Question 1

Make a list of things that would shift the long-run aggregate supply curve to the right.

Accepted Answer

Examples in the text (or variations) inc...

Question 2

Other things the same, an increase in the price level causes the interest rate to

Accepted Answer

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

Question 3

If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Accepted Answer

A) True 
 B)False

Question 4

In order to understand how the economy works in the short run, we need to

Accepted Answer

A)  study the classical model.
B)  study a model in which real and nominal variables interact.
C)  understand that "money is a veil."
D)  understand that money is neutral in the short run.E) A) and C)
F) B) and C)

Question 5

Refer to Optimism. 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) None of the above
F) A) and C)

Question 6

Figure 33-14. 
-Refer to Figure 33-14. Identify which long run aggregate-supply curve(s) would be consistent with long-run equilibrium.

Accepted Answer

The answer of Figure 33-14. 
-Refer to Figure 33-14. Identify...

Question 7

Refer to Stock Market Boom 2015. How is the new long-run equilibrium different from the original one?

Accepted Answer

A)  the price level and real GDP are higher
B)  the price level and real GDP are lower.
C)  the price level is higher and real GDP is the same.
D)  the price level is the same and real GDP is higher.E) B) and D)
F) All of the above

Question 8

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at

Accepted Answer

A)  A and moved to B.
B)  C and moved to B.
C)  D and moved to C.
D)  None of the above is correct.E) None of the above
F) All of the above

Question 9

Explain how a change in the expected price level would shift the short-run and long-run aggregate-supply curves.

Accepted Answer

Expected price level changes w...

Question 10

The long-run aggregate supply curve

Accepted Answer

A)  is vertical.
B)  is a graphical representation of the classical dichotomy.
C)  indicates monetary neutrality in the long run.
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 11

In the aggregate demand and aggregate supply model, the point where the aggregate demand curve crosses the long run aggregate supply curve, and the expected price level equals the actual price level, is known as what?

Accepted Answer

Long run e...

Question 12

​Other things the same, an increase in the price level induces less spending on

Accepted Answer

A)  ​household consumption and investment.
B)  ​household consumption, but not investment.
C)  ​investment, but not household consumption.
D)  ​neither investment nor household consumption.E) A) and B)
F) B) and D)

Question 13

Other things the same, as the price level decreases it induces greater spending on

Accepted Answer

A)  both net exports and investment.
B)  net exports but not investment.
C)  investment but not net exports.
D)  neither net exports nor investment.E) C) and D)
F) A) and B)

Question 14

The sticky-price theory implies that

Accepted Answer

A)  the short-run aggregate-supply curve is upward-sloping.
B)  an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce.
C)  menu costs influence the speed of adjustment of prices.
D)  All of the above are correct.E) All of the above
F) B) and C)

Question 15

A recession with inflation is know by what term?

Accepted Answer

The answer of A recession with inflation is know by...

Question 16

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 17

The only way to rationalize an upward slope for the short-run aggregate-supply curve is to argue that wages are sticky in the short run.

Accepted Answer

A) True 
 B)False

Question 18

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 D)
F) None of the above

Question 19

Keynes explained that recessions and depressions occur because of

Accepted Answer

A)  excess aggregate demand.
B)  inadequate aggregate demand.
C)  excess aggregate supply.
D)  inadequate aggregate supply.E) A) and B)
F) All of the above

Question 20

If the government repeals an investment tax credit and increases income taxes,

Accepted Answer

A)  real GDP rises, and the price level could rise, fall, or stay the same.
B)  real GDP falls, and the price level could rise, fall, or stay the same.
C)  real GDP and the price level rise.
D)  real GDP and the price level fall.E) A) and D)
F) B) and C)

Exam 33: Aggregate Demand and Aggregate Supply

A recession with inflation is know by what term?

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If the government repeals an investment tax credit and increases income taxes,

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Keynes explained that recessions and depressions occur because of

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Figure 33-14. -Refer to Figure 33-14. Identify which long run aggregate-supply curve(s) would be consistent with long-run equilibrium.

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Other things the same, as the price level decreases it induces greater spending on

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The sticky-price theory implies that

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Other things the same, an increase in the price level causes the interest rate to

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Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at

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The long-run aggregate supply curve

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Explain how a change in the expected price level would shift the short-run and long-run aggregate-supply curves.

Correct AnswerverifiedExpected price level changes w...View AnswerShow Answer

​Other things the same, an increase in the price level induces less spending on

Correct AnswerverifiedShow Answer

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to Stock Market Boom 2015. How is the new long-run equilibrium different from the original one?

Correct AnswerverifiedShow Answer

Refer to Optimism. In the short run what happens to the price level and real GDP?

Correct AnswerverifiedShow Answer

In order to understand how the economy works in the short run, we need to

Correct AnswerverifiedShow Answer

In the aggregate demand and aggregate supply model, the point where the aggregate demand curve crosses the long run aggregate supply curve, and the expected price level equals the actual price level, is known as what?

Correct AnswerverifiedLong run e...View AnswerShow Answer

The only way to rationalize an upward slope for the short-run aggregate-supply curve is to argue that wages are sticky in the short run.

Correct AnswerverifiedShow Answer

If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Correct AnswerverifiedShow Answer

Make a list of things that would shift the long-run aggregate supply curve to the right.

Correct AnswerverifiedExamples in the text (or variations) inc...View AnswerShow Answer

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Expected price level changes w...
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Other things the same, an increase in the price level induces less spending on

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Long run e...
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Examples in the text (or variations) inc...
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