Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Other things the same,a decrease in the price level induces people to hold

Accepted Answer

A)  less money, so they lend less, and the interest rate rises.
B)  less money, so they lend more, and the interest rate falls.
C)  more money, so they lend more, and the interest rate rises.
D)  more money, so they lend less, and the interest rate falls.E) C) and D)
F) B) and D)

Question 3

Real and nominal variables are highly intertwined,and changes in the money supply change real GDP.Most economists would agree that this statement accurately describes

Accepted Answer

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

Question 4

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Accepted Answer

A) True 
 B)False

Question 5

On average over the past 50 years,the U.S.economy has grown at the rate of about

Accepted Answer

A)  1 percent per year.
B)  3 percent per year.
C)  4 percent per year.
D)  6 percent per year.E) B) and C)
F) C) and D)

Question 6

Changes in the price level affect which components of aggregate demand?

Accepted Answer

A)  only consumption and investment
B)  only consumption and net exports
C)  only investment
D)  consumption, investment, and net exportsE) A) and B)
F) A) and C)

Question 7

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level) ,where a is a positive number,represents

Accepted Answer

A)  an upward-sloping, short-run aggregate supply curve.
B)  a vertical, long-run supply curve.
C)  a downward-sloping aggregate demand curve.
D)  None of the above is correct.E) None of the above
F) A) and C)

Question 8

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

Question 9

If people want to save more for retirement

Accepted Answer

A)  or if the government raises taxes, aggregate demand shifts right.
B)  or if the government raises taxes, aggregate demand shifts left.
C)  aggregate demand shifts right.If the government raises taxes, aggregate demand shifts left.
D)  aggregate demand shifts left.If the government raises taxes, aggregate demand shifts right.E) C) and D)
F) All of the above

Question 10

When the money supply increases

Accepted Answer

A)  interest rates fall and so aggregate demand shifts right.
B)  interest rates fall and so aggregate demand shifts left.
C)  interest rates rise and so aggregate demand shifts right.
D)  interest rates rise and so aggregate demand shifts left.E) B) and D)
F) All of the above

Question 11

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers people become pessimistic regarding the future and retain that level of pessimism for some time.
-Refer to Pessimism.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 12

If the government increased the money supply in response to a decrease in short-run aggregate supply,unemployment would return towards its natural rate,but prices would rise even more.

Accepted Answer

A) True 
 B)False

Question 13

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

Accepted Answer

A)  the price level, real output.
B)  real output, employment.
C)  employment, the inflation rate.
D)  the value of money, the price level.E) A) and B)
F) None of the above

Question 14

The quantity of money has no real impact on things people really care about like whether or not they have a job.Most economists would agree that this statement is appropriate concerning

Accepted Answer

A)  both the short run and the long run.
B)  the short run, but not the long run.
C)  the long run, but not the short run.
D)  neither the long run nor the short run.E) A) and B)
F) None of the above

Question 15

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 16

Consider the exhibit below for the following questions.
Figure 33-1
 
-Refer to Figure 33-1.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 D)
F) A) and C)

Question 17

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 18

When taxes decrease,consumption

Accepted Answer

A)  increases, so aggregate demand shifts right.
B)  increases, so aggregate supply shifts right.
C)  decreases, so aggregate demand shifts left.
D)  decreases, so aggregate supply shifts left.E) B) and C)
F) A) and D)

Question 19

Some countries 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 C)
F) B) and C)

Question 20

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) A) and B)

Exam 33: Aggregate Demand and Aggregate Supply

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

Correct Answer
verified

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level) ,where a is a positive number,represents

Correct Answer
verified

When the money supply increases

Correct Answer
verified

If people want to save more for retirement

Correct Answer
verified

On average over the past 50 years,the U.S.economy has grown at the rate of about

Correct Answer
verified

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

Correct Answer
verified

When taxes decrease,consumption

Correct Answer
verified

Other things the same,a decrease in the price level induces people to hold

Correct Answer
verified

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Correct Answer
verified

Real and nominal variables are highly intertwined,and changes in the money supply change real GDP.Most economists would agree that this statement accurately describes

Correct Answer
verified

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy starts at A and moves to D in the short run,the economy

Correct Answer
verified

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Correct Answer
verified

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 Answer
verified

The quantity of money has no real impact on things people really care about like whether or not they have a job.Most economists would agree that this statement is appropriate concerning

Correct Answer
verified

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

Correct Answer
verified

Changes in the price level affect which components of aggregate demand?

Correct Answer
verified

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

If the government increased the money supply in response to a decrease in short-run aggregate supply,unemployment would return towards its natural rate,but prices would rise even more.

Correct Answer
verified

Exam 33: Aggregate Demand and Aggregate Supply

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

Correct AnswerverifiedShow Answer

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level) ,where a is a positive number,represents

Correct AnswerverifiedShow Answer

When the money supply increases

Correct AnswerverifiedShow Answer

If people want to save more for retirement

Correct AnswerverifiedShow Answer

On average over the past 50 years,the U.S.economy has grown at the rate of about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When taxes decrease,consumption

Correct AnswerverifiedShow Answer

Other things the same,a decrease in the price level induces people to hold

Correct AnswerverifiedShow Answer

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Correct AnswerverifiedShow Answer

Real and nominal variables are highly intertwined,and changes in the money supply change real GDP.Most economists would agree that this statement accurately describes

Correct AnswerverifiedShow Answer

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy starts at A and moves to D in the short run,the economy

Correct AnswerverifiedShow Answer

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

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

The quantity of money has no real impact on things people really care about like whether or not they have a job.Most economists would agree that this statement is appropriate concerning

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Changes in the price level affect which components of aggregate demand?

Correct AnswerverifiedShow Answer

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the government increased the money supply in response to a decrease in short-run aggregate supply,unemployment would return towards its natural rate,but prices would rise even more.

Correct AnswerverifiedShow Answer

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