Question 1

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

Question 2

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is

Accepted Answer

A)   temporarily low and so supply a smaller quantity of labor.
B)   temporarily low and so supply a larger quantity of labor.
C)   temporarily high and so supply a smaller quantity of labor.
D)   temporarily high and so supply a larger quantity of labor.E) A) and B)
F) None of the above

Question 3

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A)   an increase in government purchases.
B)   an decrease in oil prices
C)   a decrease in the money supply
D)   technical progressE) A) and B)
F) A) and C)

Question 4

The aggregate supply curve is upward sloping in

Accepted Answer

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

Question 5

Aggregate demand shifts left if

Accepted Answer

A)   government purchases increase and shifts left if stock prices rise.
B)   government purchases increase and shifts left if stock prices fall.
C)   government purchases decrease and shifts left if stock prices rise.
D)   government purchases decrease and shifts left is stock prices fall.E) None of the above
F) C) and D)

Question 6

Figure 33-4 
-Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

Accepted Answer

A)   A to B.
B)   B to C.
C)   C to D.
D)   D to A.E) A) and C)
F) All of the above

Question 7

Menu costs help explain

Accepted Answer

A)   sticky-price theory.
B)   misperceptions theory.
C)   sticky-wage theory.
D)   All of the above are correct.E) C) and D)
F) None of the above

Question 8

Figure 33-7. 
-Refer to Figure 33-7. Suppose the economy starts at Y. If there is a fall in aggregate demand, then the economy moves to

Accepted Answer

A)   V in the long run.
B)   W in the long run.
C)   X in the long run.
D)   Z in the long run.E) A) and B)
F) B) and C)

Question 9

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

Accepted Answer

A)   above the natural rate, so real GDP growth was likely low.
B)   above the natural rate, so real GDP growth was likely high.
C)   below the natural rate, so real GDP growth was likely low.
D)   below the natural rate, so real GDP growth was likely high.E) C) and D)
F) B) and C)

Question 10

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

Accepted Answer

A)   rise, so firms increase investment.
B)   rise, so firms decrease investment.
C)   fall, so firms increase investment.
D)   fall, so firms decrease investment.E) C) and D)
F) A) and B)

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 C)
F) A) and B)

Question 12

Figure 33-14. 
Refer to Figure 33-14. Identify which long run aggregate-supply curves) would be consistent with long-run equilibrium.

Accepted Answer

The answer of Figure 33-14. 
Refer to Figure 33-14. Identify...

Question 13

Figure 33-12. 
-Refer to Figure 33-12. Identify periods 1 and 2.

Accepted Answer

Period 1 is the Grea...

Question 14

If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following fall during a recession?

Accepted Answer

A)   both retail sales and employment
B)   retail sales but not employment
C)   employment but not retail sales
D)   neither employment nor retail salesE) All of the above
F) None of the above

Question 16

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

Accepted Answer

A)   aggregate supply right.
B)   aggregate supply left.
C)   aggregate demand right.
D)   aggregate demand left.E) A) and B)
F) A) and C)

Question 17

Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to

Accepted Answer

A)   decrease consumption, shown as a movement to the left along a given aggregate-demand curve.
B)   increase consumption, shown as a movement to the right along a given aggregate-demand curve.
C)   decrease consumption, shown by shifting the aggregate-demand curve to the left.
D)   increase consumption, shown by shifting the aggregate-demand curve to the right.E) A) and D)
F) None of the above

Question 18

Which of the following shifts long-run aggregate supply right?

Accepted Answer

A)   an increase in either technology or the human capital stock.
B)   an increase in human capital but not technology.
C)   an increase in technology, but not the human capital stock.
D)   neither an increase in technology nor the human capital stock.E) All of the above
F) A) and C)

Question 19

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

Question 20

During a recession the economy experiences

Accepted Answer

A)   rising employment and income.
B)   rising employment and falling income.
C)   rising income and falling employment.
D)   falling employment and income.E) A) and B)
F) B) and C)

Exam 15: Aggregate Demand and Aggregate Supply

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

Correct Answer
verified

Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to

Correct Answer
verified

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

Correct Answer
verified

Aggregate demand shifts left if

Correct Answer
verified

Menu costs help explain

Correct Answer
verified

The aggregate supply curve is upward sloping in

Correct Answer
verified

As the price level falls

Correct Answer
verified

Which of the following fall during a recession?

Correct Answer
verified

Which of the following shifts long-run aggregate supply right?

Correct Answer
verified

Figure 33-4 -Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

Correct Answer
verified

Figure 33-12. -Refer to Figure 33-12. Identify periods 1 and 2.

Correct Answer
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Period 1 is the Grea...
View Answer

During a recession the economy experiences

Correct Answer
verified

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is

Correct Answer
verified

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If there is a fall in aggregate demand, then the economy moves to

Correct Answer
verified

If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

Correct Answer
verified

Correct Answer
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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

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

Correct Answer
verified

Which of the following will reduce the price level and real output in the short run?

Correct Answer
verified

Figure 33-14. Refer to Figure 33-14. Identify which long run aggregate-supply curves) would be consistent with long-run equilibrium.

Correct Answer
verified

Exam 15: Aggregate Demand and Aggregate Supply

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

Correct AnswerverifiedShow Answer

Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to

Correct AnswerverifiedShow Answer

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

Correct AnswerverifiedShow Answer

Aggregate demand shifts left if

Correct AnswerverifiedShow Answer

Menu costs help explain

Correct AnswerverifiedShow Answer

The aggregate supply curve is upward sloping in

Correct AnswerverifiedShow Answer

As the price level falls

Correct AnswerverifiedShow Answer

Which of the following fall during a recession?

Correct AnswerverifiedShow Answer

Which of the following shifts long-run aggregate supply right?

Correct AnswerverifiedShow Answer

Figure 33-4 -Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

Correct AnswerverifiedShow Answer

Figure 33-12. -Refer to Figure 33-12. Identify periods 1 and 2.

Correct AnswerverifiedPeriod 1 is the Grea...View AnswerShow Answer

During a recession the economy experiences

Correct AnswerverifiedShow Answer

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is

Correct AnswerverifiedShow Answer

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If there is a fall in aggregate demand, then the economy moves to

Correct AnswerverifiedShow Answer

If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

Correct AnswerverifiedShow Answer

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

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

Correct AnswerverifiedShow Answer

Which of the following will reduce the price level and real output in the short run?

Correct AnswerverifiedShow Answer

Figure 33-14. Refer to Figure 33-14. Identify which long run aggregate-supply curves) would be consistent with long-run equilibrium.

Correct AnswerverifiedShow Answer

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Period 1 is the Grea...
View Answer

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