Question 1

If the actual price level is 165, but people had been expecting it to be 160, then

Accepted Answer

A)   the quantity of output supplied rises, but only in the short run.
B)   the quantity of output supplied rises in the short run and the long run.
C)   the quantity of output supplied falls, but only in the short run.
D)   the quantity of output supplied falls in the short run and the long run.E) All of the above
F) A) and D)

Question 2

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

Accepted Answer

Net exports would fa...

Question 3

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Accepted Answer

A)   higher than desired prices, which increases their sales.
B)   higher than desired prices, which depresses their sales.
C)   lower than desired prices, which increases their sales.
D)   lower than desired prices, which depresses their sales.E) A) and D)
F) B) and C)

Question 4

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Sticky wages, sticky...

Question 5

Figure 33-2. 
Refer to Figure 33-2. Line X is

Accepted Answer

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

Question 6

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

Accepted Answer

A)   an increase in the price level
B)   an increase in the minimum wage
C)   a decrease in the price of oil
D)   more people migrate abroad than immigrate from abroadE) A) and C)
F) None of the above

Question 7

The Stock Market Boom of 2015
Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
-Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

Accepted Answer

A)   both the price level and real GDP rise.
B)   both the price level and real GDP fall.
C)   the price level rises and real GDP falls.
D)   the price level falls and real GDP rises.E) A) and D)
F) C) and D)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

During recessions

Accepted Answer

A)   sales and profits fall.
B)   sales and profits rise.
C)   sales rise, profits fall.
D)   profits fall, sales rise.E) B) and D)
F) A) and C)

Question 10

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) A) and B)
F) None of the above

Question 11

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) All of the above
F) A) and D)

Question 12

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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

Question 14

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 C)
F) A) and B)

Question 15

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

Accepted Answer

A)   foreign economies expand and government purchases rise.
B)   foreign economies expand and government purchases fall.
C)   foreign economies contract and government purchases fall.
D)   foreign economies contract and government purchases rise.E) B) and D)
F) All of the above

Question 16

Some countries have high minimum wages and require a lengthy and costly process to get permission to open a business

Accepted Answer

A)   Reducing either the minimum wage or the time and cost to open a business would have no effect on the long- run aggregate supply curve.
B)   Reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right.
C)   Reducing the minimum wage would shift long-run aggregate supply to the right. Reducing the time and cost to open a business would have no affect on the long-run aggregate supply curve.
D)   Reducing the minimum wage would have no affect on the long-run aggregate supply curve. Reducing the time and cost to open a business would shift the long-run aggregate supply curve to the right.E) B) and C)
F) C) and D)

Question 17

Figure 33-12. 
-Refer to Figure 33-12. Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

Accepted Answer

The aggregate-demand...

Question 18

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)   increase foreign bond purchases, so the dollar appreciates.
B)   increase foreign bond purchases, so the dollar depreciates.
C)   increase domestic bond purchases, so the dollar appreciates.
D)   increase domestic bond purchases, so the dollar depreciates.E) B) and D)
F) B) and C)

Question 20

Suppose that a decrease in the demand for goods and services pushes the economy into recession. What happens to the price level? If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output?

Accepted Answer

A decrease in aggregate demand causes th...

Exam 15: Aggregate Demand and Aggregate Supply

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Correct AnswerverifiedSticky wages, sticky...View AnswerShow Answer

Figure 33-12. -Refer to Figure 33-12. Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

Correct AnswerverifiedThe aggregate-demand...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

Correct AnswerverifiedNet exports would fa...View AnswerShow Answer

Suppose that a decrease in the demand for goods and services pushes the economy into recession. What happens to the price level? If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output?

Correct AnswerverifiedA decrease in aggregate demand causes th...View AnswerShow Answer

During recessions

Correct AnswerverifiedShow Answer

If the actual price level is 165, but people had been expecting it to be 160, then

Correct AnswerverifiedShow Answer

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Correct AnswerverifiedShow Answer

Figure 33-2. Refer to Figure 33-2. Line X is

Correct AnswerverifiedShow Answer

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Some countries have high minimum wages and require a lengthy and costly process to get permission to open a business

Correct AnswerverifiedShow Answer

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Correct AnswerverifiedShow Answer

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Sticky wages, sticky...
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The aggregate-demand...
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Net exports would fa...
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A decrease in aggregate demand causes th...
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