Question 1

During recessions investment

Accepted Answer

A)   falls by a larger percentage than GDP.
B)   falls by about the same percentage as GDP.
C)   falls by a smaller percentage than GDP.
D)   falls but the percentage change is sometimes much larger and sometimes much smaller.E) B) and C)
F) A) and C)

Question 2

Refer to U.S.Financial Crisis.What would happen to U.S.aggregate demand?

Accepted Answer

A)   it would shift right because U.S.net exports would rise.
B)   it would shift right because U.S.net exports would fall.
C)   it would shift left because U.S.net exports would rise.
D)   it would shift left because U.S.net exports would fall.E) C) and D)
F) A) and B)

Question 3

Refer to U.S.Financial Crisis.What would happen in the market for foreign-currency exchange.

Accepted Answer

A)   the supply of dollars would shift right and the exchange rate would rise.
B)   the supply of dollars would shift right and the exchange rate would fall.
C)   the supply of dollars would shift left and the exchange rate would rise.
D)   None of the above is correct.E) A) and D)
F) A) and C)

Question 4

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

Accepted Answer

A)   an increase in the minimum wage
B)   an increase in immigration from abroad
C)   an increase in the price of oil
D)   an increase in the actual price levelE) None of the above
F) B) and D)

Question 5

Keynes thought that the behavior of the economy in the short run was influenced by what he called "animal spirits." By this he meant that business people sometimes felt good about the economy,and carried out lots of investment,and at other times felt bad about the economy,and so cut back on their investment spending.Explain how such fluctuations in investment would lead to fluctuations in real GDP and prices.

Accepted Answer

Fluctuations in investment cause the agg...

Question 6

The effect of a change in the value of the dollar in the foreign exchange market due to a change in the price level helps explain the slope of aggregate demand,but does not shift it.The effects of a change in the value of the dollar in the foreign exchange market due to speculation is shown by shifting the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 7

If countries that imported goods and services from the United States went into recession,we would expect that U.S.net exports would

Accepted Answer

A)   rise,making aggregate demand shift right.
B)   rise,making aggregate demand shift left.
C)   fall,making aggregate demand shift right.
D)   fall,making aggregate demand shift left.E) All of the above
F) None of the above

Question 8

An increase in the interest rate causes investment to

Accepted Answer

A)   rise and the exchange rate to appreciate.
B)   fall and the exchange rate to depreciate.
C)   rise and the exchange rate to depreciate.
D)   fall and the exchange rate to appreciate.E) B) and D)
F) B) and C)

Question 9

The long-run effect of an increase in government spending is to raise

Accepted Answer

A)   both real output and the price level.
B)   real output and lower the price level.
C)   real output and leave the price level unchanged.
D)   the price level and leave real output unchanged.E) None of the above
F) A) and C)

Question 10

A candidate for political office announces the following policies which,he says,economics clearly demonstrates will lead to higher output in the long run.1.reduce immigration from abroad 2.make trade more open between the US and other countries:

Accepted Answer

A)   1 and 2 both shift long-run aggregate supply right.
B)   1 and 2 both shift long-run aggregate supply left.
C)   1 shifts long-run aggregate supply right,2 shifts long-run aggregate supply left.
D)   1 shifts long-run aggregate supply left,2 shifts long-run aggregate supply right.E) All of the above
F) A) and B)

Question 11

Suppose the economy is in long-run equilibrium.If there is a tax cut at the same time that major new sources of oil are discovered in the country,then in the short-run

Accepted Answer

A)   real GDP will rise and the price level might rise,fall,or stay the same.
B)   real GDP will fall and the price level might rise,fall,or stay the same.
C)   the price level will rise,and real GDP might rise,fall,or stay the same.
D)   the price level will fall,and real GDP might rise,fall,or stay the same.E) C) and D)
F) A) and D)

Question 12

Refer to Political Instability Abroad.What would the change in the exchange rate make happen to U.S.net exports and U.S.aggregate demand?

Accepted Answer

A)   Net exports would rise and so U.S.aggregate demand would fall.
B)   Net exports would rise and so U.S.aggregate demand would rise.
C)   Net exports would fall and so U.S.aggregate demand would fall.
D)   Net exports would fall and so U.S.aggregate demand would rise.E) C) and D)
F) B) and C)

Question 13

Which of the following would both shift aggregate demand right?

Accepted Answer

A)   the price level decreases and government expenditures increase
B)   the price level decreases and the government repeals an investment tax credit
C)   government expenditures increase and the money supply increases
D)   None of the above are correct.E) B) and C)
F) B) and D)

Question 14

In which case can we be sure aggregate demand shifts left overall?

Accepted Answer

A)   people want to save more for retirement and the government raises taxes
B)   people want to save more for retirement and the government cuts taxes
C)   people want to save less for retirement and the government raises taxes
D)   people want to save less for retirement and the government cuts taxesE) B) and C)
F) A) and B)

Question 15

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production.This is inconsistent with monetary neutrality because

Accepted Answer

A)   monetary neutrality would mean that neither prices nor production should have risen.
B)   monetary neutrality would mean that production should have risen,but prices should not have.
C)   monetary neutrality would mean the prices should have risen,but production should not have changed.
D)   monetary neutrality would mean that prices and production should both have fallen.E) A) and D)
F) A) and C)

Question 16

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 17

Aggregate demand shifts right when the government

Accepted Answer

A)   raises personal income taxes.
B)   increases the money supply.
C)   repeals an investment tax credit.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 18

Other things the same,an increase in the expected price level shifts

Accepted Answer

A)   short-run aggregate supply right.
B)   short-run aggregate supply left..
C)   aggregate-demand right.
D)   aggregated-demand left.E) B) and D)
F) A) and C)

Question 19

Other things the same,a decrease in the price level causes real wealth to

Accepted Answer

A)   fall,interest rates to fall,and the dollar to appreciate.
B)   fall,interest rates to rise,and the dollar to depreciate.
C)   rise,interest rates to rise,and the dollar to appreciate.
D)   rise,interest rates to fall,and the dollar to depreciate.E) None of the above
F) All of the above

Question 20

Recessions in China and India 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) A) and C)

Exam 33: Aggregate Demand and Aggregate Supply

Aggregate demand shifts right when the government

Correct Answer
verified

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production.This is inconsistent with monetary neutrality because

Correct Answer
verified

If countries that imported goods and services from the United States went into recession,we would expect that U.S.net exports would

Correct Answer
verified

In which case can we be sure aggregate demand shifts left overall?

Correct Answer
verified

Correct Answer
verified

Refer to U.S.Financial Crisis.What would happen in the market for foreign-currency exchange.

Correct Answer
verified

The long-run effect of an increase in government spending is to raise

Correct Answer
verified

Recessions in China and India would cause

Correct Answer
verified

Refer to Political Instability Abroad.What would the change in the exchange rate make happen to U.S.net exports and U.S.aggregate demand?

Correct Answer
verified

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

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

Which of the following would both shift aggregate demand right?

Correct Answer
verified

During recessions investment

Correct Answer
verified

An increase in the interest rate causes investment to

Correct Answer
verified

Suppose the economy is in long-run equilibrium.If there is a tax cut at the same time that major new sources of oil are discovered in the country,then in the short-run

Correct Answer
verified

Other things the same,an increase in the expected price level shifts

Correct Answer
verified

Correct Answer
verified
Fluctuations in investment cause the agg...
View Answer

Other things the same,a decrease in the price level causes real wealth to

Correct Answer
verified

A candidate for political office announces the following policies which,he says,economics clearly demonstrates will lead to higher output in the long run.1.reduce immigration from abroad 2.make trade more open between the US and other countries:

Correct Answer
verified

Refer to U.S.Financial Crisis.What would happen to U.S.aggregate demand?

Correct Answer
verified

Exam 33: Aggregate Demand and Aggregate Supply

Aggregate demand shifts right when the government

Correct AnswerverifiedShow Answer

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production.This is inconsistent with monetary neutrality because

Correct AnswerverifiedShow Answer

If countries that imported goods and services from the United States went into recession,we would expect that U.S.net exports would

Correct AnswerverifiedShow Answer

In which case can we be sure aggregate demand shifts left overall?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to U.S.Financial Crisis.What would happen in the market for foreign-currency exchange.

Correct AnswerverifiedShow Answer

The long-run effect of an increase in government spending is to raise

Correct AnswerverifiedShow Answer

Recessions in China and India would cause

Correct AnswerverifiedShow Answer

Refer to Political Instability Abroad.What would the change in the exchange rate make happen to U.S.net exports and U.S.aggregate demand?

Correct AnswerverifiedShow Answer

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

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

Which of the following would both shift aggregate demand right?

Correct AnswerverifiedShow Answer

During recessions investment

Correct AnswerverifiedShow Answer

An increase in the interest rate causes investment to

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium.If there is a tax cut at the same time that major new sources of oil are discovered in the country,then in the short-run

Correct AnswerverifiedShow Answer

Other things the same,an increase in the expected price level shifts

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFluctuations in investment cause the agg...View AnswerShow Answer

Other things the same,a decrease in the price level causes real wealth to

Correct AnswerverifiedShow Answer

A candidate for political office announces the following policies which,he says,economics clearly demonstrates will lead to higher output in the long run.1.reduce immigration from abroad 2.make trade more open between the US and other countries:

Correct AnswerverifiedShow Answer

Refer to U.S.Financial Crisis.What would happen to U.S.aggregate demand?

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Fluctuations in investment cause the agg...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified