Question 1

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

Question 2

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

Question 3

Other things the same,what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Accepted Answer

The price ...

Question 4

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

Accepted Answer

A)   consumer wealth rises
B)   borrowing rises
C)   each dollar is worth more domestic goods
D)   the dollar appreciates relative to other currenciesE) B) and D)
F) None of the above

Question 5

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.This can be explained

Accepted Answer

A)   only by technological progress.
B)   only by money supply growth.
C)   by technological progress and money supply growth.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 6

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

Accepted Answer

A)   increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases.
B)   increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases.
C)   decrease foreign bond purchases,so the supply of dollars in market for foreign-currency exchange increases.
D)   decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases.E) A) and B)
F) B) and D)

Question 7

Other things the same,what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

Accepted Answer

The price level decr...

Question 8

A decrease in the money supply causes the interest rate to rise so that investment falls.

Accepted Answer

A) True 
 B)False

Question 9

Other things the same,if the price level is lower than expected,then some firms believe that the relative price of what they produce has

Accepted Answer

A)   decreased,so they increase production.
B)   decreased,so they decrease production.
C)   increased,so they increase production.
D)   increased,so they decrease production.E) B) and D)
F) C) and D)

Question 10

During the 2008-2009 recession real GDP fell by about

Accepted Answer

A)   2%
B)   4%
C)   6%
D)   8%E) All of the above
F) B) and D)

Question 11

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 12

In the first few years of the Great Depression,unemployment rose to about

Accepted Answer

A)   10 percent,and prices rose about 14 percent.
B)   15 percent,and prices rose about 22 percent.
C)   20 percent,and prices fell about 14 percent.
D)   25 percent,and prices fell about 22 percent.E) None of the above
F) A) and B)

Question 13

As the price level rises,

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

Question 14

People will buy more if the price level

Accepted Answer

A)   rises because rising prices increase the real value of a dollar.
B)   rises because rising prices decrease the real value of a dollar.
C)   falls because falling prices increase the real value of a dollar.
D)   falls because falling prices decrease the real value of a dollar.E) A) and B)
F) A) and C)

Question 15

Other things the same,if workers and firms expected inflation to be 2%,but it is only 1% then

Accepted Answer

A)   employment and production rise.
B)   employment rises and production falls.
C)   employment falls and production rises.
D)   employment and production fall.E) None of the above
F) C) and D)

Question 16

If aggregate demand shifts right then in the short run

Accepted Answer

A)   firms will increase production.In the long run increased price expectations shift the short-run aggregate supply curve to the right.
B)   firms will increase production.In the long run increased price expectations shift the short-run aggregate supply curve to the left.
C)   firms will decrease production.In the long run increased price expectations shift the short-run aggregate supply curve to the right.
D)   firms will decrease production.In the long run increased price expectations shift the short-run aggregate supply curve to the left.E) All of the above
F) A) and B)

Question 17

Other things the same,a fall in an economy's overall level of prices tends to

Accepted Answer

A)   raise both the quantity demanded and supplied of goods and services.
B)   raise the quantity demanded of goods and services,but lower the quantity supplied.
C)   lower the quantity demanded of goods and services,but raise the quantity supplied.
D)   lower both the quantity demanded and the quantity supplied of goods and services.E) All of the above
F) A) and B)

Question 18

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 C)
F) None of the above

Question 19

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 C)
F) C) and D)

Question 20

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

Accepted Answer

A)   a decrease in the actual price level
B)   a decrease in the expected price level
C)   a decrease in the capital stock
D)   a decrease in the money supplyE) None of the above
F) B) and D)

Exam 33: Aggregate Demand and Aggregate Supply

In the first few years of the Great Depression,unemployment rose to about

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If aggregate demand shifts right then in the short run

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

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People will buy more if the price level

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Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.This can be explained

Correct AnswerverifiedShow Answer

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

Correct AnswerverifiedShow Answer

A decrease in the money supply causes the interest rate to rise so that investment falls.

Correct AnswerverifiedShow Answer

Other things the same,what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Correct AnswerverifiedThe price ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Other things the same,what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

Correct AnswerverifiedThe price level decr...View AnswerShow Answer

A change in the money supply changes only nominal variables in the long run.

Correct AnswerverifiedShow Answer

Other things the same,if workers and firms expected inflation to be 2%,but it is only 1% then

Correct AnswerverifiedShow Answer

During the 2008-2009 recession real GDP fell by about

Correct AnswerverifiedShow Answer

Other things the same,if the price level is lower than expected,then some firms believe that the relative price of what they produce has

Correct AnswerverifiedShow Answer

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

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An increase in the interest rate causes investment to

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

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

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As the price level rises,

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Other things the same,a fall in an economy's overall level of prices tends to

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The price ...
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The price level decr...
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