Question 1

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) None of the above

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

The wealth effect helps explain what feature in the aggregate demand and aggregate supply model?

Accepted Answer

why the ag...

Question 4

From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted

Accepted Answer

A)   aggregate demand right.
B)   aggregate demand left.
C)   aggregate supply right.
D)   aggregate supply left.E) None of the above
F) A) and C)

Question 5

According to the classical model, which of the following would double if the quantity of money doubled?

Accepted Answer

A)   prices but not nominal income
B)   nominal income but not prices
C)   both prices and nominal income
D)   neither prices nor nominal incomeE) B) and D)
F) None of the above

Question 6

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 C)
F) A) and B)

Question 7

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)   the Federal Reserve buys bonds.
B)   a decrease in net exports due to something other than a change in domestic prices.
C)   an increase in household saving.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 8

Using the aggregate demand and aggregate supply model, an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

Accepted Answer

The answer of Using the aggregate demand and aggregate supply...

Question 9

Other things the same, if the price level is lower than expected, then some firms believe that the relative price of what they produce has

Accepted Answer

A)   decreased, so they increase production.
B)   decreased, so they decrease production.
C)   increased, so they increase production.
D)   increased, so they decrease production.E) None of the above
F) A) and D)

Question 10

Which of the following typically rises during a recession?

Accepted Answer

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

Question 11

As the price level falls,

Accepted Answer

A)   the exchange rate falls, so net exports fall.
B)   the exchange rate falls, so net exports rise.
C)   the exchange rate rises, so net exports fall.
D)   the exchange rate rises, so net exports rise.E) None of the above
F) A) and B)

Question 12

Aggregate demand shifts right 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) C) and D)
F) B) and C)

Question 13

According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to

Accepted Answer

A)   decreases in both the price level and real GDP.
B)   an increase in real GDP and an increase in the price level.
C)   a decrease in the price level but does not change real GDP.
D)   an increase in the price level but does not change real GDP.E) A) and B)
F) A) and C)

Question 14

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Accepted Answer

The short-run and lo...

Question 15

If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Accepted Answer

A) True 
 B)False

Question 16

A decrease in the availability of an important major resource such as oil shifts

Accepted Answer

A)   aggregate supply right.
B)   aggregate supply left.
C)   aggregate demand right.
D)   aggregate demand left.E) All of the above
F) B) and C)

Question 17

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

Accepted Answer

A)   the supply of dollars in the market for foreign-currency exchange increases, and net exports fall.
B)   the supply of dollars in the market for foreign-currency exchange increases, and net exports rise.
C)   the supply of dollars in the market for foreign-currency exchange decreases, and net exports fall.
D)   the supply of dollars in the market for foreign-currency exchange decreases, and net exports rise.E) None of the above
F) A) and B)

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)   5 percent, 1 percent
B)   3 percent, 5 percent
C)   -1 percent, 3 percent
D)   -2 percent, 4 percentE) B) and D)
F) C) and D)

Question 19

The initial impact of the repeal of an investment tax credit is to shift

Accepted Answer

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

Question 20

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Accepted Answer

A)   rise. This rise in price expectations shifts the short-run aggregate supply curve to the right.
B)   rise. This rise in price expectations shifts the short-run aggregate supply curve to the left.
C)   fall. This fall in price expectations shifts the short-run aggregate supply curve to the right.
D)   fall. This fall in price expectations shifts the short-run aggregate supply curve to the left.E) A) and B)
F) C) and D)

Exam 23: Aggregate Demand and Aggregate Supply

If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Correct AnswerverifiedShow Answer

The initial impact of the repeal of an investment tax credit is to shift

Correct AnswerverifiedShow Answer

According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to

Correct AnswerverifiedShow Answer

Aggregate demand shifts right if

Correct AnswerverifiedShow Answer

From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted

Correct AnswerverifiedShow Answer

Which of the following typically rises during a recession?

Correct AnswerverifiedShow Answer

During a recession the economy experiences

Correct AnswerverifiedShow Answer

A decrease in the availability of an important major resource such as oil shifts

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Using the aggregate demand and aggregate supply model, an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

Correct AnswerverifiedShow Answer

As the price level falls,

Correct AnswerverifiedShow Answer

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Correct AnswerverifiedThe short-run and lo...View AnswerShow Answer

The wealth effect helps explain what feature in the aggregate demand and aggregate supply model?

Correct Answerverifiedwhy the ag...View AnswerShow Answer

Which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things the same, if the price level is lower than expected, then some firms believe that the relative price of what they produce has

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to the classical model, which of the following would double if the quantity of money doubled?

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

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The short-run and lo...
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why the ag...
View Answer

Correct Answer
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