Question 1

The aggregate supply curve is upward sloping in

Accepted Answer

A)  the short and long run.
B)  neither the short nor long run.
C)  the long run, but not the short run.
D)  the short run, but not the long run.E) B) and C)
F) A) and D)

Question 2

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) All of the above
F) B) and C)

Question 3

Other things the same, an increase in the amount of capital firms wish to purchase would initially shift

Accepted Answer

A)  aggregate demand right.
B)  aggregate demand left.
C)  aggregate supply right.
D)  aggregate supply left.E) None of the above
F) A) and D)

Question 4

Which of the following shifts aggregate demand right?

Accepted Answer

A)  both a decrease in the price level and the implementation of an investment tax credit
B)  a decrease in the price level but not the implementation of an investment tax credit
C)  the implementation of an investment tax credit but not a decrease in the price level
D)  neither a decrease in the price level nor the implementation of an investment tax creditE) A) and D)
F) None of the above

Question 5

Refer to Pessimism. What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

A)  The expected price level rises. Bargains are struck for higher wages.
B)  The expected price level rises. Bargains are struck for lower wages.
C)  The expected price level falls. Bargains are struck for higher wages.
D)  The expected price level falls. Bargains are struck for lower wages.E) C) and D)
F) B) and C)

Question 6

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 7

Figure 33-16. 
-Refer to Figure 33-16. Suppose the economy starts at P3 and Y2. If there is a decrease in government purchases, identify the price and output levels that the economy would move to in the short run.

Accepted Answer

Question 8

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

Question 9

Economic variables we are most interested in are

Accepted Answer

A)  real variables, but we usually observe nominal variables.
B)  nominal variables, but we usually observe real variables.
C)  real variables, which we usually observe.
D)  nominal variables, which we usually observe.E) A) and B)
F) A) and C)

Question 10

People will buy more if the price level

Accepted Answer

A)  rises because rising prices increase the real value of a dollar.
B)  rises because rising prices decrease the real value of a dollar.
C)  falls because falling prices increase the real value of a dollar.
D)  falls because falling prices decrease the real value of a dollar.E) B) and C)
F) A) and D)

Question 11

When taxes decrease, 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) None of the above
F) A) and D)

Question 12

Real GDP

Accepted Answer

A)  moves in the opposite direction as unemployment.
B)  increases as production falls.
C)  falls when households save a smaller fraction of their income.
D)  All of the above are correct.E) All of the above
F) A) and D)

Question 13

Figure 33-8. 3 and Y3 , then it must be the case that A) short run aggregate supply has decreased. B) short run aggregate supply has increased. C) aggregate demand has increased. D) aggregate demand has decreased." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 33-8. Suppose the economy starts at Z. If changes occur that move the economy to a new short run equilibrium of P3 and Y3 , then it must be the case that

Accepted Answer

A)  short run aggregate supply has decreased.
B)  short run aggregate supply has increased.
C)  aggregate demand has increased.
D)  aggregate demand has decreased.E) C) and D)
F) B) and D)

Question 14

During the 2008-2009 recession real GDP fell by about

Accepted Answer

A)  2%
B)  4%
C)  6%
D)  8%E) C) and D)
F) A) and C)

Question 15

When the price level falls

Accepted Answer

A)  households want to lend more, so the interest rate rises making the quantity of goods and services demanded rise.
B)  households want to lend more, so the interest rate falls, making the quantity of goods and services demanded rise.
C)  households want to lend more, so the interest rate rises, making the quantity of goods and services demanded fall.
D)  None of the above are correct.E) C) and D)
F) A) and B)

Question 16

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

Accepted Answer

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

Question 17

Refer to Optimism. Which curve shifts and in which direction?

Accepted Answer

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

Question 18

Other things the same, as the price level falls,

Accepted Answer

A)  the money supply falls.
B)  interest rates rise.
C)  a dollar buys more domestic goods.
D)  the aggregate-demand curve shifts right.E) A) and C)
F) A) and D)

Question 19

If speculators gained greater confidence in foreign economies so that they wanted to buy more assets of foreign countries and fewer U.S. bonds,

Accepted Answer

A)  the dollar would appreciate which would cause aggregate demand to shift right.
B)  the dollar would appreciate which would cause aggregate demand to shift left.
C)  the dollar would depreciate which would cause aggregate demand to shift right.
D)  the dollar would depreciate which would cause aggregate demand to shift left.E) All of the above
F) C) and D)

Question 20

Other things the same, as the price level rises, the real value of money

Accepted Answer

A)  and the exchange rate rise.
B)  and the exchange rate fall.
C)  rises and the exchange rate falls.
D)  falls and the exchange rate rises.E) C) and D)
F) A) and D)

Exam 33: Aggregate Demand and Aggregate Supply

The aggregate supply curve is upward sloping in

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Figure 33-8. -Refer to Figure 33-8. Suppose the economy starts at Z. If changes occur that move the economy to a new short run equilibrium of P3 and Y3 , then it must be the case that

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Other things the same, an increase in the amount of capital firms wish to purchase would initially shift

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Which of the following shifts aggregate demand right?

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Refer to Pessimism. What happens to the expected price level and what's the result for wage bargaining?

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Economic variables we are most interested in are

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When the price level falls

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Which of the following is not correct?

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When taxes decrease, consumption

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During the 2008-2009 recession real GDP fell by about

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Refer to Optimism. Which curve shifts and in which direction?

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Other things the same, as the price level falls,

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People will buy more if the price level

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From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

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Figure 33-16. -Refer to Figure 33-16. Suppose the economy starts at P3 and Y2. If there is a decrease in government purchases, identify the price and output levels that the economy would move to in the short run.

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If speculators gained greater confidence in foreign economies so that they wanted to buy more assets of foreign countries and fewer U.S. bonds,

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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

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,

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Other things the same, as the price level rises, the real value of money

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Real GDP

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Figure 33-8. -Refer to Figure 33-8. Suppose the economy starts at Z. If changes occur that move the economy to a new short run equilibrium of P₃ and Y₃ , then it must be the case that

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Figure 33-16. -Refer to Figure 33-16. Suppose the economy starts at P₃ and Y₂. If there is a decrease in government purchases, identify the price and output levels that the economy would move to in the short run.

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The price ...
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