Question 1

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 sales.
C)  Recessions come at regular intervals and are easy to predict.
D)  When real GDP falls, the rate of unemployment rises.E) None of the above
F) A) and C)

Question 2

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  the price level rises.
B)  the price level falls.
C)  the capital stock increases.
D)  the capital stock decreases.E) All of the above
F) A) and C)

Question 3

Aggregate demand includes

Accepted Answer

A)  both the quantity of goods and services the government and customers abroad want to buy.
B)  neither the quantity of goods and services the government wants to buy nor the quantity of goods and services customers abroad want to buy.
C)  the quantity of goods and service the government wants to buy, but not the quantity of goods and services customers abroad want to buy.
D)  the quantity of goods and services customers abroad want to buy, but not the quantity of goods and services the government wants to buy.E) None of the above
F) A) and B)

Question 4

The aggregate demand and aggregate supply graph has

Accepted Answer

A)  the price level on the horizontal axis. The price level can be measured by the GDP deflator.
B)  the price level on the horizontal axis. The price level can be measured by real GDP.
C)  the price level on the vertical axis. The price level can be measured by the GDP deflator.
D)  the price level on the vertical axis. The price level can be measured by GDP.E) A) and B)
F) A) and C)

Question 5

Suppose that during World War II the long-run aggregate supply curve shifted right. In order for price and output to have changed in the direction they did, what would have to have happened to aggregate demand?

Accepted Answer

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

Question 6

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Accepted Answer

A)  the real value of wealth
B)  the interest rate
C)  the value of currency in the market for foreign exchange
D)  All of the above are correct.E) A) and D)
F) None of the above

Question 7

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Accepted Answer

A)  consumption
B)  investment
C)  government expenditures
D)  All of the above are correct.E) A) and C)
F) A) and D)

Question 8

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

Question 9

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 10

U.S. Financial Crisis
Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that privately issued U.S. bonds were more likely to be defaulted on.
-Refer to U.S. Financial Crisis. U.S. net exports would

Accepted Answer

A)  rise which by itself would increase aggregate demand.
B)  rise which by itself would decrease aggregate demand.
C)  fall which by itself would increase aggregate demand.
D)  fall which by itself would decrease aggregate demand.E) A) and D)
F) A) and B)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Accepted Answer

A)  the sticky-wage theory
B)  misperceptions theory
C)  both the sticky-wage and misperceptions theories.
D)  neither the sticky-wage nor the misperceptions theory.E) A) and D)
F) All of the above

Question 13

When taxes decrease, consumption

Accepted Answer

A)  increases, so aggregate demand shifts right.
B)  increases, so aggregate supply shifts right.
C)  decreases, so aggregate demand shifts left.
D)  decreases, so aggregate supply shifts left.E) A) and D)
F) C) and D)

Question 14

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)  6 percent, 0 percent
B)  3 percent, 10 percent
C)  -1 percent, 6 percent
D)  -3 percent, 2 percentE) A) and D)
F) A) and C)

Question 15

When the price level falls the quantity of

Accepted Answer

A)  consumption goods demanded rises, while the quantity of net exports demanded falls.
B)  consumption goods demanded and the quantity of net exports demanded both rise.
C)  consumption goods demanded and the quantity of net exports demanded both fall.
D)  consumption goods demanded falls, while the quantity of net exports demand rises.E) A) and D)
F) None of the above

Question 16

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect

Accepted Answer

A)  the price level to rise and real GDP to fall.
B)  the price level to fall and real GDP to rise.
C)  the price level and real GDP both to stay the same.
D)  All of the above are possible.E) A) and B)
F) All of the above

Question 17

Which of the following shifts short-run aggregate supply left?

Accepted Answer

A)  an increase in price expectations
B)  an increase in the actual price level
C)  a decrease in the money supply
D)  a decrease in the price of oilE) A) and D)
F) B) and C)

Question 18

Which of the following shifts short-run aggregate supply left?

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) All of the above
F) None of the above

Question 19

Optimism
Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time.
-Refer to Optimism. How is the new long-run equilibrium different from the original one?

Accepted Answer

A)  both price and real GDP are higher
B)  both price and real GDP are lower.
C)  the price level is the same and GDP is higher.
D)  the price level is higher and real GDP is the same.E) A) and B)
F) A) and C)

Question 20

Which of the following would cause prices and real GDP to rise in the short run?

Accepted Answer

A)  short-run aggregate supply shifts right
B)  short-run aggregate supply shifts left
C)  aggregate demand shifts right
D)  aggregate demand shifts leftE) C) and D)
F) B) and D)

Exam 20: Aggregate Demand and Aggregate Supply

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Correct Answer
verified

When the price level falls the quantity of

Correct Answer
verified

Aggregate demand includes

Correct Answer
verified

U.S. Financial Crisis Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that privately issued U.S. bonds were more likely to be defaulted on. -Refer to U.S. Financial Crisis. U.S. net exports would

Correct Answer
verified

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

Correct Answer
verified

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

Correct Answer
verified

Which of the following shifts short-run aggregate supply left?

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

Suppose that during World War II the long-run aggregate supply curve shifted right. In order for price and output to have changed in the direction they did, what would have to have happened to aggregate demand?

Correct Answer
verified

The long-run aggregate supply curve shifts right if

Correct Answer
verified

When taxes decrease, consumption

Correct Answer
verified

Correct Answer
verified

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Correct Answer
verified

The aggregate demand and aggregate supply graph has

Correct Answer
verified

Which of the following would cause prices and real GDP to rise in the short run?

Correct Answer
verified

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Correct Answer
verified

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

Which of the following shifts short-run aggregate supply left?

Correct Answer
verified

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect

Correct Answer
verified

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

Correct Answer
verified

Exam 20: Aggregate Demand and Aggregate Supply

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

When the price level falls the quantity of

Correct AnswerverifiedShow Answer

Aggregate demand includes

Correct AnswerverifiedShow Answer

U.S. Financial Crisis Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that privately issued U.S. bonds were more likely to be defaulted on. -Refer to U.S. Financial Crisis. U.S. net exports would

Correct AnswerverifiedShow Answer

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following shifts short-run aggregate supply left?

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Suppose that during World War II the long-run aggregate supply curve shifted right. In order for price and output to have changed in the direction they did, what would have to have happened to aggregate demand?

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve shifts right if

Correct AnswerverifiedShow Answer

When taxes decrease, consumption

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Correct AnswerverifiedShow Answer

The aggregate demand and aggregate supply graph has

Correct AnswerverifiedShow Answer

Which of the following would cause prices and real GDP to rise in the short run?

Correct AnswerverifiedShow Answer

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Correct AnswerverifiedShow Answer

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

Which of the following shifts short-run aggregate supply left?

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect

Correct AnswerverifiedShow Answer

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

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
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