Question 1

Prices and wages tend to be

Accepted Answer

A)   ﬂexible both upward and downward.
B)   inﬂexible both upward and downward.
C)   ﬂexible downward but inﬂexible upward.
D)   ﬂexible upward but inﬂexible downward.E) A) and B)
F) All of the above

Question 2

If the dollar price of foreign currencies falls (that is, the dollar appreciates) , we would expect

Accepted Answer

A)   aggregate demand to decrease and aggregate supply to increase.
B)   both aggregate demand and aggregate supply to decrease.
C)   both aggregate demand and aggregate supply to increase.
D)   aggregate demand to increase and aggregate supply to decrease.E) None of the above
F) All of the above

Question 3

The equilibrium price level and level of real output occur where

Accepted Answer

A)   real output is at its highest possible level.
B)   exports equal imports.
C)   the price level is at its lowest level.
D)   the aggregate demand and supply curves intersect.E) A) and C)
F) A) and B)

Question 4

1. Government Spending 
2. Consumer Expectations
3. Degree of Excess Capacity
4. Personal Income Tax Rates
5. Productivity
6. National Income Abroad
7. Business Taxes
8. Domestic Resource Availability
9. Prices of Imported Products
10. Proﬁt Expectations on Investments
Answer the question based on the accompanying list of items related to aggregate demand or
aggregate supply. Changes in which combination of factors best explain why the aggregate supply
curve would shift?

Accepted Answer

A)   1 and 2
B)   2 and 10
C)   3 and 6
D)   7 and 8E) C) and D)
F) B) and D)

Question 5

Accepted Answer

A)    Q3 to Q1. Q _ { 3 } 	ext { to } Q _ { 1 } 	ext {. }Q3​ to Q1​.  
B)    Q2 to Q4Q _ { 2 } 	ext { to } Q _ { 4 }Q2​ to Q4​ 
C)    Q2 to Q1. Q _ { 2 } 	ext { to } Q _ { 1 } 	ext {. }Q2​ to Q1​.  
D)    Q3 to Q4Q _ { 3 } 	ext { to } Q _ { 4 }Q3​ to Q4​  . E) None of the above
F) B) and C)

Question 6

Accepted Answer

A)    Q1 to Q2Q _ { 1 } 	ext { to } Q _ { 2 }Q1​ to Q2​ 
B)    Q1 to Q3Q _ { 1 } 	ext { to } Q _ { 3 }Q1​ to Q3​ 
C)    Q2 to Q3. Q _ { 2 } 	ext { to } Q _ { 3 } 	ext {. }Q2​ to Q3​.  
D)    Q2 to more than Q3. Q _ { 2 } 	ext { to more than } Q _ { 3 } 	ext {. }Q2​ to more than Q3​. E) C) and D)
F) A) and B)

Question 7

Accepted Answer

A)   stricter government regulations.
B)   an increase in the prices of imported resources.
C)   a decrease in the prices of domestic resources.
D)   an increase in business taxes.E) All of the above
F) B) and C)

Question 8

When there is an increase in aggregate demand in the short run, there will be an increase in the
price level but not in the level of output or employment.

Accepted Answer

A) True 
 B)False

Question 9

What happens to bring the AD-AS system back into equilibrium when prices are below the
equilibrium level?

Accepted Answer

When prices are below equilibrium, busin...

Question 10

Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S.

Accepted Answer

A)   aggregate demand curve would shift to the right.
B)   aggregate supply curve would shift to the left.
C)   aggregate supply curve would shift to the right.
D)   aggregate demand curve would shift to the left.E) None of the above
F) C) and D)

Question 11

An increase in personal income tax rates will cause a(n)

Accepted Answer

A)   decrease (or shift left)  in aggregate demand.
B)   increase (or shift right)  in aggregate demand.
C)   decrease in the quantity of real output demanded (or movement up along A
D)  .
D)   increase in the quantity of real output demanded (or movement down along A
D)  .E) None of the above
F) A) and C)

Question 12

Accepted Answer

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

Question 13

Accepted Answer

A)   the expenditure multiplier effect
B)   the real-balances effect
C)   the interest-rate effect
D)   the foreign purchases effectE) A) and B)
F) A) and C)

Question 14

A decrease in personal and business taxes will cause government spending and aggregate demand
to decrease.

