Question 1

When the price level falls, people want to

Accepted Answer

A)  hold more money and the quantity of aggregate goods and services demanded increases.
B)  hold more money and the quantity of aggregate goods and services demanded decreases.
C)  hold less money and the quantity of aggregate goods and services demanded increases.
D)  hold less money and the quantity of aggregate goods and services demanded decreases.E) B) and D)
F) C) and D)

Question 2

Other things the same, when the price level rises, interest rates

Accepted Answer

A)  rise, which means consumers will want to spend more on homebuilding.
B)  rise, which means consumers will want to spend less on homebuilding.
C)  fall, which means consumers will want to spend more on homebuilding.
D)  fall, which means consumers will want to spend less on homebuilding.E) A) and B)
F) A) and C)

Question 3

If there are floods or droughts or a decrease in the availability of raw materials

Accepted Answer

A)  aggregate supply shifts right.
B)  output falls in the short run.
C)  prices fall in the short run.
D)  None of the above is correct.E) A) and D)
F) All of the above

Question 4

Technological progress shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 5

An increase in the money supply causes the interest rate to fall, investment spending to rise, and aggregate demand to shift right.

Accepted Answer

A) True 
 B)False

Question 6

The model of aggregate demand and aggregate supply is nothing more than a large version of the model of market demand and market supply.​

Accepted Answer

A) True 
 B)False

Question 7

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

Accepted Answer

Net exports would fa...

Question 8

​Imagine the U.S. economy is in long-run equilibrium. Then suppose the aggregate demand increases. We would expect that in the long-run the price level would

Accepted Answer

A)  ​increase.
B)  ​decrease.
C)  ​stay the same.
D)  ​decrease by the same amount as the increase in aggregate demand.E) A) and B)
F) A) and C)

Question 9

The theory of short-run economic fluctuations is uncontroversial.​

Accepted Answer

A) True 
 B)False

Question 10

Other things the same, the aggregate quantity of goods demanded decreases if

Accepted Answer

A)  real wealth falls.
B)  the interest rate rises.
C)  the dollar appreciates.
D)  All of the above are correct.E) A) and D)
F) A) and B)

Question 11

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

Question 12

Which part of real GDP fluctuates most over the course of the business cycle?

Accepted Answer

A)  consumption expenditures
B)  government expenditures
C)  investment expenditures
D)  net exportsE) B) and C)
F) A) and D)

Question 13

Other things the same, if the U.S. price level falls, then

Accepted Answer

A)  U.S. residents want to buy more foreign bonds. The real exchange rate rises.
B)  U.S. residents want to buy more foreign bonds. The real exchange rate falls.
C)  U.S. residents want to buy fewer foreign bonds. The real exchange rate rises.
D)  U.S. residents want to buy fewer foreign bonds. The real exchange rate falls.E) A) and C)
F) All of the above

Question 14

When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is

Accepted Answer

A)  less than it desires and increase its production.
B)  less than it desires and decrease its production.
C)  more than it desires and increase its production.
D)  Less than it desires and decrease its production.E) B) and D)
F) C) and D)

Question 15

Other things the same, if technology increases, then in the long run

Accepted Answer

A)  both output and prices are higher.
B)  output is higher and prices are lower.
C)  output is lower and prices are higher.
D)  both output and prices are lower.E) A) and B)
F) A) and C)

Question 16

Which of the following decreases during recessions?​

Accepted Answer

A)  ​real GDP
B)  ​unemployment
C)  ​layoffs and consumer spending
D)  ​layoffs but not consumer spendingE) B) and D)
F) B) and C)

Question 17

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

Question 18

If the dollar depreciates because of speculation or government policy, U.S.

Accepted Answer

A)  aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in real GDP.
B)  aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP.
C)  aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP.
D)  aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP.E) A) and D)
F) C) and D)

Question 19

Which of the following is most commonly used to monitor short-run changes in economic activity?

Accepted Answer

A)  the inflation rate.
B)  real GDP.
C)  interest rates.
D)  value of the U.S. dollar in the foreign exchange market.E) B) and D)
F) A) and B)

Question 20

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Accepted Answer

A)  only the increased funding for states
B)  only the tax cuts
C)  both the increased funding for states and the tax cuts
D)  neither the increased funding for states nor the tax cutsE) A) and C)
F) All of the above

Exam 33: Aggregate Demand and Aggregate Supply

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

Correct AnswerverifiedNet exports would fa...View AnswerShow Answer

Which of the following decreases during recessions?​

Correct AnswerverifiedShow Answer

Which part of real GDP fluctuates most over the course of the business cycle?

Correct AnswerverifiedShow Answer

If there are floods or droughts or a decrease in the availability of raw materials

Correct AnswerverifiedShow Answer

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Correct AnswerverifiedShow Answer

When the price level falls, people want to

Correct AnswerverifiedShow Answer

Which of the following is most commonly used to monitor short-run changes in economic activity?

Correct AnswerverifiedShow Answer

Other things the same, the aggregate quantity of goods demanded decreases if

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 model of aggregate demand and aggregate supply is nothing more than a large version of the model of market demand and market supply.​

Correct AnswerverifiedShow Answer

Other things the same, if the U.S. price level falls, then

Correct AnswerverifiedShow Answer

Other things the same, if technology increases, then in the long run

Correct AnswerverifiedShow Answer

​Imagine the U.S. economy is in long-run equilibrium. Then suppose the aggregate demand increases. We would expect that in the long-run the price level would

Correct AnswerverifiedShow Answer

If the dollar depreciates because of speculation or government policy, U.S.

Correct AnswerverifiedShow Answer

An increase in the money supply causes the interest rate to fall, investment spending to rise, and aggregate demand to shift right.

Correct AnswerverifiedShow Answer

The theory of short-run economic fluctuations is uncontroversial.​

Correct AnswerverifiedShow Answer

Technological progress shifts the long-run aggregate supply curve to the right.

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

Other things the same, when the price level rises, interest rates

Correct AnswerverifiedShow Answer

When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is

Correct AnswerverifiedShow Answer

Correct Answer
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Net exports would fa...
View Answer

Which of the following decreases during recessions?

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Correct Answer
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Correct Answer
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The model of aggregate demand and aggregate supply is nothing more than a large version of the model of market demand and market supply.

Correct Answer
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Correct Answer
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Correct Answer
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Imagine the U.S. economy is in long-run equilibrium. Then suppose the aggregate demand increases. We would expect that in the long-run the price level would

Correct Answer
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Correct Answer
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Correct Answer
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The theory of short-run economic fluctuations is uncontroversial.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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