Question 1

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

Accepted Answer

A)   an increase in the actual price level
B)   an increase in the expected price level
C)   an increase in the capital stock
D)   None of the above is correct.E) A) and B)
F) All of the above

Question 2

According to classical macroeconomic theory, changes in the money supply affect

Accepted Answer

A)   real GDP and the price level.
B)   real GDP but not the price level.
C)   the price level, but not real GDP.
D)   neither the price level nor real GDP.E) B) and C)
F) All of the above

Question 3

Because economists understand what things change GDP, they can predict recessions with a fair amount of accuracy.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not included in aggregate demand?

Accepted Answer

A)   purchases of stock and bonds
B)   purchases of services such as visits to the doctor
C)   purchases of capital goods such as equipment in a factory
D)   purchases by foreigners of consumer goods produced in the United StatesE) B) and D)
F) None of the above

Question 5

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

Question 6

Increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 7

An increase 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) None of the above
F) B) and C)

Question 8

What curve shows the quantity of goods and services that firms choose to produce and sell at each price level?

Accepted Answer

The aggreg...

Question 9

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

Question 10

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would shift the long-run aggregate supply curve right?

Accepted Answer

A)   both an increase in the capital stock and an increase in the price level
B)   an increase in the capital stock, but not an increase in the price level
C)   an increase in the money supply, but not an increase in the capital stock
D)   neither an increase in the money supply nor an increase in the capital stockE) All of the above
F) A) and B)

Question 12

If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign currencies of other countries, but foreigners do not desire to increase their holdings of U.S. dollars, then U.S. net exports would

Accepted Answer

A)   rise and aggregate demand would shift left.
B)   rise and aggregate demand would shift right.
C)   fall and aggregate demand would shift left.
D)   fall and aggregate demand would shift right.E) None of the above
F) All of the above

Question 13

Historical evidence for the U.S. economy indicates that

Accepted Answer

A)   recessions have occurred roughly once every six years since the 1960s.
B)   the unemployment rate usually decreases during a recession and increases shortly after the recession ends.
C)   real GDP usually remains roughly constant during a recession and decreases shortly after the recession ends.
D)   changes in real GDP over the business cycle are largely attributable to changes in investment over the business cycle.E) A) and C)
F) A) and B)

Question 14

Suppose a nation experiences increased immigration from abroad. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run and lo...

Question 15

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

Question 16

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) A) and C)

Question 17

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Accepted Answer

A)   It refused to provide banks funding and made no significant changes in government spending.
B)   It refused to provide banks funding but made a large increase in government spending.
C)   It became part owner of some banks but made no significant change in government spending
D)   It became part owner of some banks and made a large increase in government spending.E) A) and B)
F) C) and D)

Question 18

Which of the following would increase the price level?

Accepted Answer

A)   an increase in the money supply.
B)   an increase in taxes.
C)   a decrease in the expected price level.
D)   a decrease in the natural rate of unemployment.E) C) and D)
F) B) and D)

Question 19

Suppose the economy is in long-run equilibrium. If there is an increase in the supply of labor as well as an increase in the money supply, then we would expect that 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) B) and C)
F) A) and B)

Question 20

During recessions

Accepted Answer

A)   sales and profits fall.
B)   sales and profits rise.
C)   sales rise, profits fall.
D)   profits fall, sales rise.E) B) and D)
F) A) and C)

Exam 33: Aggregate Demand and Aggregate Supply

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

Correct AnswerverifiedShow Answer

Which of the following would increase the price level?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign currencies of other countries, but foreigners do not desire to increase their holdings of U.S. dollars, then U.S. net exports would

Correct AnswerverifiedShow Answer

Which of the following would shift the long-run aggregate supply curve right?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

What curve shows the quantity of goods and services that firms choose to produce and sell at each price level?

Correct AnswerverifiedThe aggreg...View AnswerShow Answer

Which of the following is not included in aggregate demand?

Correct AnswerverifiedShow Answer

An increase in the expected price level shifts short-run aggregate supply to the

Correct AnswerverifiedShow Answer

Because economists understand what things change GDP, they can predict recessions with a fair amount of accuracy.

Correct AnswerverifiedShow Answer

According to classical macroeconomic theory, changes in the money supply affect

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Correct AnswerverifiedShow Answer

Historical evidence for the U.S. economy indicates that

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium. If there is an increase in the supply of labor as well as an increase in the money supply, then we would expect that in the short-run,

Correct AnswerverifiedShow Answer

Increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Correct AnswerverifiedShow Answer

Suppose a nation experiences increased immigration from abroad. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Correct AnswerverifiedThe short run and lo...View AnswerShow Answer

During recessions

Correct AnswerverifiedShow Answer

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The aggreg...
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The short run and lo...
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