Accepted Answer

A) True 
 B)False

Question 15

A decrease in aggregate demand will cause a greater decline in real output the

Accepted Answer

A)   less ﬂexible is the economy's price level.
B)   more ﬂexible is the economy's price level.
C)   steeper is the economy's AS curve.
D)   larger is the economy's marginal propensity to save.E) A) and C)
F) A) and B)

Question 16

1. Real-Balances Effect 
2. Household Expectations
3. Interest-Rate Effect
4. Personal Income Tax Rates
5. Proﬁt Expectations
6. National Incomes Abroad
7. Government Spending
8. Foreign Purchases Effect
9. Exchange Rates 
10. Degree of Excess Capacity
Answer the question based on the accompanying list of factors that are related to the aggregate
demand curve. Which of the factors best explain the downward slope of aggregate demand curve?

Accepted Answer

A)   2, 4, and 6
B)   7, 9, and 10
C)   1, 3, and 8
D)   4, 6, and 7E) A) and C)
F) A) and D)

Question 17

The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the

Accepted Answer

A)   real-balances, interest-rate, and foreign purchases effects.
B)   determinants of aggregate supply.
C)   determinants of aggregate demand.
D)   sole determinants of the equilibrium price level and the equilibrium real output.E) C) and D)
F) A) and B)

Question 18

Accepted Answer

A)   increasing output produced.
B)   decreasing the GDP produced.
C)   reducing the price level.
D)   increasing the total output demanded.E) B) and D)
F) B) and C)

Question 19

The aggregate supply curve (short run)

Accepted Answer

A)   graphs as a horizontal line.
B)   is steeper above the full-employment output than below it.
C)   slopes downward and to the right.
D)   presumes that changes in wages and other resource prices match changes in the price level.E) A) and C)
F) A) and B)

Question 20

In the Great Recession of 2007-2009, stock market values shrank, causing a reverse

Accepted Answer

A)   wealth effect.
B)   real-balances effect.
C)   interest-rate effect.
D)   expectations effect.E) B) and C)
F) C) and D)

Exam 12: Aggregate Demand and Aggregate Supply

What happens to bring the AD-AS system back into equilibrium when prices are below the equilibrium level?

Correct Answer
verified
When prices are below equilibrium, busin...
View Answer

Correct Answer
verified

$A) Q _ { 3 } \text { to } Q _ { 1 } \text {. } B) Q _ { 2 } \text { to } Q _ { 4 } C) Q _ { 2 } \text { to } Q _ { 1 } \text {. } D) Q _ { 3 } \text { to } Q _ { 4 } .$

Correct Answer
verified

The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the

Correct Answer
verified

In the Great Recession of 2007-2009, stock market values shrank, causing a reverse

Correct Answer
verified

Correct Answer
verified

$A) Q _ { 1 } \text { to } Q _ { 2 } B) Q _ { 1 } \text { to } Q _ { 3 } C) Q _ { 2 } \text { to } Q _ { 3 } \text {. } D) Q _ { 2 } \text { to more than } Q _ { 3 } \text {. }$

Correct Answer
verified

If the dollar price of foreign currencies falls (that is, the dollar appreciates) , we would expect

Correct Answer
verified

Prices and wages tend to be

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The equilibrium price level and level of real output occur where

Correct Answer
verified

A decrease in personal and business taxes will cause government spending and aggregate demand to decrease.

Correct Answer
verified

An increase in personal income tax rates will cause a(n)

Correct Answer
verified

Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S.

Correct Answer
verified

When there is an increase in aggregate demand in the short run, there will be an increase in the price level but not in the level of output or employment.

Correct Answer
verified

The aggregate supply curve (short run)

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A decrease in aggregate demand will cause a greater decline in real output the

Correct Answer
verified

Exam 12: Aggregate Demand and Aggregate Supply

What happens to bring the AD-AS system back into equilibrium when prices are below the equilibrium level?

Correct AnswerverifiedWhen prices are below equilibrium, busin...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the

Correct AnswerverifiedShow Answer

In the Great Recession of 2007-2009, stock market values shrank, causing a reverse

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the dollar price of foreign currencies falls (that is, the dollar appreciates) , we would expect

Correct AnswerverifiedShow Answer

Prices and wages tend to be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The equilibrium price level and level of real output occur where

Correct AnswerverifiedShow Answer

A decrease in personal and business taxes will cause government spending and aggregate demand to decrease.

Correct AnswerverifiedShow Answer

An increase in personal income tax rates will cause a(n)

Correct AnswerverifiedShow Answer

Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S.

Correct AnswerverifiedShow Answer

When there is an increase in aggregate demand in the short run, there will be an increase in the price level but not in the level of output or employment.

Correct AnswerverifiedShow Answer

The aggregate supply curve (short run)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A decrease in aggregate demand will cause a greater decline in real output the

Correct AnswerverifiedShow Answer

Correct Answer
verified
When prices are below equilibrium, busin...
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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified