Question 1

Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?

Accepted Answer

A)  The expected price level falls. Bargains are struck for higher wages.
B)  The expected price level falls. Bargains are struck for lower wages.
C)  The expected price level rises. Bargains are struck for higher wages.
D)  The expected price level rises. Bargains are struck for lower wages.E) All of the above
F) None of the above

Question 2

Figure 33-1. 
-Refer to Figure 33-1. Line A is

Accepted Answer

A)  investment spending.
B)  real GDP.
C)  unemployment rate.
D)  CPI.E) B) and C)
F) A) and D)

Question 3

Briefly state the three key facts about economic fluctuations.

Accepted Answer

(1) Economic fluctuations are ...

Question 4

During a recession, unemployment ​

Accepted Answer

A)  ​increases.
B)  ​decreases.
C)  ​is equal to the natural rate of unemployment.
D)  ​is frictional unemployment minus structural unemployment.E) None of the above
F) B) and C)

Question 5

As the price level falls

Accepted Answer

A)  people are more willing to lend, so interest rates rise.
B)  people are more willing to lend, so interest rates fall.
C)  people are less willing to lend, so interest rates fall.
D)  people are less willing to lend, so interest rates rise.E) A) and D)
F) B) and D)

Question 6

Most macroeconomic variables that measure some type of income, spending, or production fluctuate closely together.

Accepted Answer

A) True 
 B)False

Question 7

Figure 33-9. 1. A decrease in short-run aggregate supply would be consistent with the movement to A) P1, Y1. B) P2, Y1. C) P1, Y2. D) P3, Y2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 33-9. Suppose the economy starts where LRAS = AD1 = SRAS1. A decrease in short-run aggregate supply would be consistent with the movement to

Accepted Answer

A)  P1, Y1.
B)  P2, Y1.
C)  P1, Y2.
D)  P3, Y2.E) B) and C)
F) A) and D)

Question 8

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

Accepted Answer

A)  and output are higher than in the original long-run equilibrium.
B)  and output are lower than in the original long-run equilibrium.
C)  is lower and output is the same as the original long-run equilibrium.
D)  is the same and output is lower than in the original long-run equilibrium.E) All of the above
F) A) and B)

Question 9

Because economists understand what things change GDP, they can predict recessions with a fair amount of accuracy.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run aggreg...

Question 11

Which of the following shifts 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 levelE) All of the above
F) A) and D)

Question 12

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

why the short run ag...

Question 13

The exchange-rate effect is the idea that a higher U.S. price level causes the value of the dollar to increase in foreign exchange markets, and this effect contributes to the downward slope of the aggregate-demand curve.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following both shift aggregate demand left?

Accepted Answer

A)  a decrease in taxes and at a given price level consumers feel more wealthy
B)  a decrease in taxes and at a given price level consumers feel less wealthy
C)  an increase in taxes and at a given price level consumers feel more wealthy
D)  an increase in taxes and at a given price level consumers feel less wealthyE) C) and D)
F) B) and D)

Question 15

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) All of the above
F) None of the above

Question 16

Refer to U.S. Financial Crisis. What would happen in the market for foreign-currency exchange?

Accepted Answer

A)  the supply of dollars would shift right and the exchange rate would rise.
B)  the supply of dollars would shift right and the exchange rate would fall.
C)  the supply of dollars would shift left and the exchange rate would rise.
D)  None of the above is correct.E) B) and C)
F) None of the above

Question 17

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected.

Accepted Answer

Variables that fall along with real GDP ...

Question 18

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 19

Aggregate demand includes

Accepted Answer

A)  only the quantity of goods and services households want to buy.
B)  only the quantity of goods and services households and firms want to buy.
C)  only the quantity of goods and services households, firms, and the government want to buy.
D)  the quantity of goods and services households, firms, the government, and customer abroad want to buy.E) A) and D)
F) B) and C)

Question 20

Which of the following is correct?

Accepted Answer

A)  The short-run, but not the long-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.
B)  The long-run, but not the short-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.
C)  The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables.
D)  Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables.E) A) and D)
F) None of the above

Exam 33: Aggregate Demand and Aggregate Supply

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

Correct Answerverifiedwhy the short run ag...View AnswerShow Answer

As the price level falls

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Refer to U.S. Financial Crisis. What would happen in the market for foreign-currency exchange?

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If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

Correct AnswerverifiedShow Answer

Aggregate demand includes

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

Correct AnswerverifiedShow Answer

Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Correct AnswerverifiedThe short run aggreg...View AnswerShow Answer

The exchange-rate effect is the idea that a higher U.S. price level causes the value of the dollar to increase in foreign exchange markets, and this effect contributes to the downward slope of the aggregate-demand curve.

Correct AnswerverifiedShow Answer

Figure 33-9. -Refer to Figure 33-9. Suppose the economy starts where LRAS = AD1 = SRAS1. A decrease in short-run aggregate supply would be consistent with the movement to

Correct AnswerverifiedShow Answer

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

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected.

Correct AnswerverifiedVariables that fall along with real GDP ...View AnswerShow Answer

Because economists understand what things change GDP, they can predict recessions with a fair amount of accuracy.

Correct AnswerverifiedShow Answer

During a recession, unemployment ​

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Which of the following is correct?

Correct AnswerverifiedShow Answer

Most macroeconomic variables that measure some type of income, spending, or production fluctuate closely together.

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Which of the following both shift aggregate demand left?

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Figure 33-1. -Refer to Figure 33-1. Line A is

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Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?

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Briefly state the three key facts about economic fluctuations.

Correct Answerverified(1) Economic fluctuations are ...View AnswerShow 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

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why the short run ag...
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The short run aggreg...
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Figure 33-9. -Refer to Figure 33-9. Suppose the economy starts where LRAS = AD1 = SRAS₁. A decrease in short-run aggregate supply would be consistent with the movement to

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Correct Answer
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Correct Answer
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Variables that fall along with real GDP ...
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During a recession, unemployment

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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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(1) Economic fluctuations are ...
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