Question 1

From 2001 to 2005 there was a dramatic rise in the price of houses.If this made people feel wealthier,then it would shift

Accepted Answer

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

Question 2

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Accepted Answer

A) True 
 B)False

Question 3

Suppose the economy is in long-run equilibrium.If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions,then we would expect that in the short-run,

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) A) and B)
F) C) and D)

Question 4

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

Accepted Answer

A)  a decrease in the actual price level.
B)  an increase in the actual price level.
C)  a decrease in the expected price level.
D)  an increase in the expected price level.E) A) and B)
F) B) and C)

Question 5

When the money supply decreases

Accepted Answer

A)  interest rates fall and so aggregate demand shifts right.
B)  interest rates fall and so aggregate demand shifts left.
C)  interest rates rise and so aggregate demand shifts right.
D)  interest rates rise and so aggregate demand shifts left.E) All of the above
F) A) and D)

Question 6

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

Accepted Answer

A)  rises, shifting aggregate demand right.
B)  rises, shifting aggregate demand left.
C)  falls, shifting aggregate supply right.
D)  falls, shifting aggregate supply left.E) C) and D)
F) None of the above

Question 7

Consider the exhibit below for the following questions.
Figure 33-1
 
-Refer to Figure 33-1.If the economy starts at C,an increase in the money supply moves the economy

Accepted Answer

A)  to A in the long run.
B)  to B in the long run.
C)  back to C in the long run.
D)  to D in the long run.E) A) and B)
F) A) and C)

Question 8

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

Accepted Answer

A)  an increase in the actual price level
B)  an increase in the expected price level
C)  an increase in the capital stock
D)  None of the above is correct.E) A) and B)
F) B) and D)

Question 9

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

Question 10

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption,investme...

Question 11

During a recession the economy experiences

Accepted Answer

A)  rising employment and income.
B)  rising employment and falling income.
C)  rising income and falling employment.
D)  falling employment and income.E) None of the above
F) A) and D)

Question 12

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers people become pessimistic regarding the future and retain that level of pessimism for some time.
-Refer to Pessimism.In the long run,the change in price expectations created by pessimism shifts

Accepted Answer

A)  long-run aggregate supply right.
B)  long-run aggregate supply left.
C)  short-run aggregate supply right.
D)  short-run aggregate supply left.E) C) and D)
F) All of the above

Question 13

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 they produce had

Accepted Answer

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

Question 14

Imagine the economy is in long-run equilibrium.If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers,then we would expect that in the short run,

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) A) and B)
F) A) and C)

Question 15

Pessimism about the future leads to falling prices and rising unemployment in the short run.

Accepted Answer

A) True 
 B)False

Question 16

An increase in the price level causes the interest rate to

Accepted Answer

A)  increase, the dollar to depreciate, and net exports to increase.
B)  increase, the dollar to appreciate, and net exports to decrease.
C)  decrease, the dollar to depreciate, and net exports to increase.
D)  decrease, the dollar to appreciate, and net exports to decrease.E) A) and B)
F) B) and C)

Question 17

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Accepted Answer

A)  increase which shifts aggregate demand right.
B)  increase which shifts aggregate demand left.
C)  decrease which shifts aggregate demand right.
D)  decrease which shifts aggregate demand left.E) B) and D)
F) A) and D)

Question 18

Other things the same,if the money supply rises by 2% and people were expecting it to rise by 5%,then some firms have

Accepted Answer

A)  higher than desired prices which increases their sales.
B)  higher than desired prices which depresses their sales.
C)  lower than desired prices which increases their sales.
D)  lower than desired prices which depresses their sales.E) A) and B)
F) A) and C)

Question 19

Which of the following will cause stagflation?

Accepted Answer

A)  an increase in the money supply
B)  an increase in oil prices
C)  a decrease in the money supply
D)  technical progressE) B) and C)
F) A) and B)

Question 20

An increase in the price level and a reduction in real GDP could be created by

Accepted Answer

A)  a fall in stock prices.
B)  natural disasters such as hurricanes and famines.
C)  declining government expenditures.
D)  tax rebates.E) B) and C)
F) None of the above

Exam 33: Aggregate Demand and Aggregate Supply

An increase in the price level causes the interest rate to

Correct Answer
verified

During a recession the economy experiences

Correct Answer
verified

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Correct Answer
verified

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Correct Answer
verified

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

Correct Answer
verified

Which of the following will cause stagflation?

Correct Answer
verified

An increase in the price level and a reduction in real GDP could be created by

Correct Answer
verified

Pessimism about the future leads to falling prices and rising unemployment in the short run.

Correct Answer
verified

Suppose the economy is in long-run equilibrium.If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions,then we would expect that in the short-run,

Correct Answer
verified

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy starts at C,an increase in the money supply moves the economy

Correct Answer
verified

Correct Answer
verified

From 2001 to 2005 there was a dramatic rise in the price of houses.If this made people feel wealthier,then it would shift

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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 they produce had

Correct Answer
verified

When the money supply decreases

Correct Answer
verified

Make a list of expenditures whose sum equals GDP.

Correct Answer
verified
consumption,investme...
View Answer

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

Correct Answer
verified

Other things the same,if the money supply rises by 2% and people were expecting it to rise by 5%,then some firms have

Correct Answer
verified

Imagine the economy is in long-run equilibrium.If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers,then we would expect that in the short run,

Correct Answer
verified

Exam 33: Aggregate Demand and Aggregate Supply

An increase in the price level causes the interest rate to

Correct AnswerverifiedShow Answer

During a recession the economy experiences

Correct AnswerverifiedShow Answer

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Correct AnswerverifiedShow Answer

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following will cause stagflation?

Correct AnswerverifiedShow Answer

An increase in the price level and a reduction in real GDP could be created by

Correct AnswerverifiedShow Answer

Pessimism about the future leads to falling prices and rising unemployment in the short run.

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium.If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions,then we would expect that in the short-run,

Correct AnswerverifiedShow Answer

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy starts at C,an increase in the money supply moves the economy

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

From 2001 to 2005 there was a dramatic rise in the price of houses.If this made people feel wealthier,then it would shift

Correct AnswerverifiedShow Answer

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

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

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 they produce had

Correct AnswerverifiedShow Answer

When the money supply decreases

Correct AnswerverifiedShow Answer

Make a list of expenditures whose sum equals GDP.

Correct Answerverifiedconsumption,investme...View AnswerShow Answer

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

Correct AnswerverifiedShow Answer

Other things the same,if the money supply rises by 2% and people were expecting it to rise by 5%,then some firms have

Correct AnswerverifiedShow Answer

Imagine the economy is in long-run equilibrium.If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers,then we would expect that in the short run,

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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consumption,investme...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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