Question 1

The aggregate-demand curve

Accepted Answer

A)   has a slope that is explained in the same way as the slope of the demand curve for a particular product.
B)   is vertical in the long run.
C)   shows an inverse relation between the price level and the quantity of all goods and services demanded.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 2

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

Accepted Answer

A)   consumer wealth rises
B)   borrowing rises
C)   each dollar is worth more domestic goods
D)   the dollar appreciates relative to other currenciesE) B) and C)
F) C) and D)

Question 3

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

Accepted Answer

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

Question 4

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

Accepted Answer

A)   the price level is higher than expected making production more profitable.
B)   the price level is higher than expected making production less profitable.
C)   the price level is lower than expected making production more profitable..
D)   the price level is higher than expected making production less profitableE) A) and B)
F) A) and C)

Question 5

Briefly state the three key facts about economic fluctuations.

Accepted Answer

1) Economic fluctuations are i...

Question 6

Refer to Political Instability Abroad. What would happen to the dollar?

Accepted Answer

A)   It would appreciate in foreign exchange markets making U.S goods more expensive compared to foreign goods.
B)   It would appreciate in foreign exchange markets making U.S. goods less expensive compared to foreign goods.
C)   It would depreciate in foreign exchange markets making U.S. goods more expensive compared to foreign goods.
D)   It would depreciate in foreign exchange markets making U.S. goods less expensive compared to foreign goods.E) None of the above
F) All of the above

Question 7

Other things the same, if the price level rises, people

Accepted Answer

A)   increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases.
B)   increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.
C)   decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases.
D)   decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.E) A) and B)
F) A) and C)

Question 8

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 9

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 D)
F) B) and C)

Question 10

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Accepted Answer

A) True 
 B)False  False

Question 11

What curve shows the quantity of goods and services that firms choose to produce and sell at each price level?

Accepted Answer

The aggregate supply curve

Question 12

The aggregate demand and aggregate supply graph has

Accepted Answer

A)   the price level on the horizontal axis. The price level can be measured by the GDP deflator.
B)   the price level on the horizontal axis. The price level can be measured by real GDP.
C)   the price level on the vertical axis. The price level can be measured by the GDP deflator.
D)   the price level on the vertical axis. The price level can be measured by GDP.E) A) and D)
F) A) and C)

Question 13

Most economists believe that money neutrality

Accepted Answer

A)   does not hold in the short run.
B)   does not hold in the long run.
C)   does not hold in either the short run or long run.
D)   holds in the short run and the long run.E) All of the above
F) B) and C) A

Question 14

If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then

Accepted Answer

A)   U.S. goods become more expensive relative to foreign goods so aggregate demand shifts right.
B)   U.S. goods become less expensive relative to foreign goods so aggregate demand shifts right.
C)   U.S. goods become more expensive relative to foreign goods so aggregate demand shifts left.
D)   U.S. goods become less expensive relative to foreign goods so aggregate demand shifts left.E) None of the above
F) A) and B)

Question 15

In the long run, an increase in the stock of human capital

Accepted Answer

A)   and increases in the money supply both make the price level rise.
B)   and increases in the money supply both make the price level fall.
C)   makes the price level rise, while increases in the money supply make prices fall.
D)   makes the price level fall, while increases in the money supply make prices rise.E) A) and C)
F) C) and D)

Question 16

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Accepted Answer

The answer of Who wrote the 1936 book titled The...

Question 17

The long-run aggregate supply curve would shift left if the amount of labor available

Accepted Answer

A)   increased or Congress made a substantial increase in the minimum wage.
B)   decreased or Congress abolished the minimum wage.
C)   increased or Congress abolished the minimum wage.
D)   decreased or Congress made a substantial increase in the minimum wage.E) A) and B)
F) None of the above

Question 18

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

Accepted Answer

A)   an increase in the money supply
B)   an increase in the price level
C)   a decrease in the expected price level
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 19

Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run aggreg...

Question 20

Which of the following would increase output in the short run?

Accepted Answer

A)   an increase in stock prices makes people feel wealthier
B)   government spending increases
C)   firms chose to purchase more investment goods
D)   All of the above are correct.E) B) and C)
F) A) and D)

Exam 20: Aggregate Demand and Aggregate Supply

The aggregate-demand curve

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Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

Correct AnswerverifiedShow Answer

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

Correct AnswerverifiedShow Answer

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

Correct AnswerverifiedShow Answer

Briefly state the three key facts about economic fluctuations.

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

Refer to Political Instability Abroad. What would happen to the dollar?

Correct AnswerverifiedShow Answer

Other things the same, if the price level rises, people

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Correct AnswerverifiedFalse

What curve shows the quantity of goods and services that firms choose to produce and sell at each price level?

Correct AnswerverifiedThe aggregate supply curve

The aggregate demand and aggregate supply graph has

Correct AnswerverifiedShow Answer

Most economists believe that money neutrality

Correct AnswerverifiedA

If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then

Correct AnswerverifiedShow Answer

In the long run, an increase in the stock of human capital

Correct AnswerverifiedShow Answer

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

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The long-run aggregate supply curve would shift left if the amount of labor available

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

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Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Correct AnswerverifiedThe short run aggreg...View AnswerShow Answer

Which of the following would increase output in the short run?

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1) Economic fluctuations are i...
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Net exports would fa...
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False

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The aggregate supply curve

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A

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The short run aggreg...
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