Question 1

The long-run aggregate supply curve would shift left if the amount of labor available

Accepted Answer

A)   increased or Congress made a substantial increase in the minimum wage.
B)   decreased or Congress abolished the minimum wage.
C)   increased or Congress abolished the minimum wage.
D)   decreased or Congress made a substantial increase in the minimum wage.E) B) and D)
F) None of the above

Question 2

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Accepted Answer

A)   only the increased funding for states
B)   only the tax cuts
C)   both the increased funding for states and the tax cuts
D)   neither the increased funding for states nor the tax cutsE) B) and C)
F) A) and B)

Question 3

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then 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 4

The aggregate demand and aggregate supply model implies monetary neutrality

Accepted Answer

A)   only in the short run.
B)   only in the long run.
C)   in both the short run and the long run.
D)   in neither the short run nor long run.E) A) and C)
F) B) and C)

Question 5

In which case can we be sure aggregate demand shifts left overall?

Accepted Answer

A)   people want to save more for retirement and the Fed increases the money supply.
B)   people want to save more for retirement and the Fed decreases the money supply.
C)   people want to save less for retirement and the Fed increases the money supply.
D)   people want to save less for retirement and the Fed decreases the money supply.E) B) and D)
F) C) and D)

Question 6

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Accepted Answer

The price ...

Question 7

When taxes increase, consumption

Accepted Answer

A)   decreases as shown by a movement to the left along a given aggregate-demand curve.
B)   decreases as shown by a shift of the aggregate demand curve to the left.
C)   increases as shown by a movement to the right along a given aggregate-demand curve.
D)   increases as shown by a shift of the aggregate demand curve to the right.E) None of the above
F) All of the above

Question 8

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

Accepted Answer

A)   in the price level and output.
B)   in the price level, but not output.
C)   in output, but not the price level.
D)   in neither the price level nor output.E) A) and D)
F) B) and D)

Question 9

If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign currencies of other countries, but foreigners do not desire to increase their holdings of U.S. dollars, then U.S. net exports would

Accepted Answer

A)   rise and aggregate demand would shift left.
B)   rise and aggregate demand would shift right.
C)   fall and aggregate demand would shift left.
D)   fall and aggregate demand would shift right.E) A) and B)
F) A) and C)

Question 10

Which of the following correctly expresses why the short-run aggregate-supply curve slopes upward?

Accepted Answer

A)  
B)  
C)  
D)  E) None of the above
F) A) and B)

Question 11

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Accepted Answer

the price level decreases when...

Question 12

In the long-run, an increase in aggregate demand increases the price level, but not real GDP.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is correct?

Accepted Answer

A)   Over the business cycle investment fluctuates more than consumption.
B)   Economic fluctuations are easy to predict.
C)   During recessions employment rises.
D)   Because of government policy the U.S. had zero recessions in the last 25 years.E) None of the above
F) A) and D)

Question 14

An unexpected increase in the price level that temporarily lowers real wages and induces more employment and output in an economy, occurs in

Accepted Answer

A)   nominal-supply theory.
B)   stagflation.
C)   misperceptions theory.
D)   sticky-wage theory.E) A) and D)
F) None of the above

Question 15

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption, investm...

Question 16

A decrease in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A)   right, and an increase in the actual price level shifts short-run aggregate supply to the right.
B)   right, and an increase in the actual price level does not shift short-run aggregate supply.
C)   left, and an increase in the actual price level shifts short-run aggregate supply to the left.
D)   left, and an increase in the actual price level does not shift short-run aggregate supply.E) B) and D)
F) A) and C)

Question 17

In which case can we be sure real GDP rises in the short run?

Accepted Answer

A)   government purchases increase and taxes rise.
B)   government purchases increase and taxes fall.
C)   government purchases decrease and taxes rise.
D)   government purchases decrease and taxes fall.E) A) and D)
F) A) and C)

Question 18

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 B)
F) A) and C)

Question 19

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

Question 20

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

Accepted Answer

A)   an increase in the minimum wage
B)   an increase in immigration from abroad
C)   an increase in the price of oil
D)   an increase in the actual price levelE) None of the above
F) C) and D)

Exam 15: Aggregate Demand and Aggregate Supply

In the long-run, an increase in aggregate demand increases the price level, but not real GDP.

Correct AnswerverifiedShow Answer

Make a list of expenditures whose sum equals GDP.

Correct Answerverifiedconsumption, investm...View AnswerShow Answer

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

Correct AnswerverifiedShow Answer

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Correct AnswerverifiedShow Answer

The aggregate demand and aggregate supply model implies monetary neutrality

Correct AnswerverifiedShow Answer

In which case can we be sure real GDP rises in the short run?

Correct AnswerverifiedShow Answer

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Correct Answerverifiedthe price level decreases when...View AnswerShow Answer

Which of the following correctly expresses why the short-run aggregate-supply curve slopes upward?

Correct AnswerverifiedShow Answer

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Correct AnswerverifiedThe price ...View AnswerShow Answer

Refer to U.S. Financial Crisis. U.S. net exports would

Correct AnswerverifiedShow Answer

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then in the short run

Correct AnswerverifiedShow Answer

In which case can we be sure aggregate demand shifts left overall?

Correct AnswerverifiedShow Answer

When taxes decrease, consumption

Correct AnswerverifiedShow Answer

When taxes increase, consumption

Correct AnswerverifiedShow Answer

An unexpected increase in the price level that temporarily lowers real wages and induces more employment and output in an economy, occurs in

Correct AnswerverifiedShow Answer

If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign currencies of other countries, but foreigners do not desire to increase their holdings of U.S. dollars, then U.S. net exports would

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve would shift left if the amount of labor available

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A decrease in the expected price level shifts short-run aggregate supply to the

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

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consumption, investm...
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the price level decreases when...
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The price ...
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