Question 1

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Accepted Answer

A)   real wealth rises.
B)   the interest rate rises.
C)   the dollar appreciates.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 2

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 3

According to the "In the News" article, macroprudential tools

Accepted Answer

A)   allow a central bank to alter lending for specific industries.
B)   allow a central bank to alter taxes.
C)   limit a central bank's power to act independently of the political process.
D)   limit the policy tools available to a central bank.E) C) and D)
F) None of the above

Question 4

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

Accepted Answer

A)   the supply of dollars in the market for foreign-currency exchange increases, and net exports fall.
B)   the supply of dollars in the market for foreign-currency exchange increases, and net exports rise.
C)   the supply of dollars in the market for foreign-currency exchange decreases, and net exports fall.
D)   the supply of dollars in the market for foreign-currency exchange decreases, and net exports rise.E) A) and B)
F) A) and C)

Question 5

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Accepted Answer

A)   consumption
B)   investment
C)   government expenditures
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 6

Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run aggreg...

Question 7

When the dollar appreciates, U.S.

Accepted Answer

A)   exports decrease, while imports increase.
B)   exports and imports decrease.
C)   exports and imports increase.
D)   exports increase, while imports decrease.E) A) and D)
F) A) and C)

Question 8

When the dollar depreciates, each dollar buys

Accepted Answer

A)   more foreign currency, and so buys more foreign goods.
B)   more foreign currency, and so buys fewer foreign goods.
C)   less foreign currency, and so buys more foreign goods.
D)   less foreign currency, and so buys fewer foreign goods.E) A) and B)
F) C) and D)

Question 9

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)   interest rates.
D)   value of the U.S. dollar in the foreign exchange market.E) A) and B)
F) A) and C)

Question 10

Most economists believe that money neutrality

Accepted Answer

A)   does not hold in the short run.
B)   does not hold in the long run.
C)   does not hold in either the short run or long run.
D)   holds in the short run and the long run.E) B) and C)
F) B) and D)

Question 11

As the price level falls

Accepted Answer

A)   people will want to buy more bonds, so the interest rate rises.
B)   people will want to buy fewer bonds, so the interest rate falls.
C)   people will want to buy more bonds, so the interest rate falls.
D)   people will want to buy fewer bonds, so the interest rate rises.E) None of the above
F) A) and D)

Question 12

Suppose a boom in stock market prices helps make people feel wealthier. Using the model of aggregate demand and aggregate supply, identify the curves that are affected, and which way these curves would shift.

Accepted Answer

The aggregate demand...

Question 13

Other things the same, a decrease in the price level causes the interest rate to

Accepted Answer

A)   increase, the dollar to appreciate, and net exports to increase.
B)   increase, the dollar to depreciate, and net exports to decrease.
C)   decrease, the dollar to depreciate, and net exports to increase.
D)   decrease, the dollar to appreciate, and net exports to decrease.E) All of the above
F) A) and C)

Question 14

If money is neutral, then changes in the quantity of money

Accepted Answer

A)   do not affect real output.
B)   affect both nominal and real output
C)   do not affect nominal output.
D)   affect neither nominal nor real output.E) C) and D)
F) A) and B)

Question 15

As the price level falls

Accepted Answer

A)   people are more willing to lend, so interest rates rise.
B)   people are more willing to lend, so interest rates fall.
C)   people are less willing to lend, so interest rates fall.
D)   people are less willing to lend, so interest rates rise.E) A) and B)
F) A) and C)

Question 16

If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports

Accepted Answer

A)   increase which shifts aggregate demand right.
B)   increase which shifts aggregate demand left.
C)   decrease which shifts aggregate demand right.
D)   decrease which shifts aggregate demand left.E) C) and D)
F) A) and B)

Question 17

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) A) and B)
F) C) and D)

Question 18

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

Accepted Answer

A)   back to A in the long run.
B)   to B in the long run.
C)   to C in the long run.
D)   to D in the long run.E) A) and B)
F) A) and C)

Question 19

Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Accepted Answer

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

Question 20

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy

Accepted Answer

A)   moves to A in the long run.
B)   moves to B in the long run.
C)   moves to C in the long run.
D)   stays at D in the long run.E) None of the above
F) All of the above

Exam 33: Aggregate Demand and Aggregate Supply

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 the dollar appreciates, U.S.

Correct AnswerverifiedShow Answer

Other things the same, a decrease in the price level causes the interest rate to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose a boom in stock market prices helps make people feel wealthier. Using the model of aggregate demand and aggregate supply, identify the curves that are affected, and which way these curves would shift.

Correct AnswerverifiedThe aggregate demand...View AnswerShow Answer

Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Correct AnswerverifiedShow Answer

When the dollar depreciates, each dollar buys

Correct AnswerverifiedShow Answer

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports

Correct AnswerverifiedShow Answer

As the price level falls

Correct AnswerverifiedShow Answer

Most economists believe that money neutrality

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Correct AnswerverifiedThe short run aggreg...View AnswerShow Answer

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy

Correct AnswerverifiedShow Answer

If money is neutral, then changes in the quantity of money

Correct AnswerverifiedShow Answer

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

Correct AnswerverifiedShow Answer

According to the "In the News" article, macroprudential tools

Correct AnswerverifiedShow Answer

As the price level falls

Correct AnswerverifiedShow Answer

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Quantity of output s...
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The aggregate demand...
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The short run aggreg...
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