Question 1

Other things the same, continued increases in technology lead to

Accepted Answer

A)   continued increases in the price level and real GDP.
B)   continued decreases in the price level and real GDP.
C)   continued increases in real GDP and continued increases in the price level.
D)   continued increases in real GDP and continued decreases in the price level.E) All of the above
F) None of the above

Question 2

Which of the following correctly expresses why the short-run aggregate-supply curve slopes upward?

Accepted Answer

The answer of Which of the following correctly expresses why...

Question 3

An increase in the price level and a reduction in output would result from

Accepted Answer

A)   an increase in the money supply.
B)   an increase in government expenditures.
C)   a fall in stock prices.
D)   bad weather in farm states.E) A) and D)
F) All of the above

Question 4

Which of the following lists includes only changes that shift aggregate demand to the right?

Accepted Answer

A)   repeal of an investment tax credit, an increase in the money supply
B)   repeal of an investment tax credit, a decrease in the money supply
C)   passing of an investment tax credit, an increase in the money supply
D)   passing of an investment tax credit, a decrease in the money supplyE) None of the above
F) A) and D)

Question 5

The sticky-price theory implies that

Accepted Answer

A)   the short-run aggregate-supply curve is upward-sloping.
B)   an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce.
C)   menu costs influence the speed of adjustment of prices.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 6

Most economist agree that money changes real GDP in both the short and long run.

Accepted Answer

A) True 
 B)False

Question 7

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

Examples and variations on examples) in ...

Question 8

In which case can we be sure real GDP rises in the short run?

Accepted Answer

A)   government purchases increase and taxes rise.
B)   government purchases increase and taxes fall.
C)   government purchases decrease and taxes rise.
D)   government purchases decrease and taxes fall.E) A) and D)
F) A) and C)

Question 9

According to the classical model, which of the following would double if the quantity of money doubled?

Accepted Answer

A)   prices but not nominal income
B)   nominal income but not prices
C)   both prices and nominal income
D)   neither prices nor nominal incomeE) B) and C)
F) All of the above

Question 10

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

Accepted Answer

A)   rising prices only.
B)   rising real GDP only.
C)   rising prices and rising real GDP.
D)   neither rising prices nor rising real GDP.E) A) and D)
F) B) and D)

Question 11

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)   the Federal Reserve buys bonds.
B)   a decrease in net exports due to something other than a change in domestic prices.
C)   an increase in household saving.
D)   All of the above are correct.E) All of the above
F) A) and D)

Question 12

Most economists believe that in the long run, changes in the money supply

Accepted Answer

A)   affect nominal but not real variables. This view that money is ultimately neutral is consistent with classical theory.
B)   affect nominal but not real variables. This view that money is ultimately neutral is inconsistent with classical theory.
C)   affect real but not nominal variables. This view that money is ultimately neutral is consistent with classical theory.
D)   affect real but not nominal variables. This view that money is ultimately neutral is inconsistent with classical theory.E) A) and C)
F) C) and D)

Question 13

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would cause prices to rise and real GDP to fall in the short run?

Accepted Answer

A)   an increase in the expected price level.
B)   an increase in the capital stock.
C)   an increase in the money supply.
D)   an increase in taxes.E) All of the above
F) B) and C)

Question 15

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Accepted Answer

A) True 
 B)False

Question 16

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Accepted Answer

the price level decreases when...

Question 17

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Accepted Answer

why the ag...

Question 18

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)   an increase in the price level.
B)   households decide to save a larger fraction of their income.
C)   an increase in net exports.
D)   Congress passes a new investment tax credit.E) B) and D)
F) B) and C)

Question 19

Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to

Accepted Answer

A)   decrease consumption, shown as a movement to the left along a given aggregate-demand curve.
B)   increase consumption, shown as a movement to the right along a given aggregate-demand curve.
C)   decrease consumption, shown by shifting the aggregate-demand curve to the left.
D)   increase consumption, shown by shifting the aggregate-demand curve to the right.E) A) and B)
F) A) and C)

Question 20

Figure 33-7. 
-Refer to Optimism. In the long run, the change in price expectations created by optimism shifts

Accepted Answer

A)   long-run aggregate supply right.
B)   long-run aggregate supply left.
C)   short-run aggregate supply right.
D)   short-run aggregate supply left.E) A) and B)
F) None of the above

Exam 20: Aggregate Demand and Aggregate Supply

Figure 33-7. -Refer to Optimism. In the long run, the change in price expectations created by optimism shifts

Correct AnswerverifiedShow Answer

Which of the following correctly expresses why the short-run aggregate-supply curve slopes upward?

Correct AnswerverifiedShow Answer

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Correct AnswerverifiedShow Answer

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand to the left?

Correct AnswerverifiedShow Answer

Which of the following would cause prices to rise and real GDP to fall in the short run?

Correct AnswerverifiedShow Answer

Other things the same, continued increases in technology lead to

Correct AnswerverifiedShow Answer

Make a list of things that would shift the aggregate demand curve to the right.

Correct AnswerverifiedExamples and variations on examples) in ...View AnswerShow Answer

Most economists believe that in the long run, changes in the money supply

Correct AnswerverifiedShow Answer

The sticky-price theory implies that

Correct AnswerverifiedShow Answer

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

Correct AnswerverifiedShow Answer

According to the classical model, which of the following would double if the quantity of money doubled?

Correct AnswerverifiedShow Answer

Which of the following lists includes only changes that shift aggregate demand to the right?

Correct AnswerverifiedShow Answer

An increase in the price level and a reduction in output would result from

Correct AnswerverifiedShow Answer

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Correct Answerverifiedthe price level decreases when...View AnswerShow Answer

Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

In which case can we be sure real GDP rises in the short run?

Correct AnswerverifiedShow Answer

Most economist agree that money changes real GDP in both the short and long run.

Correct AnswerverifiedShow Answer

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Correct Answerverifiedwhy the ag...View AnswerShow Answer

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Examples and variations on examples) in ...
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the price level decreases when...
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why the ag...
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