Question 1

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 C)
F) B) and D)

Question 2

Which of the following is included in the aggregate demand for goods and services?

Accepted Answer

A)   consumption demand
B)   investment demand
C)   net exports
D)   All of the above are correct.E) B) and D)
F) All of the above

Question 3

In the mid-1970s the price of oil rose dramatically. This

Accepted Answer

A)   shifted aggregate supply left, the price level rose, and real GDP fell.
B)   caused U.S. prices to fall, and real GDP rose.
C)   caused an increase in U.S. prices and real GDP.
D)   caused a decrease in U.S. prices and real GDP.E) A) and D)
F) All of the above

Question 4

Other things the same, a decrease in the price level makes consumers feel

Accepted Answer

A)   less wealthy, so the quantity of goods and services demanded falls.
B)   less wealthy, so the quantity of goods and services demanded rises.
C)   more wealthy, so the quantity of goods and services demanded rises.
D)   more wealthy, so the quantity of goods and services demanded falls.E) B) and C)
F) A) and C)

Question 5

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

Question 6

Which of the following typically rises during a recession?

Accepted Answer

A)   investment.
B)   unemployment.
C)   tax revenues.
D)   new home construction.E) B) and C)
F) B) and D)

Question 7

The economic boom of the early 1940s resulted mostly from

Accepted Answer

A)   increased government expenditures.
B)   falling prices of oil and other natural resources.
C)   an increase in the growth rate of the money supply.
D)   rapid developments in transportation, electronics, and communication.E) B) and C)
F) A) and B)

Question 8

People had been expecting the price level to be 120 but it turns out to be 122. In response Robinson Tire Company increases the number of workers it employs. What could explain this?

Accepted Answer

A)   both sticky price theory and sticky wage theory
B)   sticky price theory but not sticky wage theory
C)   sticky wage theory but not sticky price theory
D)   neither sticky wage theory nor sticky price theoryE) All of the above
F) B) and C)

Question 9

Real GDP

Accepted Answer

A)   is the current dollar value of all goods produced by the citizens of an economy within a given time.
B)   measures economic activity and income.
C)   is used primarily to measure long-run changes rather than short-run fluctuations.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 10

Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

Accepted Answer

A)   decreases the real value of money.
B)   increases the real value of the dollar in foreign exchange markets.
C)   decreases the interest rate.
D)   All of the above are correct.E) B) and C)
F) C) and D)

Question 11

Which of the following is not a determinant of the long-run level of real GDP?

Accepted Answer

A)   the price level.
B)   the amount of capital used by firms.
C)   available stock of human capital.
D)   available technologyE) A) and B)
F) A) and C)

Question 12

Aggregate demand shifts right when the government

Accepted Answer

A)   decreases taxes.
B)   cuts military expenditures.
C)   repeals an investment tax credit.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 13

As the price level falls

Accepted Answer

A)   people will want to hold more money, so the interest rate rises.
B)   people will want to hold more money, so the interest rate falls.
C)   people will want to hold less money, so the interest rate falls.
D)   people will want to hold less money, so the interest rate rises.E) A) and B)
F) A) and C)

Question 14

At the end of World War II many European countries were rebuilding and so were eager to buy capital goods and had rising incomes. We would expect that the rebuilding increased aggregate demand in

Accepted Answer

A)   both the United States and Europe.
B)   the United States but not Europe.
C)   Europe, but not the United States.
D)   neither the United States, nor Europe.E) B) and C)
F) B) and D)

Question 15

Refer to Pessimism. 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 D)
F) None of the above

Question 16

Suppose people anticipate an increase in the expected price level. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Accepted Answer

The short-run aggreg...

Question 17

Which of the following has been suggested as a cause of the Great Depression?

Accepted Answer

A)   a decline in the money supply
B)   a decrease in stock prices
C)   the collapse of the banking system
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 18

The recession of 2008-2009 was in many ways the worst macroeconomic event in more than half a century.

Accepted Answer

A) True 
 B)False

Question 19

Who said about classical economic theory: "the long run is a misleading guide to current affairs. In the long run we are all dead"?

Accepted Answer

The answer of Who said about classical economic theory: "the...

Question 20

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 C)

Exam 33: Aggregate Demand and Aggregate Supply

Which of the following has been suggested as a cause of the Great Depression?

Correct AnswerverifiedShow Answer

Which of the following typically rises during a recession?

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As the price level falls

Correct AnswerverifiedShow Answer

The recession of 2008-2009 was in many ways the worst macroeconomic event in more than half a century.

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand right?

Correct AnswerverifiedShow Answer

Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

Correct AnswerverifiedShow Answer

The economic boom of the early 1940s resulted mostly from

Correct AnswerverifiedShow Answer

Real GDP

Correct AnswerverifiedShow Answer

Suppose people anticipate an increase in the expected price level. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Correct AnswerverifiedThe short-run aggreg...View AnswerShow Answer

Which of the following is included in the aggregate demand for goods and services?

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People had been expecting the price level to be 120 but it turns out to be 122. In response Robinson Tire Company increases the number of workers it employs. What could explain this?

Correct AnswerverifiedShow Answer

Which of the following is correct?

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

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Who said about classical economic theory: "the long run is a misleading guide to current affairs. In the long run we are all dead"?

Correct AnswerverifiedShow Answer

In the mid-1970s the price of oil rose dramatically. This

Correct AnswerverifiedShow Answer

Aggregate demand shifts right when the government

Correct AnswerverifiedShow Answer

Which of the following is not a determinant of the long-run level of real GDP?

Correct AnswerverifiedShow Answer

Changes in the price of oil

Correct AnswerverifiedShow Answer

Other things the same, a decrease in the price level makes consumers feel

Correct AnswerverifiedShow Answer

At the end of World War II many European countries were rebuilding and so were eager to buy capital goods and had rising incomes. We would expect that the rebuilding increased aggregate demand in

Correct AnswerverifiedShow Answer

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The short-run aggreg...
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