Question 1

Suppose the government raises taxes. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The aggreg...

Question 2

Which of the following would cause stagflation?

Accepted Answer

A)   rising government expenditures
B)   rising oil prices
C)   a falling money supply
D)   technical progressE) None of the above
F) A) and B)

Question 3

When the dollar appreciates, U.S.

Accepted Answer

A)   exports decrease, while imports increase.
B)   exports and imports decrease.
C)   exports and imports increase.
D)   exports increase, while imports decrease.E) A) and D)
F) A) and B)

Question 4

Which of the following affected aggregate demand during the recession of 2008-2009?

Accepted Answer

A)   a decline in residential construction and a decrease in lending
B)   a decline in residential construction but not a decrease in lending
C)   a decrease in lending but not a decline in residential construction
D)   neither a decrease in residential construction nor a decrease in lendingE) C) and D)
F) A) and D)

Question 5

During World War II government expenditures increased almost five-fold and output almost doubled.

Accepted Answer

A) True 
 B)False

Question 6

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Accepted Answer

When the price level increases, the purc...

Question 7

Suppose that during the Great Depression long-run aggregate supply shifted left. To be consistent with what happened to the price level and output, what would have had to happen to aggregate demand?

Accepted Answer

A)   It would have to have shifted left by less than aggregate supply.
B)   It would have to have shifted left by more than aggregate supply.
C)   It would have to have shifted right by less than aggregate supply.
D)   It would have to have shifted right by more than aggregate supply.E) A) and B)
F) All of the above

Question 8

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

Accepted Answer

A)   increases by less than expected so that firms believe the relative price of their output has increased.
B)   increases by less than expected so that firms believe the relative price of their output has decreased.
C)   increases by more than expected so that firms believe the relative price of their output has increased.
D)   increases by more than expected so that firms believe the relative price of their output has decreased.E) C) and D)
F) A) and C)

Question 9

Figure 33-7. 
-Refer to Stock Market Boom 2015. 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) A) and B)
F) A) and C)

Question 10

Recession come at

Accepted Answer

A)   regular intervals. During recessions consumption spending falls relatively more than investment spending.
B)   regular intervals. During recessions investment spending falls relatively more than consumption spending.
C)   irregular intervals. During recessions consumption spending falls relatively more than investment spending.
D)   irregular intervals. During recessions investment spending falls relatively more than consumption spending.E) A) and B)
F) A) and C)

Question 11

The long-run aggregate supply curve would shift right if the government were to

Accepted Answer

A)   reduce the minimum-wage.
B)   make unemployment benefits more generous.
C)   raise taxes on investment spending.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 12

Which of the following effects helps to explain the slope of the aggregate-demand curve?

Accepted Answer

A)   the exchange-rate effect
B)   the wealth effect
C)   the interest-rate effect
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 13

Microeconomic substitution is impossible for the economy as a whole because

Accepted Answer

A)   money is a veil.
B)   real GDP measures the total quantity of goods and services produced by all firms in all markets.
C)   the prices of some goods and services adjust sluggishly in response to changing economic conditions.
D)   a lower price level increases real wealth, which stimulates spending by consumers and vice-versa.E) A) and B)
F) B) and C)

Question 14

A decrease in the expected price level shifts

Accepted Answer

A)   only the long-run aggregate supply curve right.
B)   only the short-run aggregate supply curve right.
C)   both the short-run and the long-run aggregate supply curve right.
D)   Neither the short-run nor the long-run aggregate supply curve right.E) A) and C)
F) None of the above

Question 15

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

Question 16

Figure 33-2. 
-Refer to Figure 33-2. Line X is

Accepted Answer

A)   investment spending.
B)   real GDP.
C)   unemployment rate.
D)   CPI.E) A) and B)
F) B) and C)

Question 17

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

Accepted Answer

A)   nominal variables and real variables.
B)   nominal variables, but not real variables.
C)   real variables, but not nominal variables.
D)   neither nominal nor real variables.E) A) and B)
F) A) and C)

Question 18

In the context of the aggregate-demand curve, the interest-rate effect refers to the idea that, when the price level increases,

Accepted Answer

A)   the real value of money decreases; in turn, the real value of the dollar increases in foreign exchange markets, which decreases net exports.
B)   the real value of money decreases; in turn, interest rates increase, which decreases net exports.
C)   households increase their holdings of money; in turn, interest rates decrease, which reduces spending on investment goods.
D)   households increase their holdings of money; in turn, interest rates increase, which reduces spending on investment goods.E) B) and D)
F) A) and C)

Question 19

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 20

Refer to Political Instability Abroad. What would the change in the interest rate created by foreigners wanting to buy more U.S. assets do to investment spending in the U.S.?

Accepted Answer

A)   make it rise which by itself would increase U.S. aggregate demand.
B)   make it rise which by itself would decrease U.S. aggregate demand.
C)   make it fall which by itself would increase U.S. aggregate demand.
D)   make it fall which by itself would decrease U.S. aggregate demand.E) A) and B)
F) All of the above

Exam 20: Aggregate Demand and Aggregate Supply

Recession come at

Correct Answer
verified

Figure 33-7. -Refer to Stock Market Boom 2015. Which curve shifts and in which direction?

Correct Answer
verified

Correct Answer
verified

Suppose the government raises taxes. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Correct Answer
verified
The aggreg...
View Answer

During World War II government expenditures increased almost five-fold and output almost doubled.

Correct Answer
verified

The long-run aggregate supply curve would shift right if the government were to

Correct Answer
verified

Refer to Political Instability Abroad. What would the change in the interest rate created by foreigners wanting to buy more U.S. assets do to investment spending in the U.S.?

Correct Answer
verified

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

Correct Answer
verified

Which of the following affected aggregate demand during the recession of 2008-2009?

Correct Answer
verified

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

Correct Answer
verified

Microeconomic substitution is impossible for the economy as a whole because

Correct Answer
verified

In the context of the aggregate-demand curve, the interest-rate effect refers to the idea that, when the price level increases,

Correct Answer
verified

Which of the following would cause stagflation?

Correct Answer
verified

When the dollar appreciates, U.S.

Correct Answer
verified

Which of the following effects helps to explain the slope of the aggregate-demand curve?

Correct Answer
verified

Suppose that during the Great Depression long-run aggregate supply shifted left. To be consistent with what happened to the price level and output, what would have had to happen to aggregate demand?

Correct Answer
verified

A decrease in the expected price level shifts

Correct Answer
verified

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Correct Answer
verified
When the price level increases, the purc...
View Answer

Figure 33-2. -Refer to Figure 33-2. Line X is

Correct Answer
verified

Other things the same, as the price level falls,

Correct Answer
verified

Exam 20: Aggregate Demand and Aggregate Supply

Recession come at

Correct AnswerverifiedShow Answer

Figure 33-7. -Refer to Stock Market Boom 2015. Which curve shifts and in which direction?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the government raises taxes. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Correct AnswerverifiedThe aggreg...View AnswerShow Answer

During World War II government expenditures increased almost five-fold and output almost doubled.

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve would shift right if the government were to

Correct AnswerverifiedShow Answer

Refer to Political Instability Abroad. What would the change in the interest rate created by foreigners wanting to buy more U.S. assets do to investment spending in the U.S.?

Correct AnswerverifiedShow Answer

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

Correct AnswerverifiedShow Answer

Which of the following affected aggregate demand during the recession of 2008-2009?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Microeconomic substitution is impossible for the economy as a whole because

Correct AnswerverifiedShow Answer

In the context of the aggregate-demand curve, the interest-rate effect refers to the idea that, when the price level increases,

Correct AnswerverifiedShow Answer

Which of the following would cause stagflation?

Correct AnswerverifiedShow Answer

When the dollar appreciates, U.S.

Correct AnswerverifiedShow Answer

Which of the following effects helps to explain the slope of the aggregate-demand curve?

Correct AnswerverifiedShow Answer

Suppose that during the Great Depression long-run aggregate supply shifted left. To be consistent with what happened to the price level and output, what would have had to happen to aggregate demand?

Correct AnswerverifiedShow Answer

A decrease in the expected price level shifts

Correct AnswerverifiedShow Answer

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Correct AnswerverifiedWhen the price level increases, the purc...View AnswerShow Answer

Figure 33-2. -Refer to Figure 33-2. Line X is

Correct AnswerverifiedShow Answer

Other things the same, as the price level falls,

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The aggreg...
View Answer

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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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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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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When the price level increases, the purc...
View Answer

Correct Answer
verified

Correct Answer
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