Question 1

The classical dichotomy and monetary neutrality are represented graphically by

Accepted Answer

A)   an upward-sloping long-run aggregate-supply curve.
B)   a vertical long-run aggregate-supply curve.
C)   an upward-sloping short-run aggregate-curve.
D)   a downward-sloping aggregate-demand curve.E) A) and B)
F) B) and C)

Question 2

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the supply of labor, a major new discovery of oil, and new environmental regulations that raise the cost of electricity production.
In the short run

Accepted Answer

A)   the price level will rise and real GDP will fall.
B)   the price level will fall and real GDP will rise.
C)   the price level and real GDP will both stay the same.
D)   All of the above are possible.E) All of the above
F) None of the above

Question 3

Which of the following is correct?

Accepted Answer

A)   Economic fluctuations are easily predicted by competent economists.
B)   Recessions have never occurred very close together.
C)   Spending, income, and production do not fluctuate closely with real GDP.
D)   None of the above is correct.E) B) and D)
F) B) and C)

Question 4

An increase in the interest rate causes investment to

Accepted Answer

A)   rise and the exchange rate to appreciate.
B)   fall and the exchange rate to depreciate.
C)   rise and the exchange rate to depreciate.
D)   fall and the exchange rate to appreciate.E) A) and B)
F) B) and C)

Question 5

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.
-Refer to Financial Crisis. Suppose the economy reaches long-run equilibrium without the Fed responding. Now suppose the financial crisis ends and the ability of banks to lend returns to normal. In which case is the price level lower compared to its value prior to the crisis?

Accepted Answer

A)   both after the economy reaches long-run equilibrium during the crisis and in the long-run equilibrium after the crisis is over
B)   after the economy reaches long-run equilibrium during the crisis but not in the long-run equilibrium after the crisis is over
C)   in the long-run equilibrium after the crisis is over but not after the economy reaches long-run equilibrium during the crisis
D)   neither after the economy reaches long-run equilibrium during the crisis nor in the long-run equilibrium after the crisis is overE) C) and D)
F) A) and B)

Question 6

When the price level increases, the real value of people's money holdings

Accepted Answer

A)   falls, so they buy more.
B)   falls, so they buy less.
C)   rises, so they buy more.
D)   rises, so they buy less.E) C) and D)
F) A) and D)

Question 7

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Accepted Answer

A)   the sticky-wage theory
B)   misperceptions theory
C)   both the sticky-wage and misperceptions theories.
D)   neither the sticky-wage nor the misperceptions theory.E) None of the above
F) C) and D)

Question 8

Figure 33-4 
-Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy

Accepted Answer

A)   moves to A in the long run.
B)   moves to B in the long run.
C)   moves to C in the long run.
D)   stays at D in the long run.E) A) and B)
F) B) and D)

Question 9

Historically, as recessions have ended the unemployment rate declined

Accepted Answer

A)   gradually to near zero.
B)   rapidly to near zero.
C)   gradually to a rate of about 5%-6%.
D)   rapidly to a rate of about 5%-6%.E) B) and D)
F) A) and D)

Question 10

When the dollar depreciates, U.S.

Accepted Answer

A)   exports and imports increase.
B)   exports increase, while imports decrease.
C)   exports decrease, while imports increase.
D)   exports and imports decrease.E) C) and D)
F) A) and B)

Question 11

During recessions investment

Accepted Answer

A)   falls by a larger percentage than GDP.
B)   falls by about the same percentage as GDP.
C)   falls by a smaller percentage than GDP.
D)   falls but the percentage change is sometimes much larger and sometimes much smaller.E) A) and C)
F) All of the above

Question 12

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 13

If aggregate demand shifts right, then eventually price level expectations rise. The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left.

Accepted Answer

A) True 
 B)False

Question 14

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)   10 percent, 1 percent
B)   2 percent, 12 percent
C)   -1 percent, 8 percent
D)   -2 percent, 2 percentE) A) and D)
F) C) and D)

Question 15

Figure 33-17. 
Refer to Figure 33-17. Suppose the economy starts at P3 and Y2. Explain how government purchases would need to change to move the economy to P2 and Y1. What about taxes?

