Question 1

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

Accepted Answer

A)   rise, which means consumers will want to spend more on homebuilding.
B)   rise, which means consumers will want to spend less on homebuilding.
C)   fall, which means consumers will want to spend more on homebuilding.
D)   fall, which means consumers will want to spend less on homebuilding.E) B) and C)
F) A) and B)

Question 2

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) None of the above
F) A) and B)

Question 3

Figure 33-7. 
-Refer to Stock Market Boom 2015. 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) C) and D)
F) All of the above

Question 4

When output rises, unemployment falls.

Accepted Answer

A) True 
 B)False

Question 5

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   the price level rises.
B)   the price level falls.
C)   the capital stock increases.
D)   the capital stock decreases.E) A) and B)
F) B) and C)

Question 6

If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would

Accepted Answer

A)   rise, making aggregate demand shift right.
B)   rise, making aggregate demand shift left.
C)   fall, making aggregate demand shift right.
D)   fall, making aggregate demand shift left.E) A) and D)
F) All of the above

Question 7

Other things the same, if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, 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) A) and D)
F) B) and D)

Question 8

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have

Accepted Answer

A)   higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
B)   higher than desired prices, which leads to a decrease in the aggregate quantity of goods and service supplied.
C)   lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
D)   lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services suppliedE) A) and D)
F) C) and D)

Question 9

A recession with inflation is known by what term?

Accepted Answer

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

Question 10

Which of the following is correct?

Accepted Answer

A)   Economic fluctuations are easily predicted by competent economists.
B)   Recessions have never occurred very close together.
C)   Spending, income, and production do not fluctuate closely with real GDP.
D)   None of the above is correct.E) A) and B)
F) A) and D)

Question 11

Figure 33-4 
-Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy

Accepted Answer

A)   moves to A in the long run.
B)   moves to B in the long run.
C)   moves to C in the long run.
D)   stays at D in the long run.E) A) and B)
F) B) and D)

Question 12

Aggregate demand includes

Accepted Answer

A)   the quantity of goods and services the government, households, firms, and customers abroad want to buy.
B)   neither the quantity of goods and services the government, households, nor firms want to buy nor the quantity of goods and services customers abroad want to buy.
C)   the quantity of goods and service the government wants to buy, but not the quantity of goods and services households, firms, or customers abroad want to buy.
D)   the quantity of goods and services households and firms want to buy, but not the quantity of goods and services the government wants to buy.E) None of the above
F) A) and D)

Question 13

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, 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) None of the above

Question 14

Changes in the price of oil

Accepted Answer

A)   can only lead to recessions.
B)   have not contributed much to output fluctuations in the United States.
C)   change the economy principally by changing aggregate demand.
D)   created both inflation and recession in the United States in the 1970s.E) None of the above
F) A) and C)

Question 15

Other things the same, if the long-run aggregate supply curve shifts right, prices

Accepted Answer

A)   and output both increase.
B)   and output both decrease.
C)   increase and output decreases.
D)   decrease and output increases.E) C) and D)
F) A) and B)

Question 16

Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

Accepted Answer

The price level woul...

Question 17

If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports

Accepted Answer

A)   increase which shifts aggregate demand right.
B)   increase which shifts aggregate demand left.
C)   decrease which shifts aggregate demand right.
D)   decrease which shifts aggregate demand left.E) A) and C)
F) All of the above

Question 18

Figure 33-4 
-Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

Accepted Answer

A)   back to A in the long run.
B)   to B in the long run.
C)   to C in the long run.
D)   to D in the long run.E) B) and C)
F) B) and D)

Question 19

Which of the following is not correct?

Accepted Answer

A)   The model of aggregate demand and aggregate supply is used by most economists to analyze short-run fluctuations.
B)   During a recession firms cut back production and workers are laid off.
C)   A recession is a period of declining real incomes and declining unemployment.
D)   A depression is a severe recession.E) B) and D)
F) B) and C)

Question 20

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

Accepted Answer

A)   a fall in stock prices.
B)   a decrease in the supply of an important resource.
C)   an increase in government expenditures.
D)   an increase in taxes.E) None of the above
F) A) and B)

Exam 20: Aggregate Demand and Aggregate Supply

If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports

Correct AnswerverifiedShow Answer

Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy

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If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would

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Which of the following is not correct?

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The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have

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The long-run aggregate supply curve shifts right if

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

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A recession with inflation is known by what term?

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Figure 33-7. -Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

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When output rises, unemployment falls.

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Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

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Which of the following is correct?

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When the price level falls

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

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Other things the same, if the long-run aggregate supply curve shifts right, prices

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Changes in the price of oil

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Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

Correct AnswerverifiedThe price level woul...View AnswerShow Answer

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then in the short run

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Other things the same, if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, then

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Aggregate demand includes

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The price level woul...
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