Question 1

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

Accepted Answer

A)   both an increase in the price level that is greater than expected and an increase in the expected price level.
B)   an increase in the price level that is greater than expected, but not an increase in the expected price level.
C)   an increase in the expected price level, but not an increase in the price level that is greater than expected.
D)   neither an increase in the price level that is greater than expected nor an increase in the expected price level.E) B) and C)
F) A) and D)

Question 2

Other things the same, continued increases in technology lead to

Accepted Answer

A)   continued increases in the price level and real GDP.
B)   continued decreases in the price level and real GDP.
C)   continued increases in real GDP and continued increases in the price level.
D)   continued increases in real GDP and continued decreases in the price level.E) All of the above
F) B) and D)

Question 3

Other things the same, a decrease in the price level causes the interest rate to

Accepted Answer

A)   increase, the dollar to appreciate, and net exports to increase.
B)   increase, the dollar to depreciate, 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) None of the above
F) C) and D)

Question 4

A decrease in the price level

Accepted Answer

A)   increases the quantity of goods and services supplied in the short run.
B)   decreases the quantity of goods and services supplied in the long run.
C)   decreases the quantity of goods and services demanded.
D)   increases the quantity of goods and services demanded.E) All of the above
F) B) and D)

Question 5

Figure 33-4 
-Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Accepted Answer

A)   A to B.
B)   C to D.
C)   B to A.
D)   D to C.E) A) and D)
F) B) and D)

Question 6

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

Question 7

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 8

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. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Accepted Answer

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

Question 9

Figure 33-5. 
-Refer to Figure 33-5. In Figure 33-5,

Accepted Answer

A)   Point B represents a short-run equilibrium and a long-run equilibrium.
B)   Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium.
C)   Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium.
D)   Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium.E) B) and D)
F) None of the above

Question 10

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Accepted Answer

A)   employment and production would rise.
B)   employment would rise and production would fall.
C)   employment would fall and production would rise.
D)   employment and production would fall.E) B) and D)
F) All of the above

Question 11

The aggregate supply curve is

Accepted Answer

A)   vertical in the long run and slopes upward in the short run.
B)   upward sloping in the long run and vertical in the short run.
C)   vertical in the short run and in the long run.
D)   upward sloping in the short run and in the long run.E) C) and D)
F) None of the above

Question 12

The Stock Market Boom of 2015
Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
-Refer to Stock Market Boom 2015. In the long run, the change in price expectations created by the stock market boom 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) A) and C)
F) B) and C)

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 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 D)
F) A) and C)

Question 14

What do most economists believe concerning the relation between the price level and real output?

Accepted Answer

Most economists believe that in the long...

Question 15

Which of the following shifts aggregate demand right?

Accepted Answer

A)   both a decrease in the price level and the implementation of an investment tax credit
B)   a decrease in the price level but not the implementation of an investment tax credit
C)   the implementation of an investment tax credit but not a decrease in the price level
D)   neither a decrease in the price level nor the implementation of an investment tax creditE) A) and B)
F) A) and C)

Question 16

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Accepted Answer

Consumption expendit...

Question 17

Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes raised. At the same time,
Senator B succeeds in getting major restrictions on logging removed. 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) B) and D)
F) A) and D)

Question 18

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 19

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

The aggreg...

Exam 15: Aggregate Demand and Aggregate Supply

What do most economists believe concerning the relation between the price level and real output?

Correct Answer
verified
Most economists believe that in the long...
View Answer

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2015. In the long run, the change in price expectations created by the stock market boom shifts

Correct Answer
verified

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

Correct Answer
verified

Which of the following shifts aggregate demand right?

Correct Answer
verified

Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes raised. At the same time, Senator B succeeds in getting major restrictions on logging removed. In the short run

Correct Answer
verified

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Correct Answer
verified

Correct Answer
verified

The aggregate supply curve is

Correct Answer
verified

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Correct Answer
verified
Consumption expendit...
View Answer

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Correct Answer
verified

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Correct Answer
verified

Other things the same, continued increases in technology lead to

Correct Answer
verified

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

Correct Answer
verified
The aggreg...
View Answer

Other things the same, a decrease in the price level causes the interest rate to

Correct Answer
verified

Figure 33-4 -Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Correct Answer
verified

A decrease in the price level

Correct Answer
verified

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

Correct Answer
verified

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

Correct Answer
verified

Figure 33-5. -Refer to Figure 33-5. In Figure 33-5,

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 it produce had

Correct Answer
verified

Exam 15: Aggregate Demand and Aggregate Supply

What do most economists believe concerning the relation between the price level and real output?

Correct AnswerverifiedMost economists believe that in the long...View AnswerShow Answer

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2015. In the long run, the change in price expectations created by the stock market boom shifts

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand right?

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes raised. At the same time, Senator B succeeds in getting major restrictions on logging removed. In the short run

Correct AnswerverifiedShow Answer

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The aggregate supply curve is

Correct AnswerverifiedShow Answer

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Correct AnswerverifiedConsumption expendit...View AnswerShow Answer

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Correct AnswerverifiedShow Answer

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Correct AnswerverifiedShow Answer

Other things the same, continued increases in technology lead to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe aggreg...View AnswerShow Answer

Other things the same, a decrease in the price level causes the interest rate to

Correct AnswerverifiedShow Answer

Figure 33-4 -Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Correct AnswerverifiedShow Answer

A decrease in the price level

Correct AnswerverifiedShow Answer

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 33-5. -Refer to Figure 33-5. In Figure 33-5,

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

Correct Answer
verified
Most economists believe that in the long...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Consumption expendit...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The aggreg...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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