Question 1

Suppose the economy is in long-run equilibrium.If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions,then in the short run,real GDP will

Accepted Answer

A)   rise and the price level might rise,fall,or stay the same.In the long run,the price level might rise,fall,or stay the same but real GDP will be unaffected.
B)   fall and the price level might rise,fall,or stay the same.In the long run,the price level might rise,fall,or stay the same but real GDP will be unaffected.
C)   rise and the price level might rise,fall,or stay the same.In the long run,the price level might rise,fall,or stay the same but real GDP will be lower.
D)   fall and the price level might rise,fall,or stay the same.In the long run,the price level might rise,fall,or stay the same but real GDP will be lower.E) A) and D)
F) A) and B)

Question 2

The recessions of the 1970s are often attributed to

Accepted Answer

A)   declining inflation expectations.
B)   an increase in oil prices.
C)   declines in the price of stock.
D)   decreases in the money supply.E) B) and D)
F) B) and C)

Question 3

The long-run aggregate supply curve would shift right if the government were to

Accepted Answer

A)   increase the minimum-wage.
B)   make unemployment benefits more generous.
C)   raise taxes on investment spending.
D)   None of the above is correct.E) A) and C)
F) A) and D)

Question 4

During recessions

Accepted Answer

A)   workers are laid off.
B)   factories are idle.
C)   firms may find they are unable to sell all they produce.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 5

If international speculators lose confidence in foreign economies and want to move some of their wealth into the U.S.economy,then in the short run there is

Accepted Answer

A)   an increase in the value of the U.S.dollar in foreign exchange markets,a lower level of U.S.output and a lower U.S.price level.
B)   an increase in the value of the U.S.dollar in foreign exchange markets,a higher level of U.S.output and a higher U.S.price level.
C)   a decrease in the value of the U.S.dollar in foreign exchange markets,a lower level of U.S.output and a lower U.S.price level.
D)   a decrease in the value of the U.S.dollar in foreign exchange markets,a lower level of U.S.output and a higher U.S.price level.E) All of the above
F) A) and C)

Question 6

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   technology improves.
B)   the price level decreases.
C)   the money supply increases.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 7

Aggregate demand includes

Accepted Answer

A)   the quantity of goods and services both the government and customers abroad want to buy.
B)   the quantity of goods and services neither the government nor customers abroad want to buy.
C)   the quantity of goods and service the government wants to buy,but not the quantity of goods and services customers abroad want to buy.
D)   the quantity of goods and services customers abroad want to buy,but not the quantity of goods and services the government wants to buy.E) A) and D)
F) All of the above

Question 8

Which of the following is most commonly used to monitor short-run changes in economic activity?

Accepted Answer

A)   the inflation rate
B)   real GDP
C)   aggregate demand
D)   aggregate supplyE) B) and C)
F) A) and D)

Question 9

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)   an increase in the money supply
B)   an increase in net exports due to something other than a change in domestic prices
C)   an investment tax credit
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 10

Suppose the economy is in long-run equilibrium.In a short span of time,there is a decline in the money supply,a tax increase,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) All of the above
F) B) and D)

Question 11

Other things the same,if the U.S.price level falls,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) B) and D)
F) B) and C)

Question 12

When output rises,unemployment falls.

Accepted Answer

A) True 
 B)False

Question 13

If speculators bid up the value of the dollar in the market for foreign-currency exchange,U.S.aggregate demand would shift to the left.

Accepted Answer

A) True 
 B)False

Question 14

Economic expansions in Germany and Japan would cause

Accepted Answer

A)   the U.S.price level and real GDP to rise.
B)   the U.S.price level and real GDP to fall.
C)   the U.S.price level to rise and real GDP to fall.
D)   the U.S.price level to fall and real GDP to rise.E) A) and B)
F) All of the above

Question 15

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Accepted Answer

A) True 
 B)False

Question 16

When the price level changes,which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Accepted Answer

A)   the real value of wealth
B)   the interest rate
C)   the value of currency in the market for foreign exchange
D)   All of the above are correct.E) B) and D)
F) A) and B)

Question 17

Other things the same,as the price level falls,

Accepted Answer

A)   the money supply falls.
B)   interest rates rise.
C)   a dollar buys more domestic goods.
D)   the aggregate-demand curve shifts right.E) None of the above
F) C) and D)

Question 18

Which of the following shifts both the short-run and 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)   None of the above is correct.E) B) and C)
F) All of the above

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

During recessions which type of spending falls?

Accepted Answer

A)   consumption and investment
B)   investment but not consumption
C)   consumption but not investment
D)   neither consumption nor investmentE) B) and C)
F) All of the above

Exam 33: Aggregate Demand and Aggregate Supply

If international speculators lose confidence in foreign economies and want to move some of their wealth into the U.S.economy,then in the short run there is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If speculators bid up the value of the dollar in the market for foreign-currency exchange,U.S.aggregate demand would shift to the left.

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

The recessions of the 1970s are often attributed to

Correct AnswerverifiedShow Answer

During recessions

Correct AnswerverifiedShow Answer

During recessions which type of spending falls?

Correct AnswerverifiedShow Answer

Which of the following is most commonly used to monitor short-run changes in economic activity?

Correct AnswerverifiedShow Answer

Economic expansions in Germany and Japan would cause

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium.In a short span of time,there is a decline in the money supply,a tax increase,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

When output rises,unemployment falls.

Correct AnswerverifiedShow Answer

Other things the same,as the price level falls,

Correct AnswerverifiedShow Answer

When the price level changes,which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium.If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions,then in the short run,real GDP will

Correct AnswerverifiedShow Answer

Aggregate demand includes

Correct AnswerverifiedShow Answer

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve would shift right if the government were to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve shifts right if

Correct AnswerverifiedShow Answer

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