Question 1

Suppose the economy is in long-run equilibrium. In a short span of time, there is an increase in the money supply, a tax decrease, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, we would expect

Accepted Answer

A)   the price level and real GDP both to rise.
B)   the price level and real GDP both to fall.
C)   the price level and real GDP both to stay the same.
D)   All of the above are possible.E) A) and D)
F) All of the above

Question 2

Most macroeconomic variables that measure some type of income, spending, or production fluctuate closely together.

Accepted Answer

A) True 
 B)False

Question 3

The effects of a higher than expected price level are shown by

Accepted Answer

A)   shifting the short-run aggregate supply curve right.
B)   shifting the short-run aggregate supply curve left.
C)   moving to the right along a given aggregate supply curve.
D)   moving to the left along a given aggregate supply curve.E) All of the above
F) B) and C)

Question 4

Which of the following accounts for about two-thirds of the decline in output during a recession?

Accepted Answer

A)   the decline in government purchases.
B)   the decline in total consumption spending.
C)   the decline in investment spending.
D)   the decline in net exports.E) A) and C)
F) A) and D)

Question 5

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

why the short run ag...

Question 6

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.
-Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at

Accepted Answer

A)   V.
B)   W.
C)   X.
D)   Z.E) None of the above
F) A) and B)

Question 7

When the dollar appreciates, U.S.

Accepted Answer

A)   net exports rise, which increases the aggregate quantity of goods and services demanded.
B)   net exports rise, which decreases the aggregate quantity of goods and services demanded.
C)   net exports fall, which increases the aggregate quantity of goods and services demanded.
D)   net exports fall, which decreases the aggregate quantity of goods and services demanded.E) B) and C)
F) A) and C)

Question 8

Other things the same, if the price level rises, people

Accepted Answer

A)   increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases.
B)   increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.
C)   decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases.
D)   decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.E) A) and B)
F) C) and D)

Question 9

According to classical macroeconomic theory, changes in the money supply affect

Accepted Answer

A)   unemployment and the price level.
B)   unemployment but not the price level.
C)   the price level, but not unemployment.
D)   neither the price level nor unemployment.E) B) and D)
F) C) and D)

Question 10

Other things the same, if the U.S. price level rises, then

Accepted Answer

A)   the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate rises.
B)   the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate falls.
C)   the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate rises.
D)   the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate falls.E) All of the above
F) B) and C)

Question 11

Stagflation results from continued decreases in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following would increase the price level?

Accepted Answer

A)   an increase in the money supply.
B)   an increase in taxes.
C)   a decrease in the expected price level.
D)   a decrease in the natural rate of unemployment.E) All of the above
F) B) and C)

Question 13

Other things the same, if the long-run aggregate supply curve shifts left, prices

Accepted Answer

A)   and output both increase.
B)   and output both decrease.
C)   increase and output decreases.
D)   decrease and output increases.E) B) and C)
F) A) and C)

Question 14

When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is

Accepted Answer

A)   less than it desires and increase its production.
B)   less than it desires and decrease its production
C)   more than it desires and increase its production.
D)   less than it desires and decrease its production.E) B) and D)
F) A) and B)

Question 15

Other things the same, what happens in the short run to the price level and quantity of output when the aggregate demand curve shifts to the left?

Accepted Answer

The price ...

Question 16

Figure 33-1. 
-Refer to Figure 33-1. Line A is

Accepted Answer

A)   investment spending.
B)   real GDP.
C)   unemployment rate.
D)   CPI.E) A) and B)
F) All of the above

Question 17

Which of the following, other things the same, would make the price level decrease and real GDP increase?

Accepted Answer

A)   long-run aggregate supply shifts right
B)   long-run aggregate supply shifts left
C)   aggregate demand shifts right
D)   aggregate demand shifts leftE) A) and D)
F) B) and C)

Question 18

Figure 33-4 
-Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Accepted Answer

A)   A to B.
B)   C to D.
C)   B to A.
D)   D to C.E) B) and C)
F) A) and C)

Question 19

When the price level falls

Accepted Answer

A)   The interest rate falls because people will want to hold more money and so sell bonds.
B)   Firms will want to spend more on new business buildings and business equipment and households will want to spend more building new homes.
C)   Both A and B are correct.
D)   None of the above are correct.E) B) and C)
F) All of the above

Question 20

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Accepted Answer

A) True 
 B)False

Exam 23: Aggregate Demand and Aggregate Supply

Which of the following would increase the price level?

Correct Answer
verified

Other things the same, if the long-run aggregate supply curve shifts left, prices

Correct Answer
verified

Other things the same, what happens in the short run to the price level and quantity of output when the aggregate demand curve shifts to the left?

Correct Answer
verified
The price ...
View Answer

When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is

Correct Answer
verified

Other things the same, if the U.S. price level rises, then

Correct Answer
verified

Suppose the economy is in long-run equilibrium. In a short span of time, there is an increase in the money supply, a tax decrease, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, we would expect

Correct Answer
verified

Other things the same, if the price level rises, people

Correct Answer
verified

When the dollar appreciates, U.S.

Correct Answer
verified

Correct Answer
verified

Stagflation results from continued decreases in aggregate demand.

Correct Answer
verified

Which of the following, other things the same, would make the price level decrease and real GDP increase?

Correct Answer
verified

When the price level falls

Correct Answer
verified

Figure 33-1. -Refer to Figure 33-1. Line A is

Correct Answer
verified

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

Correct Answer
verified
why the short run ag...
View Answer

Figure 33-4 -Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Correct Answer
verified

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Correct Answer
verified

The effects of a higher than expected price level are shown by

Correct Answer
verified

According to classical macroeconomic theory, changes in the money supply affect

Correct Answer
verified

Which of the following accounts for about two-thirds of the decline in output during a recession?

Correct Answer
verified

Most macroeconomic variables that measure some type of income, spending, or production fluctuate closely together.

Correct Answer
verified

Exam 23: Aggregate Demand and Aggregate Supply

Which of the following would increase the price level?

Correct AnswerverifiedShow Answer

Other things the same, if the long-run aggregate supply curve shifts left, prices

Correct AnswerverifiedShow Answer

Other things the same, what happens in the short run to the price level and quantity of output when the aggregate demand curve shifts to the left?

Correct AnswerverifiedThe price ...View AnswerShow Answer

When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is

Correct AnswerverifiedShow Answer

Other things the same, if the U.S. price level rises, then

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium. In a short span of time, there is an increase in the money supply, a tax decrease, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, we would expect

Correct AnswerverifiedShow Answer

Other things the same, if the price level rises, people

Correct AnswerverifiedShow Answer

When the dollar appreciates, U.S.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Stagflation results from continued decreases in aggregate demand.

Correct AnswerverifiedShow Answer

Which of the following, other things the same, would make the price level decrease and real GDP increase?

Correct AnswerverifiedShow Answer

When the price level falls

Correct AnswerverifiedShow Answer

Figure 33-1. -Refer to Figure 33-1. Line A is

Correct AnswerverifiedShow Answer

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

Correct Answerverifiedwhy the short run ag...View AnswerShow Answer

Figure 33-4 -Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Correct AnswerverifiedShow Answer

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Correct AnswerverifiedShow Answer

The effects of a higher than expected price level are shown by

Correct AnswerverifiedShow Answer

According to classical macroeconomic theory, changes in the money supply affect

Correct AnswerverifiedShow Answer

Which of the following accounts for about two-thirds of the decline in output during a recession?

Correct AnswerverifiedShow Answer

Most macroeconomic variables that measure some type of income, spending, or production fluctuate closely together.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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The price ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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why the short run ag...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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