Question 1

Suppose there is a decrease in the availability of an important major resource,such as oil.Which of the following shifts would most likely occur?

Accepted Answer

A)  The aggregate supply would shift right.
B)  The aggregate supply would shift left.
C)  The aggregate demand would shift right.
D)  The aggregate demand would shift left.E) A) and B)
F) A) and C)

Question 2

When the government spends more,what is the initial effect?

Accepted Answer

A)  Aggregate demand shifts right.
B)  Aggregate demand shifts left.
C)  Aggregate supply shifts right.
D)  Aggregate supply shifts left.E) C) and D)
F) A) and C)

Question 3

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs.Which of the following pairs of GDP growth rates and unemployment rates is most realistic?

Accepted Answer

A)  6 percent, 0 percent
B)  3 percent, 20 percent
C)  -1 percent, 6 percent
D)  -3 percent, 2 percentE) A) and B)
F) B) and C)

Question 4

Which of the following explains the downward slope of the aggregate-demand curve?

Accepted Answer

A)  As the Canadian price level increases, the dollar depreciates and people buy more imports.
B)  As the Canadian price level increases, the interest rate falls and firms invest less.
C)  As the Canadian price level increases, people feel less wealthy and buy less goods and services.
D)  As the Canadian price level increases, people buy more substitute goods.E) A) and D)
F) C) and D)

Question 5

In 1986,OPEC countries increased their production of oil.What was the result?

Accepted Answer

A)  The price level rose.
B)  Aggregate supply shifted right.
C)  Unemployment rose.
D)  Stagflation occurred.E) None of the above
F) A) and B)

Question 6

Consider the short-run aggregate-supply curve in the following graph.
  
a. Calculate approximately the elasticities of the curve at two price levels, P = 20 and P = 100. (Hint: The price elasticity formula is EP = percentage change in Y / percentage change in P.)
b. Explain the meaning of the elasticity in the context of the AS curve.
c. Compare the two elasticities found in (a) and discuss the results.

Accepted Answer

a.An easier way of calculating the elast...

Question 7

Which of the following terms refers to a short period of falling incomes and rising unemployment?

Accepted Answer

A)  depression
B)  recession
C)  expansion
D)  business cycleE) A) and B)
F) None of the above

Question 8

What was the main reason for the economic boom of the early 1940s?

Accepted Answer

A)  increased government expenditures
B)  falling prices of oil and other natural resources
C)  an increase in the growth rate of the money supply
D)  rapid developments in transportation, electronics, and communicationE) A) and C)
F) All of the above

Question 9

Pessimism about the future leads to falling prices and rising unemployment.

Accepted Answer

A) True 
 B)False

Question 10

Because not all prices adjust instantly to changing conditions,an unexpected fall in the price level leaves some firms with higher-than-desired prices,and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following happens during recessions?

Accepted Answer

A)  Firms produce less but invest more.
B)  Firms have to increase production because of falling prices.
C)  Incomes increase because workers have to work overtime.
D)  Many workers are laid off.E) C) and D)
F) B) and D)

Question 12

The long-run trend in real GDP is upward.How is this possible given business cycles? What explains the upward trend?

Accepted Answer

There are occasional short-lived periods...

Question 13

Which of the following typically rises during a recession?

Accepted Answer

A)  garbage collection
B)  unemployment
C)  corporate profits
D)  automobile salesE) A) and B)
F) A) and C)

Question 14

What happens when the dollar appreciates?

Accepted Answer

A)  Canadian exports decrease while imports increase.
B)  Canadian exports and imports decrease.
C)  Canadian exports and imports increase.
D)  Canadian exports increase while imports decrease.E) None of the above
F) A) and B)

Question 15

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption,investme...

Question 16

Scenario 14-2
The economy is in long-run equilibrium. Suddenly, due to corporate scandals, international tensions, and the loss of confidence among policymakers, citizens become pessimistic concerning the future. They maintain this level of pessimism for a long time.
-Refer to the Scenario 14-2.How does the new long-run equilibrium differ from the original one?

Accepted Answer

A)  Both the price level and real GDP are higher.
B)  Both the price level and real GDP are lower.
C)  The price level is the same and real GDP is lower.
D)  The price level is lower and real GDP is the same.E) A) and D)
F) All of the above

Question 17

Figure 14-1
 
-Refer to the Figure 14-1.How would an increase in the money supply move the economy in the short and long run?

Accepted Answer

A)  from C to B in the short run and the long run
B)  from C to D in the short run and the long run
C)  from C to B in the short run and to A in the long run
D)  from C to D in the short run and back to C in the long runE) A) and D)
F) A) and C)

Question 18

Which of the following shifts both the short-run and the long-run aggregate supply right?

