Question 1

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

Accepted Answer

A)   a decrease in the actual price level
B)   a decrease in the expected price level
C)   a decrease in the capital stock
D)   a decrease in the money supplyE) A) and C)
F) None of the above

Question 2

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Accepted Answer

A)   nominal wages are slow to adjust to changing economic conditions
B)   as the price level falls, the exchange rate falls
C)   an increase in the money supply lowers the interest rate
D)   an increase in the interest rate increases investment spendingE) B) and C)
F) A) and C)

Question 3

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 4

When the Fed buys bonds

Accepted Answer

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

Question 5

Other things the same, as the price level falls, a country's exchange rate

Accepted Answer

A)   and interest rates rise.
B)   and interest rates fall.
C)   falls and interest rates rise.
D)   rises and interest rates fall.E) All of the above
F) None of the above

Question 6

Which of the following did not happen during the onset of the Great Depression?

Accepted Answer

A)   The money supply fell as households took money out of bank deposits.
B)   The Fed conducted expansionary monetary policy.
C)   Stock prices fell about 90 percent.
D)   Disruption of the banking system made it difficult for some firms to obtain funds for investment.E) None of the above
F) All of the above

Question 7

Other things the same, a fall in an economy's overall level of prices tends to

Accepted Answer

A)   raise both the quantity demanded and supplied of goods and services.
B)   raise the quantity demanded of goods and services, but lower the quantity supplied.
C)   lower the quantity demanded of goods and services, but raise the quantity supplied.
D)   lower both the quantity demanded and the quantity supplied of goods and services.E) C) and D)
F) None of the above

Question 8

An increase in household saving causes consumption to

Accepted Answer

A)   rise and aggregate demand to increase.
B)   rise and aggregate demand to decrease.
C)   fall and aggregate demand to increase.
D)   fall and aggregate demand to decrease.E) A) and B)
F) C) and D)

Question 9

All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of output supplied increases when the actual price level exceeds the expected price level.

Accepted Answer

A) True 
 B)False

Question 10

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Accepted Answer

A)   relative to prices wages are higher and employment rise.
B)   relative to prices wages are higher and employment falls.
C)   relative to prices wages are lower and employment rises.
D)   relative to prices wages are lower and employment falls.E) B) and D)
F) B) and C)

Question 11

Stagflation exists when prices

Accepted Answer

A)   fall and unemployment falls.
B)   rise and unemployment falls.
C)   fall and unemployment rises.
D)   rise and unemployment rises.E) A) and C)
F) B) and D)

Question 12

Keynes explained that recessions and depressions occur because of

Accepted Answer

A)   excess aggregate demand.
B)   inadequate aggregate demand.
C)   excess aggregate supply.
D)   inadequate aggregate supply.E) A) and C)
F) A) and D)

Question 13

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

Question 14

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Accepted Answer

why the ag...

Question 15

In 2008, the United States was in recession. Which of the following things would you not expect to have happened?

Accepted Answer

A)   increased layoffs and firings.
B)   a higher rate of bankruptcy.
C)   increased claims for unemployment insurance.
D)   increased real GDP.E) B) and D)
F) B) and C)

Question 16

Which of the following is correct?

Accepted Answer

A)   Over the business cycle investment fluctuates more than consumption.
B)   Economic fluctuations are easy to predict.
C)   During recessions employment rises.
D)   Because of government policy the U.S. had zero recessions in the last 25 years.E) A) and B)
F) A) and C)

Question 17

Which of the following shifts short-run aggregate supply left?

Accepted Answer

A)   an increase in price expectations
B)   an increase in the actual price level
C)   a decrease in the money supply
D)   a decrease in the price of oilE) A) and D)
F) B) and D)

Question 18

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)   10 percent, 1 percent
B)   2 percent, 12 percent
C)   -1 percent, 8 percent
D)   -2 percent, 2 percentE) A) and D)
F) A) and C)

Question 19

As the price level falls

Accepted Answer

A)   people are more willing to lend, so interest rates rise.
B)   people are more willing to lend, so interest rates fall.
C)   people are less willing to lend, so interest rates fall.
D)   people are less willing to lend, so interest rates rise.E) All of the above
F) A) and C)

Question 20

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) None of the above
F) A) and D)

Exam 23: Aggregate Demand and Aggregate Supply

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

Correct AnswerverifiedShow Answer

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Correct AnswerverifiedShow Answer

An increase in household saving causes consumption to

Correct AnswerverifiedShow Answer

Other things the same, a fall in an economy's overall level of prices tends to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Correct AnswerverifiedShow Answer

A change in the money supply changes only nominal variables in the long run.

Correct AnswerverifiedShow Answer

People will buy more if the price level

Correct AnswerverifiedShow Answer

Other things the same, as the price level falls, a country's exchange rate

Correct AnswerverifiedShow Answer

All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of output supplied increases when the actual price level exceeds the expected price level.

Correct AnswerverifiedShow Answer

Which of the following did not happen during the onset of the Great Depression?

Correct AnswerverifiedShow Answer

In 2008, the United States was in recession. Which of the following things would you not expect to have happened?

Correct AnswerverifiedShow Answer

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

Correct AnswerverifiedShow Answer

Stagflation exists when prices

Correct AnswerverifiedShow Answer

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Correct Answerverifiedwhy the ag...View AnswerShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Keynes explained that recessions and depressions occur because of

Correct AnswerverifiedShow Answer

As the price level falls

Correct AnswerverifiedShow Answer

When the Fed buys bonds

Correct AnswerverifiedShow Answer

Which of the following shifts short-run aggregate supply left?

Correct AnswerverifiedShow Answer

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why the ag...
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