Accepted Answer

decrease in governme...

Question 16

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Accepted Answer

A)   both investment and consumption
B)   consumption but not investment
C)   investment but not consumption
D)   neither investment nor consumptionE) C) and D)
F) All of the above

Question 17

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) None of the above
F) A) and D)

Question 18

Which of the following shifts the long-run aggregate supply curve to the left?

Accepted Answer

A)   either an increase in the price of imported natural resources or a reduction in trade restrictions.
B)   neither an increase in the price of imported natural resources or a reduction in trade restrictions.
C)   an increase in the price of imported natural resources and an increase in trade restrictions.
D)   an increase in trade restrictions and a decrease in the price of imported natural resources.E) A) and B)
F) A) and C)

Question 19

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.
-Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

Accepted Answer

A)   both the price level and real GDP rise
B)   the price level rises and real GDP falls
C)   the price level falls and real GDP rises
D)   both the price level and real GDP fallE) B) and D)
F) All of the above

Question 20

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   either immigration from abroad increases or technology improves.
B)   immigration from abroad increases, but not if technology improves.
C)   technology improves, but not if immigration from abroad increases.
D)   None of the above are correct.E) A) and D)
F) C) and D)

Exam 15: Aggregate Demand and Aggregate Supply

Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy

Correct Answer
verified

Correct Answer
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Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the supply of labor, a major new discovery of oil, and new environmental regulations that raise the cost of electricity production. In the short run

Correct Answer
verified

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Correct Answer
verified

Which of the following shifts the long-run aggregate supply curve to the left?

Correct Answer
verified

Correct Answer
verified

When the dollar depreciates, U.S.

Correct Answer
verified

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 Answer
verified

During recessions investment

Correct Answer
verified

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 Answer
verified

The long-run aggregate supply curve shifts right if

Correct Answer
verified

Which of the following is correct?

Correct Answer
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When the price level increases, the real value of people's money holdings

Correct Answer
verified

Figure 33-17. Refer to Figure 33-17. Suppose the economy starts at P3 and Y2. Explain how government purchases would need to change to move the economy to P2 and Y1. What about taxes?

Correct Answer
verified
decrease in governme...
View Answer

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Correct Answer
verified

If aggregate demand shifts right, then eventually price level expectations rise. The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left.

Correct Answer
verified

Historically, as recessions have ended the unemployment rate declined

Correct Answer
verified

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

Correct Answer
verified

An increase in the interest rate causes investment to

Correct Answer
verified

The classical dichotomy and monetary neutrality are represented graphically by

Correct Answer
verified

Exam 15: Aggregate Demand and Aggregate Supply

Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the supply of labor, a major new discovery of oil, and new environmental regulations that raise the cost of electricity production. In the short run

Correct AnswerverifiedShow Answer

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Correct AnswerverifiedShow Answer

Which of the following shifts the long-run aggregate supply curve to the left?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the dollar depreciates, U.S.

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

During recessions investment

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

The long-run aggregate supply curve shifts right if

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

When the price level increases, the real value of people's money holdings

Correct AnswerverifiedShow Answer

Figure 33-17. Refer to Figure 33-17. Suppose the economy starts at P3 and Y2. Explain how government purchases would need to change to move the economy to P2 and Y1. What about taxes?

Correct Answerverifieddecrease in governme...View AnswerShow Answer

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Correct AnswerverifiedShow Answer

If aggregate demand shifts right, then eventually price level expectations rise. The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left.

Correct AnswerverifiedShow Answer

Historically, as recessions have ended the unemployment rate declined

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

An increase in the interest rate causes investment to

Correct AnswerverifiedShow Answer

The classical dichotomy and monetary neutrality are represented graphically by

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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decrease in governme...
View Answer

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