Accepted Answer

A)  an increase in the actual price level
B)  an increase in the expected price level
C)  an increase in the capital stock
D)  an increase in money supplyE) None of the above
F) C) and D)

Question 19

According to misperceptions theory,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,how may the firm be affected?

Accepted Answer

A)  It may believe that the relative price has increased, so it would increase production.
B)  It may believe that the relative price has increased, so it would decrease production.
C)  It may believe that the relative price has decreased, so it would increase production.
D)  It may believe that the relative price has decreased, so it would decrease production.E) B) and C)
F) A) and D)

Question 20

Other things the same,a decrease in the price level makes the interest rate increase,which leads to an appreciation of the dollar in the foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Exam 14: Aggregate Demand and Aggregate Supply

Which of the following shifts both the short-run and the long-run aggregate supply right?

Correct Answer
verified

Which of the following happens during recessions?

Correct Answer
verified

Which of the following explains the downward slope of the aggregate-demand curve?

Correct Answer
verified

Which of the following terms refers to a short period of falling incomes and rising unemployment?

Correct Answer
verified

Figure 14-1 -Refer to the Figure 14-1.How would an increase in the money supply move the economy in the short and long run?

Correct Answer
verified

Which of the following typically rises during a recession?

Correct Answer
verified

In 1986,OPEC countries increased their production of oil.What was the result?

Correct Answer
verified

According to misperceptions theory,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,how may the firm be affected?

Correct Answer
verified

What happens when the dollar appreciates?

Correct Answer
verified

Pessimism about the future leads to falling prices and rising unemployment.

Correct Answer
verified

Make a list of expenditures whose sum equals GDP.

Correct Answer
verified
consumption,investme...
View Answer

Suppose there is a decrease in the availability of an important major resource,such as oil.Which of the following shifts would most likely occur?

Correct Answer
verified

The long-run trend in real GDP is upward.How is this possible given business cycles? What explains the upward trend?

Correct Answer
verified
There are occasional short-lived periods...
View Answer

When the government spends more,what is the initial effect?

Correct Answer
verified

Correct Answer
verified

What was the main reason for the economic boom of the early 1940s?

Correct Answer
verified

Correct Answer
verified
a.An easier way of calculating the elast...
View Answer

Because not all prices adjust instantly to changing conditions,an unexpected fall in the price level leaves some firms with higher-than-desired prices,and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Correct Answer
verified

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs.Which of the following pairs of GDP growth rates and unemployment rates is most realistic?

Correct Answer
verified

Other things the same,a decrease in the price level makes the interest rate increase,which leads to an appreciation of the dollar in the foreign-currency exchange.

Correct Answer
verified

Exam 14: Aggregate Demand and Aggregate Supply

Which of the following shifts both the short-run and the long-run aggregate supply right?

Correct AnswerverifiedShow Answer

Which of the following happens during recessions?

Correct AnswerverifiedShow Answer

Which of the following explains the downward slope of the aggregate-demand curve?

Correct AnswerverifiedShow Answer

Which of the following terms refers to a short period of falling incomes and rising unemployment?

Correct AnswerverifiedShow Answer

Figure 14-1 -Refer to the Figure 14-1.How would an increase in the money supply move the economy in the short and long run?

Correct AnswerverifiedShow Answer

Which of the following typically rises during a recession?

Correct AnswerverifiedShow Answer

In 1986,OPEC countries increased their production of oil.What was the result?

Correct AnswerverifiedShow Answer

According to misperceptions theory,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,how may the firm be affected?

Correct AnswerverifiedShow Answer

What happens when the dollar appreciates?

Correct AnswerverifiedShow Answer

Pessimism about the future leads to falling prices and rising unemployment.

Correct AnswerverifiedShow Answer

Make a list of expenditures whose sum equals GDP.

Correct Answerverifiedconsumption,investme...View AnswerShow Answer

Suppose there is a decrease in the availability of an important major resource,such as oil.Which of the following shifts would most likely occur?

Correct AnswerverifiedShow Answer

The long-run trend in real GDP is upward.How is this possible given business cycles? What explains the upward trend?

Correct AnswerverifiedThere are occasional short-lived periods...View AnswerShow Answer

When the government spends more,what is the initial effect?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What was the main reason for the economic boom of the early 1940s?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.An easier way of calculating the elast...View AnswerShow Answer

Because not all prices adjust instantly to changing conditions,an unexpected fall in the price level leaves some firms with higher-than-desired prices,and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Correct AnswerverifiedShow Answer

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs.Which of the following pairs of GDP growth rates and unemployment rates is most realistic?

Correct AnswerverifiedShow Answer

Other things the same,a decrease in the price level makes the interest rate increase,which leads to an appreciation of the dollar in the foreign-currency exchange.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
consumption,investme...
View Answer

Correct Answer
verified

Correct Answer
verified
There are occasional short-lived periods...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.An easier way of calculating the elast...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified