Question 1

The aggregate-demand curve shows the

Accepted Answer

A)   quantity of labor and other inputs that firms want to buy at each price level.
B)   quantity of labor and other inputs that firms want to buy at each inflation rate.
C)   quantity of domestically produced goods and services that households want to buy at each price level.
D)   quantity of domestically produced goods and services that households,firms,the government,and customers abroad want to buy at each price level.E) All of the above
F) B) and C)

Question 2

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

Accepted Answer

A)   the price level is higher than expected making production more profitable .
B)   the price level is higher than expected making production less profitable
C)   the price level is lower than expected making production more profitable.
D)   the price level is higher than expected making production less profitable.E) A) and B)
F) None of the above

Question 3

Other things the same,when the price level falls,interest rates

Accepted Answer

A)   rise,so firms increase investment.
B)   rise,so firms decrease investment.
C)   fall,so firms increase investment.
D)   fall,so firms decrease investment.E) A) and B)
F) A) and C)

Question 4

Which of the following would raise the price level in both the short and long run?

Accepted Answer

A)   an increase in taxes
B)   an increase in government expenditures
C)   a decrease in the minimum wage
D)   an increase in the capital stockE) A) and D)
F) B) and D)

Question 5

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)   both an investment tax credit and a decrease in income tax rates
B)   an investment tax credit but not a decrease in income tax rates
C)   a decrease in income tax rates but not an investment tax credit
D)   neither an investment tax credit nor a decrease in income tax ratesE) None of the above
F) B) and D)

Question 6

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

Question 7

Which of the following would cause stagflation?

Accepted Answer

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

Question 8

A relatively mild period of falling incomes and rising unemployment is called a(n)

Accepted Answer

A)   depression.
B)   recession.
C)   expansion.
D)   business cycle.E) B) and D)
F) C) and D)

Question 9

According to classical macroeconomic theory,changes in the money supply affect

Accepted Answer

A)   real GDP and the price level.
B)   real GDP but not the price level.
C)   the price level,but not real GDP.
D)   neither the price level nor real GDP.E) A) and D)
F) None of the above

Question 10

Which of the following did the Fed do during the recession of 2008-2009?

Accepted Answer

A)   lowered the federal funds rate and sold securities and loans
B)   lowered the federal funds rate and purchased securities and loans
C)   raised the federal funds rate and sold securities and loans
D)   raised the federal funds rate and purchased securities and loansE) A) and C)
F) None of the above

Question 11

A decrease in the price level makes consumers feel wealthier,so they purchase more.This logic helps explain why the aggregate demand curve slopes downward.

Accepted Answer

A) True 
 B)False

Question 12

When the price level falls

Accepted Answer

A)   people want to hold more money.
B)   the interest rate rises.
C)   investment spending rises.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Question 13

An increase in the price level and a reduction in output would result from

Accepted Answer

A)   an increase in the money supply.
B)   an increase in government expenditures.
C)   a fall in stock prices.
D)   bad weather in farm states.E) All of the above
F) A) and B)

Question 14

A change in the expected price level is likely to cause which of the following?

Accepted Answer

A)   a shift in the short-run aggregate supply curve and long-run aggregate supply curve
B)   a shift in the short run aggregate supply curve
C)   a shift in the aggregate demand curve
D)   a shift in the long-run aggregate supply curveE) A) and C)
F) B) and C)

Question 15

Figure 20-2. 
-Refer to Figure 20-2.Point B represents

Accepted Answer

A)   a short-run equilibrium and a long-run equilibrium.
B)   a short-run equilibrium but not a long-run equilibrium.
C)   a long-run equilibrium but not a short-run equilibrium.
D)   neither a short-run equilibrium nor a long-run equilibrium.E) None of the above
F) A) and D)

Question 16

As the price level falls,

Accepted Answer

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

Question 17

Aggregate demand shifts left when the government

Accepted Answer

A)   decreases taxes.
B)   cuts military expenditures.
C)   creates a new investment tax credit
D)   None of the above is correct.E) A) and B)
F) None of the above

Question 18

Changes in what four variables will shift the long run aggregate supply curve?

Accepted Answer

Labor,capital,natura...

Question 19

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) B) and C)

Question 20

Which of the following fall during a recession?

Accepted Answer

A)   both retail sales and employment
B)   retail sales but not employment
C)   employment but not retail sales
D)   neither employment nor retail salesE) All of the above
F) B) and C)

Exam 33: Aggregate Demand and Aggregate Supply

Changes in what four variables will shift the long run aggregate supply curve?

Correct AnswerverifiedLabor,capital,natura...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A change in the expected price level is likely to cause which of the following?

Correct AnswerverifiedShow Answer

Other things the same,when the price level falls,interest rates

Correct AnswerverifiedShow Answer

Which of the following would raise the price level in both the short and long run?

Correct AnswerverifiedShow Answer

As the price level falls,

Correct AnswerverifiedShow Answer

Which of the following did the Fed do during the recession of 2008-2009?

Correct AnswerverifiedShow Answer

A relatively mild period of falling incomes and rising unemployment is called a(n)

Correct AnswerverifiedShow Answer

Which of the following fall during a recession?

Correct AnswerverifiedShow Answer

A decrease in the price level makes consumers feel wealthier,so they purchase more.This logic helps explain why the aggregate demand curve slopes downward.

Correct AnswerverifiedShow Answer

According to classical macroeconomic theory,changes in the money supply affect

Correct AnswerverifiedShow Answer

The aggregate-demand curve shows the

Correct AnswerverifiedShow Answer

Figure 20-2. -Refer to Figure 20-2.Point B represents

Correct AnswerverifiedShow Answer

Aggregate demand shifts left when the government

Correct AnswerverifiedShow Answer

When the price level falls

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

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

Correct AnswerverifiedShow Answer

An increase in the price level and a reduction in output would result from

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

Which of the following would cause stagflation?

Correct AnswerverifiedShow Answer

Correct Answer
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