Question 1

The investment component of GDP measures spending on

Accepted Answer

A)   financial assets such as stocks and bonds. During recessions it declines by a relatively large amount
B)   residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively large amount
C)   financial assets such as stocks and bonds. During recessions it declines by a relatively small amount.
D)   residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively large amount.E) A) and B)
F) C) and D)

Question 2

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

Question 3

Other things the same, as the price level rises, exchange rates

Accepted Answer

A)   and interest rates rise.
B)   and interest rates fall.
C)   fall and interest rates rise.
D)   rise and interest rates fall.E) A) and D)
F) A) and C)

Question 4

Figure 15-1
 
-Refer to Figure 15-1. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Accepted Answer

A)   A to B.
B)   C to D.
C)   B to A.
D)   D to C.E) A) and B)
F) C) and D)

Question 5

A decrease in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A)   right, and an increase in the actual price level shifts short-run aggregate supply to the right.
B)   right, and an increase in the actual price level does not shift short-run aggregate supply.
C)   left, and an increase in the actual price level shifts short-run aggregate supply to the left.
D)   left, and an increase in the actual price level does not shift short-run aggregate supply.E) A) and B)
F) C) and D)

Question 6

A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. reduce immigration from abroad 2. make trade more open between the US and other countries:

Accepted Answer

A)   1 and 2 both shift long-run aggregate supply right.
B)   1 and 2 both shift long-run aggregate supply left.
C)   1 shifts long-run aggregate supply right, 2 shifts long-run aggregate supply left.
D)   1 shifts long-run aggregate supply left, 2 shifts long-run aggregate supply right.E) C) and D)
F) B) and D)

Question 7

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

Accepted Answer

A)   an increase in price expectations
B)   an increase in the actual price level
C)   a decrease in the money supply
D)   a decrease in the price of oilE) A) and D)
F) A) and B)

Question 8

Aggregate demand shifts right if at a given price level

Accepted Answer

A)   net exports rise and shifts left if the money supply increases.
B)   net exports rise and shifts right if the money supply increases.
C)   net exports fall and shifts left if the money supply increases.
D)   net exports fall and shifts right if the money supply increases.E) A) and B)
F) All of the above

Question 9

When taxes increase, consumption

Accepted Answer

A)   decreases as shown by a movement to the left along a given aggregate-demand curve.
B)   decreases as shown by a shift of the aggregate demand curve to the left.
C)   increases as shown by a movement to the right along a given aggregate-demand curve.
D)   increases as shown by a shift of the aggregate demand curve to the right.E) A) and C)
F) A) and B)

Question 10

Suppose that the economy is at long-run equilibrium. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers, then in the short run

Accepted Answer

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

Question 11

Technological progress shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 12

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

Accepted Answer

A) True 
 B)False

Question 13

An increase in the money supply causes output to rise in the long run.

Accepted Answer

A) True 
 B)False

Question 14

The effect of an increase in the price level on the aggregate-demand curve is represented by a

Accepted Answer

A)   shift to the right of the aggregate-demand curve.
B)   shift to the left of the aggregate-demand curve.
C)   movement to the left along a given aggregate-demand curve.
D)   movement to the right along a given aggregate-demand curve.E) A) and B)
F) A) and C)

Question 15

As the price level rises, the interest rate

Accepted Answer

A)   falls, so the supply of dollars in the market for foreign currency exchange shifts left.
B)   falls, so the supply of dollars in the market for foreign currency exchange shifts right.
C)   rises, so the supply of dollars in the market for foreign currency exchange shifts left.
D)   rises, so the supply of dollars in the market for foreign currency exchange shifts right.E) A) and C)
F) B) and C)

Question 16

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

Question 17

Other things the same, the aggregate quantity of goods demanded decreases if

Accepted Answer

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

Question 18

The effect of a change in the value of the dollar in the foreign exchange market due to a change in the price level helps explain the slope of aggregate demand, but does not shift it. The effects of a change in the value of the dollar in the foreign exchange market due to speculation is shown by shifting the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 19

What do most economists believe concerning the relation between the price level and real output?

Accepted Answer

Most economists believe that in the long...

Question 20

In 1986, OPEC countries increased their production of oil. This caused

Accepted Answer

A)   the price level to rise.
B)   aggregate supply to shift right.
C)   unemployment to rise.
D)   None of the above is correct.E) A) and B)
F) B) and D)

Exam 15: Aggregate Demand and Aggregate Supply

Other things the same, as the price level rises, exchange rates

Correct Answer
verified

An increase in the money supply causes output to rise in the long run.

Correct Answer
verified

If aggregate demand shifts right then in the short run

Correct Answer
verified

Figure 15-1 -Refer to Figure 15-1. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Correct Answer
verified

Other things the same, the aggregate quantity of goods demanded decreases if

Correct Answer
verified

In 1986, OPEC countries increased their production of oil. This caused

Correct Answer
verified

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

Correct Answer
verified

What do most economists believe concerning the relation between the price level and real output?

Correct Answer
verified
Most economists believe that in the long...
View Answer

Aggregate demand shifts right if at a given price level

Correct Answer
verified

As the price level rises, the interest rate

Correct Answer
verified

A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. reduce immigration from abroad 2. make trade more open between the US and other countries:

Correct Answer
verified

When taxes increase, consumption

Correct Answer
verified

The investment component of GDP measures spending on

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Technological progress shifts the long-run aggregate supply curve to the right.

Correct Answer
verified

A decrease in the expected price level shifts short-run aggregate supply to the

Correct Answer
verified

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

Correct Answer
verified

The effect of an increase in the price level on the aggregate-demand curve is represented by a

Correct Answer
verified

Suppose that the economy is at long-run equilibrium. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers, then in the short run

Correct Answer
verified

Exam 15: Aggregate Demand and Aggregate Supply

Other things the same, as the price level rises, exchange rates

Correct AnswerverifiedShow Answer

An increase in the money supply causes output to rise in the long run.

Correct AnswerverifiedShow Answer

If aggregate demand shifts right then in the short run

Correct AnswerverifiedShow Answer

Figure 15-1 -Refer to Figure 15-1. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Correct AnswerverifiedShow Answer

Other things the same, the aggregate quantity of goods demanded decreases if

Correct AnswerverifiedShow Answer

In 1986, OPEC countries increased their production of oil. This caused

Correct AnswerverifiedShow Answer

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

Correct AnswerverifiedShow Answer

What do most economists believe concerning the relation between the price level and real output?

Correct AnswerverifiedMost economists believe that in the long...View AnswerShow Answer

Aggregate demand shifts right if at a given price level

Correct AnswerverifiedShow Answer

As the price level rises, the interest rate

Correct AnswerverifiedShow Answer

A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. reduce immigration from abroad 2. make trade more open between the US and other countries:

Correct AnswerverifiedShow Answer

When taxes increase, consumption

Correct AnswerverifiedShow Answer

The investment component of GDP measures spending on

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Technological progress shifts the long-run aggregate supply curve to the right.

Correct AnswerverifiedShow Answer

A decrease in the expected price level shifts short-run aggregate supply to the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The effect of an increase in the price level on the aggregate-demand curve is represented by a

Correct AnswerverifiedShow Answer

Suppose that the economy is at long-run equilibrium. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers, then in the short run

Correct AnswerverifiedShow Answer

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Most economists believe that in the long...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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