Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The aggregate demand curve shifts left if either

Accepted Answer

A)   speculators gain confidence in U.S. assets or foreign countries enter into recession.
B)   speculators gain confidence in U.S. assets or recessions in foreign countries end.
C)   speculators lose confidence in U.S. assets or foreign countries enter into recession.
D)   speculators lose confidence in U.S. assets or recessions in foreign countries end.E) None of the above
F) All of the above

Question 3

When we say that economic fluctuations are "irregular and unpredictable," we mean that

Accepted Answer

A)   the relationship between output and unemployment is erratic and difficult to characterize.
B)   when one macroeconomic variable that measures income or spending is falling, other macroeconomic variables that measure income or spending are likely to be rising.
C)   recessions do not occur at regular intervals.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 4

Which of the following shifts the long-run aggregate supply curve to the left?

Accepted Answer

A)   either an increase in the price of imported natural resources or a reduction in trade restrictions.
B)   neither an increase in the price of imported natural resources or a reduction in trade restrictions.
C)   an increase in the price of imported natural resources and an increase in trade restrictions.
D)   an increase in trade restrictions and a decrease in the price of imported natural resources.E) All of the above
F) None of the above

Question 5

Which of the following would shift long-run aggregate supply to the right?

Accepted Answer

A)   increased immigration from abroad
B)   a decrease in the price of an imported natural resource
C)   opening the economy to international trade
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 6

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Accepted Answer

Consumption expendit...

Question 7

As the price level rises, the exchange rate

Accepted Answer

A)   falls, so exports rise and imports fall.
B)   falls, so exports fall and imports rise.
C)   rises, so exports rise and imports fall.
D)   rises, so exports fall and imports rise.E) None of the above
F) C) and D)

Question 8

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A)   an increase in government purchases.
B)   an decrease in oil prices
C)   a decrease in the money supply
D)   technical progressE) None of the above
F) A) and C)

Question 9

Figure 33-9. 
-Refer to Figure 33-9. Suppose the economy starts where LRAS = AD1 = SRAS1. A decrease in short-run aggregate supply would be consistent with the movement to

Accepted Answer

A)   P1, Y1.
B)   P2, Y1.
C)   P1, Y2.
D)   P3, Y2.E) None of the above
F) B) and D)

Question 10

The exchange-rate effect is the idea that a higher U.S. price level causes the value of the dollar to increase in foreign exchange markets, and this effect contributes to the downward slope of the aggregate-demand curve.

Accepted Answer

A) True 
 B)False

Question 11

Aggregate demand shifts right when the Federal Reserve

Accepted Answer

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

Question 12

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Quantity of output s...

Question 13

Which of the following would cause prices and real GDP to rise in the short run?

Accepted Answer

A)   short-run aggregate supply shifts right
B)   short-run aggregate supply shifts left
C)   aggregate demand shifts right
D)   aggregate demand shifts leftE) A) and B)
F) All of the above

Question 14

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Accepted Answer

A) True 
 B)False

Question 15

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 16

In 1986, OPEC countries increased their production of oil. This caused

Accepted Answer

A)   the price level to rise.
B)   aggregate supply to shift right.
C)   unemployment to rise.
D)   None of the above is correct.E) A) and D)
F) A) and C)

Question 17

Figure 33-7. 
-Refer to Figure 33-7. Suppose the economy starts at Y. If aggregate demand increases from AD2 to AD3, then the economy moves to

Accepted Answer

A)   V.
B)   W.
C)   X.
D)   Z.E) A) and D)
F) All of the above

Question 18

The mathematical equation: quantity of output supplied = natural rate of output + aactual price level - expected price level) , expresses

Accepted Answer

A)   how the long run equilibrium adjusts to changes in money supply.
B)   how output deviates in the short run from its long run natural rate.
C)   how the short run aggregate supply curve shifts.
D)   how adverse shifts in aggregate supply can cause stagflation.E) C) and D)
F) B) and C)

Question 19

A decrease in the price level

Accepted Answer

A)   increases the quantity of goods and services supplied in the short run.
B)   decreases the quantity of goods and services supplied in the long run.
C)   decreases the quantity of goods and services demanded.
D)   increases the quantity of goods and services demanded.E) B) and D)
F) B) and C)

Question 20

Figure 33-4 
-Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

Accepted Answer

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

Exam 20: Aggregate Demand and Aggregate Supply

Which of the following shifts the long-run aggregate supply curve to the left?

Correct AnswerverifiedShow Answer

Which of the following would shift long-run aggregate supply to the right?

Correct AnswerverifiedShow Answer

Figure 33-9. -Refer to Figure 33-9. Suppose the economy starts where LRAS = AD1 = SRAS1. A decrease in short-run aggregate supply would be consistent with the movement to

Correct AnswerverifiedShow Answer

In 1986, OPEC countries increased their production of oil. This caused

Correct AnswerverifiedShow Answer

As the price level rises, the exchange rate

Correct AnswerverifiedShow Answer

Aggregate demand shifts right when the Federal Reserve

Correct AnswerverifiedShow Answer

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If aggregate demand increases from AD2 to AD3, then the economy moves to

Correct AnswerverifiedShow Answer

Figure 33-4 -Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

Correct AnswerverifiedShow Answer

Which of the following would cause prices and real GDP to rise in the short run?

Correct AnswerverifiedShow Answer

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Correct AnswerverifiedShow Answer

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Correct AnswerverifiedQuantity of output s...View AnswerShow Answer

When we say that economic fluctuations are "irregular and unpredictable," we mean that

Correct AnswerverifiedShow Answer

The mathematical equation: quantity of output supplied = natural rate of output + aactual price level - expected price level) , expresses

Correct AnswerverifiedShow Answer

A decrease in the price level

Correct AnswerverifiedShow Answer

Which of the following will reduce the price level and real output in the short run?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The aggregate demand curve shifts left if either

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

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Correct AnswerverifiedConsumption expendit...View AnswerShow Answer

The exchange-rate effect is the idea that a higher U.S. price level causes the value of the dollar to increase in foreign exchange markets, and this effect contributes to the downward slope of the aggregate-demand curve.

Correct AnswerverifiedShow Answer

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There are occasional short-lived periods...
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Consumption expendit...
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