Question 1

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 opening up international trade
B)  neither an increase in the price of imported natural resources or opening up international trade
C)  an increase in the price of imported natural resources, but not opening up international trade
D)  opening up international trade, but not an increase in the price of imported natural resourcesE) B) and D)
F) None of the above

Question 2

Suppose the economy is in long-run equilibrium.Senator Aviary succeeds in getting a major new highway project for his state.At the same time,Senator Green succeeds in getting major new restrictions on logging enacted.In the short run,we would expect

Accepted Answer

A)  real GDP will rise and the price level might rise, fall, or stay the same.
B)  real GDP will fall and the price level might rise, fall, or stay the same.
C)  the price level will rise, and real GDP might rise, fall, or stay the same.
D)  the price level will fall, and real GDP might rise, fall, or stay the same.E) B) and C)
F) A) and B)

Question 3

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage.They may infer that the reward to working is

Accepted Answer

A)  temporarily low and so supply a smaller quantity of labor.
B)  temporarily low and so supply a larger quantity of labor.
C)  temporarily high and so supply a smaller quantity of labor.
D)  temporarily high and so supply a larger quantity of labor.E) A) and B)
F) C) and D)

Question 4

The average price level is measured by

Accepted Answer

A)  any real variable.
B)  the rate of inflation.
C)  the level of the money supply.
D)  the CPI or the GDP deflator.E) None of the above
F) B) and C)

Question 5

A decrease in the expected price level would shift

Accepted Answer

A)  only the long-run aggregate supply curve right.
B)  only the short-run aggregate supply curve right.
C)  both the short-run and the long-run aggregate supply curve right.
D)  Neither the short-run nor the long-run aggregate supply curve right.E) A) and B)
F) B) and C)

Question 6

Consider the exhibit below for the following questions.
Figure 33-1
 
-Refer to Figure 33-1.In the short run,a favorable shift in aggregate supply would move the economy from

Accepted Answer

A)  A to B.
B)  B to C.
C)  C to D.
D)  D to A.E) A) and C)
F) All of the above

Question 7

Other things the same,when the price level falls,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 C)
F) A) and B)

Question 8

During recessions

Accepted Answer

A)  workers are laid off.
B)  factories are idle.
C)  firms may find they are unable to sell all they produce.
D)  All of the above are correct.E) All of the above
F) A) and C)

Question 9

Other things the same,as the price level falls,a country's exchange rate

Accepted Answer

A)  and interest rates rise.
B)  and interest rates fall.
C)  falls and interest rates rise.
D)  rises and interest rates fall.E) C) and D)
F) A) and B)

Question 10

Other things the same,a decrease in the price level makes the interest rate increase,which leads to an appreciation of the dollar in the foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 11

In the short run Recessions in South Korea and Indonesia will cause

Accepted Answer

A)  the U.S.price level and real GDP to rise.
B)  the U.S.price level and real GDP to fall.
C)  the U.S.price level to rise and real GDP to fall.
D)  the U.S.price level to fall and real GDP to rise.E) A) and B)
F) A) and C)

Question 12

Which of the following explains why production rises in most years?

Accepted Answer

A)  increases in the labor force
B)  increases in the capital stock
C)  advances in technological knowledge
D)  All of the above are correct.E) A) and B)
F) B) and C)

Question 13

The aggregate supply curve is upward sloping in

Accepted Answer

A)  the short and long run.
B)  neither the short nor long run.
C)  the long run, but not the short run.
D)  the short run, but not the long run.E) A) and B)
F) All of the above

Question 14

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) All of the above
F) A) and B)

Question 15

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  Congress reduces purchases of new weapons systems.
B)  The Fed buys bonds in the open market.
C)  The price level falls.
D)  Net exports fall.E) A) and B)
F) None of the above

Question 16

A short period of falling incomes and rising unemployment is called a

Accepted Answer

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

Question 17

Because we understand what things change GDP,we can predict recessions with a fair amount of accuracy.

Accepted Answer

A) True 
 B)False

Question 18

Other things the same,an increase in the price level makes the dollars people hold worth

Accepted Answer

A)  more, so they spend more.
B)  more, so they spend less.
C)  less, so they spend more.
D)  less, so they spend less.E) None of the above
F) B) and C)

Question 19

Other things the same,as the price level falls,

Accepted Answer

A)  the money supply falls.
B)  interest rates rise.
C)  a dollar buys more domestic goods.
D)  the aggregate demand curve shifts right.E) C) and D)
F) All of the above

Question 20

Other things the same,a fall in the economy's overall level of prices tends to

Accepted Answer

A)  raise both the quantity demanded and supplied of goods and services.
B)  raise the quantity demanded of goods and services, but lower the quantity supplied.
C)  lower the quantity demanded of goods and services, but raise the quantity supplied.
D)  lower both the quantity demanded and the quantity supplied of goods and services.E) All of the above
F) A) and B)

Exam 33: Aggregate Demand and Aggregate Supply

The average price level is measured by

Correct AnswerverifiedShow Answer

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

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Other things the same,as the price level falls,

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

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The aggregate supply curve is upward sloping in

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Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage.They may infer that the reward to working is

Correct AnswerverifiedShow Answer

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.In the short run,a favorable shift in aggregate supply would move the economy from

Correct AnswerverifiedShow Answer

Which of the following explains why production rises in most years?

Correct AnswerverifiedShow Answer

In the short run Recessions in South Korea and Indonesia will cause

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

Other things the same,a fall in the economy's overall level of prices tends to

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium.Senator Aviary succeeds in getting a major new highway project for his state.At the same time,Senator Green succeeds in getting major new restrictions on logging enacted.In the short run,we would expect

Correct AnswerverifiedShow Answer

Other things the same,as the price level falls,a country's exchange rate

Correct AnswerverifiedShow Answer

Other things the same,a decrease in the price level makes the interest rate increase,which leads to an appreciation of the dollar in the foreign-currency exchange.

Correct AnswerverifiedShow Answer

A short period of falling incomes and rising unemployment is called a

Correct AnswerverifiedShow Answer

Other things the same,an increase in the price level makes the dollars people hold worth

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand to the right?

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A decrease in the expected price level would shift

Correct AnswerverifiedShow Answer

Because we understand what things change GDP,we can predict recessions with a fair amount of accuracy.

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During recessions

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