Question 1

In the long-run, an increase in aggregate demand increases the price level, but not real GDP.

Accepted Answer

A) True 
 B)False

Question 2

Investment is

Accepted Answer

A)  a small part of real GDP, so it accounts for a small share of the fluctuation in real GDP.
B)  a small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP.
C)  a large part of real GDP, so it accounts for a large share of the fluctuation in real GDP.
D)  a large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP.E) All of the above
F) A) and B)

Question 3

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, production is

Accepted Answer

A)  more profitable and employment and output rises.
B)  more profitable and employment and output falls.
C)  less profitable and employment and output rises.
D)  less profitable and employment and output falls.E) A) and C)
F) A) and B)

Question 4

Using the aggregate demand and aggregate supply model, an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

Accepted Answer

The answer of Using the aggregate demand and aggregate supply...

Question 5

In countries that have high minimum wages and require a lengthy and costly process to get permission to open a business,

Accepted Answer

A)  reducing either the minimum wage or the time and cost to open a business would have no effect on the long-run aggregate supply curve.
B)  reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right.
C)  reducing the minimum wage would shift long-run aggregate supply to the right.Reducing the time and cost to open a business would have no affect on the long-run aggregate supply curve.
D)  reducing the minimum wage would have no affect on the long-run aggregate supply curve.Reducing the time and cost to open a business would shift the long-run aggregate supply curve to the right.E) A) and D)
F) All of the above

Question 6

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.

Accepted Answer

A) True 
 B)False

Question 7

An increase in the expected price level shifts

Accepted Answer

A)  both the short-run and long-run aggregate supply curves to the left.
B)  the short-run aggregate supply curve to the left but does not affect the long-run aggregate supply curve.
C)  the long-run aggregate supply curve to the left but does not affect the short-run aggregate supply curve.
D)  neither the long-run aggregate supply curve nor the short-run aggregate supply curve to the left.E) A) and D)
F) All of the above

Question 8

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Accepted Answer

A) True 
 B)False

Question 9

The recession of 2008-2009 was in many ways the worst macroeconomic event in more than half a century.

Accepted Answer

A) True 
 B)False

Question 10

Other things the same, if the U.S. price level falls, then U.S. residents want to buy

Accepted Answer

A)  more foreign bonds.The real exchange rate rises.
B)  more foreign bonds.The real exchange rate falls.
C)  fewer foreign bonds.The real exchange rate rises.
D)  fewer foreign bonds.The real exchange rate falls.E) B) and C)
F) A) and B)

Question 11

Aggregate demand shifts to the left if the money supply increases.

Accepted Answer

A) True 
 B)False

Question 12

The theory of short-run economic fluctuations is uncontroversial.​

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

The price ...

Question 14

The price level rises in the short run if

Accepted Answer

A)  aggregate demand or aggregate supply shifts left.
B)  aggregate demand shifts right or aggregate supply shifts left.
C)  aggregate demand shifts left or aggregate supply shifts right.
D)  aggregate demand or aggregate supply shifts right.E) C) and D)
F) B) and C)

Question 15

A decrease in what variable will raise the quantity of goods and services supplied, and shift only the short run aggregate supply curve to the right?

Accepted Answer

The expect...

Question 16

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption, investm...

Question 17

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

Accepted Answer

A) True 
 B)False

Question 18

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Accepted Answer

A) True 
 B)False

Question 19

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Accepted Answer

A) True 
 B)False

Question 20

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...

Exam 33: Aggregate Demand and Aggregate Supply

Make a list of expenditures whose sum equals GDP.

Correct Answerverifiedconsumption, investm...View AnswerShow Answer

The theory of short-run economic fluctuations is uncontroversial.​

Correct AnswerverifiedShow Answer

Other things the same, if the U.S. price level falls, then U.S. residents want to buy

Correct AnswerverifiedShow Answer

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Correct AnswerverifiedShow Answer

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

Correct AnswerverifiedShow Answer

Aggregate demand shifts to the left if the money supply increases.

Correct AnswerverifiedShow Answer

An increase in the expected price level shifts

Correct AnswerverifiedShow Answer

Using the aggregate demand and aggregate supply model, an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

Correct AnswerverifiedShow Answer

The price level rises in the short run if

Correct AnswerverifiedShow Answer

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Correct AnswerverifiedShow Answer

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Correct AnswerverifiedShow Answer

The recession of 2008-2009 was in many ways the worst macroeconomic event in more than half a century.

Correct AnswerverifiedShow Answer

In countries that have high minimum wages and require a lengthy and costly process to get permission to open a business,

Correct AnswerverifiedShow Answer

In the long-run, an increase in aggregate demand increases the price level, but not real GDP.

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

Investment is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe price ...View AnswerShow Answer

A decrease in what variable will raise the quantity of goods and services supplied, and shift only the short run aggregate supply curve to the right?

Correct AnswerverifiedThe expect...View AnswerShow Answer

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.

Correct AnswerverifiedShow Answer

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, production is

Correct AnswerverifiedShow Answer

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consumption, investm...
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The theory of short-run economic fluctuations is uncontroversial.

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There are occasional short-lived periods...
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The price ...
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The expect...
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