Question 1

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

Accepted Answer

A)   The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply.
B)   The price level and quantity of output adjust to bring aggregate demand and supply into balance.
C)   The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 2

If output is above its natural rate, then according to sticky-wage theory

Accepted Answer

A)   workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve right.
B)   workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left.
C)   workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve right.
D)   workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve left.E) C) and D)
F) A) and C)

Question 3

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

Accepted Answer

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

Question 4

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward.

Accepted Answer

A) True 
 B)False

Question 5

If a central bank is independent,

Accepted Answer

A)   it has the ability to alter taxes.
B)   it allocates savings to firms.
C)   it restricts trade to increase domestic employment.
D)   it operations are not controlled by the political process.E) None of the above
F) B) and C)

Question 6

If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would

Accepted Answer

A)   rise, making aggregate demand shift right.
B)   rise, making aggregate demand shift left.
C)   fall, making aggregate demand shift right.
D)   fall, making aggregate demand shift left.E) None of the above
F) A) and B)

Question 7

According to the "In the News" article, macroprudential tools

Accepted Answer

A)   allow a central bank to alter lending for specific industries.
B)   allow a central bank to alter taxes.
C)   limit a central bank's power to act independently of the political process.
D)   limit the policy tools available to a central bank.E) B) and D)
F) All of the above

Question 8

Who is credited for the original development of the model of aggregate demand and aggregate supply?

Accepted Answer

The answer of Who is credited for the original development...

Question 9

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

Accepted Answer

A)   an increase in the price level
B)   an increase in the minimum wage
C)   a decrease in the price of oil
D)   more people migrate abroad than immigrate from abroadE) A) and D)
F) A) and C)

Question 10

Figure 33-4 
-Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at

Accepted Answer

A)   A and moved to B.
B)   C and moved to B.
C)   D and moved to C.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 11

Which of the following would not be included in aggregate demand?

Accepted Answer

A)   an increase in firms' inventories.
B)   purchases of goods by households.
C)   firms' purchases of newly produced machinery.
D)   government's tax collections.E) B) and D)
F) B) and C)

Question 12

When taxes decrease, consumption

Accepted Answer

A)   decreases as shown by a movement to the left along a given aggregate-demand curve.
B)   decreases as shown by a shift of the aggregate demand curve to the left.
C)   increases as shown by a movement to the right along a given aggregate-demand curve.
D)   increases as shown by a shift of the aggregate demand curve to the right.E) A) and D)
F) None of the above

Question 13

Other things the same, as the price level rises, the real value of money

Accepted Answer

A)   and the exchange rate rise.
B)   and the exchange rate fall.
C)   rises and the exchange rate falls.
D)   falls and the exchange rate rises.E) A) and D)
F) C) and D)

Question 14

Briefly state the three key facts about economic fluctuations.

Accepted Answer

1) Economic fluctuations are i...

Question 15

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

Accepted Answer

A)   production is more profitable and employment rises.
B)   production is more profitable and employment falls.
C)   production is less profitable and employment rises.
D)   production is less profitable and employment falls.E) A) and B)
F) A) and C)

Question 16

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.

Accepted Answer

A) True 
 B)False

Question 17

The curve that shows the quantity of goods and services that firms produce and sell

Accepted Answer

A)   as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-demand curve.
B)   as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve.
C)   as it relates to the overall price level is called the aggregate-demand curve.
D)   as it relates to the overall price level is called the aggregate-supply curve.E) A) and B)
F) A) and C)

Question 18

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Accepted Answer

A)   It refused to provide banks funding and made no significant changes in government spending.
B)   It refused to provide banks funding but made a large increase in government spending.
C)   It became part owner of some banks but made no significant change in government spending
D)   It became part owner of some banks and made a large increase in government spending.E) All of the above
F) None of the above

Question 19

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

Accepted Answer

Period 1 is the Grea...

Question 20

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Accepted Answer

The price ...

Exam 23: Aggregate Demand and Aggregate Supply

If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would

Correct AnswerverifiedShow Answer

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

Correct AnswerverifiedShow Answer

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

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

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Correct AnswerverifiedShow Answer

If a central bank is independent,

Correct AnswerverifiedShow Answer

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Who is credited for the original development of the model of aggregate demand and aggregate supply?

Correct AnswerverifiedShow Answer

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Correct AnswerverifiedThe price ...View AnswerShow Answer

The curve that shows the quantity of goods and services that firms produce and sell

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Briefly state the three key facts about economic fluctuations.

Correct Answerverified1) Economic fluctuations are i...View AnswerShow Answer

Which of the following would not be included in aggregate demand?

Correct AnswerverifiedShow Answer

When taxes decrease, consumption

Correct AnswerverifiedShow Answer

Figure 33-4 -Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at

Correct AnswerverifiedShow Answer

According to the "In the News" article, macroprudential tools

Correct AnswerverifiedShow Answer

If output is above its natural rate, then according to sticky-wage theory

Correct AnswerverifiedShow Answer

Other things the same, as the price level rises, the real value of money

Correct AnswerverifiedShow Answer

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The price ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1) Economic fluctuations are i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified