Question 1

A decrease in what variable will raise the quantity of goods and services supplied, and shift only the short run aggregate supply curve to the right?

Accepted Answer

The expect...

Question 2

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

Question 3

A relatively mild period of falling incomes and rising unemployment is called an)

Accepted Answer

A)   depression.
B)   recession.
C)   expansion.
D)   business cycle.E) None of the above
F) A) and C)

Question 4

Suppose people anticipate an increase in the expected price level. 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 aggreg...

Question 5

The aggregate demand and aggregate supply model helps us to understand both short-run economic fluctuations and how the economy moves from the short to the long run.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that during the Great Depression long-run aggregate supply shifted left. To be consistent with what happened to the price level and output, what would have had to happen to aggregate demand?

Accepted Answer

A)   It would have to have shifted left by less than aggregate supply.
B)   It would have to have shifted left by more than aggregate supply.
C)   It would have to have shifted right by less than aggregate supply.
D)   It would have to have shifted right by more than aggregate supply.E) All of the above
F) A) and B)

Question 7

Other things the same, when the price level rises, 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) A) and B)
F) None of the above

Question 8

Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire

Accepted Answer

A)   increased consumption, which shifts the aggregate-demand curve right.
B)   increased consumption, which shifts the aggregate-demand curve left.
C)   decreased consumption, which shifts the aggregate-demand curve right.
D)   decreased consumption, which shifts the aggregate-demand curve left.E) B) and C)
F) A) 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) A) and B)
F) A) and C)

Question 10

According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what it produce had

Accepted Answer

A)   increased, so it would increase production.
B)   increased, so it would decrease production.
C)   decreased, so it would increase production.
D)   decreased, so it would decrease production.E) A) and B)
F) A) and C)

Question 11

Which of the following alone can explain the change in the price level and output during World War II?

Accepted Answer

A)   aggregate demand shifted right
B)   aggregate demand shifted left
C)   aggregate supply shifted right
D)   aggregate supply shifted leftE) All of the above
F) None of the above

Question 12

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) B) and C)
F) None of the above

Question 13

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

Accepted Answer

A) True 
 B)False

Question 14

Figure 33-2. 
-Refer to Figure 33-2. Line X is

Accepted Answer

A)   investment spending.
B)   real GDP.
C)   unemployment rate.
D)   CPI.E) None of the above
F) A) and D)

Question 15

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption, investm...

Question 16

An increase in the expected price level shifts the

Accepted Answer

A)   short-run and long-run aggregate supply curves left.
B)   the short-run but not the long-run aggregate supply curve left.
C)   the long-run but not the short-run aggregate supply curve left.
D)   neither the long-run nor the short-run aggregate supply curve left.E) A) and B)
F) A) and C)

Question 17

Which of the following is correct?

Accepted Answer

A)   Short run fluctuations in economic activity happen only in developing countries.
B)   During economic contractions most firms experience rising profits.
C)   Recessions come at irregular intervals and are easy to predict.
D)   When real GDP falls, the rate of unemployment rises.E) None of the above
F) B) and D)

Question 18

The aggregate quantity of goods and services demanded changes as the price level falls because

Accepted Answer

A)   real wealth falls, interest rates rise, and the dollar appreciates.
B)   real wealth falls, interest rates rise, and the dollar depreciates.
C)   real wealth rises, interest rates fall, and the dollar appreciates.
D)   real wealth rises, interest rates fall, and the dollar depreciates.E) None of the above
F) B) and C)

Question 19

Figure 33-4 
-Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy

Accepted Answer

A)   stays at A.
B)   moves to B.
C)   moves to C.
D)   moves to D.E) A) and D)
F) A) and C)

Question 20

The recessions of the 1970s are often attributed to

Accepted Answer

A)   declining inflation expectations.
B)   an increase in oil prices.
C)   declines in the price of stock.
D)   decreases in the money supply.E) None of the above
F) B) and D)

Exam 23: Aggregate Demand and Aggregate Supply

The recessions of the 1970s are often attributed to

Correct AnswerverifiedShow Answer

Which of the following is correct?

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Which of the following alone can explain the change in the price level and output during World War II?

Correct AnswerverifiedShow Answer

The aggregate quantity of goods and services demanded changes as the price level falls because

Correct AnswerverifiedShow Answer

A decrease in what variable will raise the quantity of goods and services supplied, and shift only the short run aggregate supply curve to the right?

Correct AnswerverifiedThe expect...View AnswerShow Answer

Figure 33-4 -Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy

Correct AnswerverifiedShow Answer

The aggregate demand and aggregate supply model helps us to understand both short-run economic fluctuations and how the economy moves from the short to the long run.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that during the Great Depression long-run aggregate supply shifted left. To be consistent with what happened to the price level and output, what would have had to happen to aggregate demand?

Correct AnswerverifiedShow Answer

Historically, as recessions have ended the unemployment rate declined

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in the expected price level shifts the

Correct AnswerverifiedShow Answer

According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what it produce had

Correct AnswerverifiedShow Answer

Figure 33-2. -Refer to Figure 33-2. Line X is

Correct AnswerverifiedShow Answer

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

Correct AnswerverifiedShow Answer

Suppose people anticipate an increase in the expected price level. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Correct AnswerverifiedThe short-run aggreg...View AnswerShow Answer

Make a list of expenditures whose sum equals GDP.

Correct Answerverifiedconsumption, investm...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire

Correct AnswerverifiedShow Answer

A relatively mild period of falling incomes and rising unemployment is called an)

Correct AnswerverifiedShow Answer

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The expect...
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The short-run aggreg...
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consumption, investm...
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