Question 1

Which of the following would both shift aggregate demand right?

Accepted Answer

A)  the price level decreases and government expenditures increase.
B)  the price level decreases and the government repeals an investment tax credit.
C)  taxes decrease and government expenditures increase.
D)  None of the above are correct.E) C) and D)
F) A) and C)

Question 2

An increase in household saving causes consumption to

Accepted Answer

A)  rise and aggregate demand to increase.
B)  rise and aggregate demand to decrease.
C)  fall and aggregate demand to increase.
D)  fall and aggregate demand to decrease.E) A) and D)
F) C) and D)

Question 3

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

Accepted Answer

A)  above the natural rate, so real GDP growth was likely low.
B)  above the natural rate, so real GDP growth was likely high.
C)  below the natural rate, so real GDP growth was likely low.
D)  below the natural rate, so real GDP growth was likely high.E) None of the above
F) All of the above

Question 4

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

Accepted Answer

A)  an increase in either technology or the human capital stock.
B)  an increase in human capital but not technology.
C)  an increase in technology, but not the human capital stock.
D)  neither an increase in technology nor the human capital stock.E) A) and B)
F) None of the above

Question 5

When the dollar appreciates, U.S.

Accepted Answer

A)  exports decrease, while imports increase.
B)  exports and imports decrease.
C)  exports and imports increase.
D)  exports increase, while imports decrease.E) B) and C)
F) All of the above

Question 6

Which of the following would increase output in the short run?

Accepted Answer

A)  an increase in stock prices makes people feel wealthier
B)  government spending increases
C)  firms chose to purchase more investment goods
D)  All of the above are correct.E) B) and D)
F) A) and C)

Question 7

An increase in the price level and a reduction in output would result from

Accepted Answer

A)  an increase in the money supply.
B)  an increase in government expenditures.
C)  a fall in stock prices.
D)  bad weather in farm states.E) A) and B)
F) B) and C)

Question 8

Figure 33-11. 1 and Y2, to P2 and Y1 would be consistent with A) a decrease in consumption expenditures. B) stagflation. C) sticky-wages. D) an increase in net exports." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 33-11. A movement from P1 and Y2, to P2 and Y1 would be consistent with

Accepted Answer

A)  a decrease in consumption expenditures.
B)  stagflation.
C)  sticky-wages.
D)  an increase in net exports.E) A) and D)
F) A) and C)

Question 9

Which of the following rises when the U.S. price level falls?

Accepted Answer

A)  interest rates
B)  the value of the dollar in the market for foreign-currency exchange
C)  real wealth
D)  All of the above are correct.E) B) and C)
F) A) and D)

Question 10

During recessions investment

Accepted Answer

A)  falls by a larger percentage than GDP.
B)  falls by about the same percentage as GDP.
C)  falls by a smaller percentage than GDP.
D)  falls but the percentage change is sometimes much larger and sometimes much smaller.E) B) and C)
F) None of the above

Question 11

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

Accepted Answer

A)  an increase in the price level
B)  an increase in the minimum wage
C)  a decrease in the price of oil
D)  more people migrate abroad than immigrate from abroadE) None of the above
F) A) and D)

Question 12

Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

Accepted Answer

The price level woul...

Question 13

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) None of the above
F) All of the above

Question 14

Other things the same, what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Accepted Answer

The price ...

Question 15

A decrease in the expected price level shifts

Accepted Answer

A)  only the long-run aggregate supply curve right.
B)  only the short-run aggregate supply curve right.
C)  both the short-run and the long-run aggregate supply curve right.
D)  Neither the short-run nor the long-run aggregate supply curve right.E) A) and B)
F) A) and C)

Question 16

Which of the following adjust to bring aggregate supply and demand into balance?

Accepted Answer

A)  the price level and real output
B)  the real rate of interest and the money supply
C)  government expenditures and taxes
D)  the saving rate and net exportsE) A) and B)
F) None of the above

Question 17

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy

Accepted Answer

A)  stays at A.
B)  moves to B.
C)  moves to C.
D)  moves to D.E) A) and C)
F) None of the above

Question 18

Most economists believe that classical theory describes the world

Accepted Answer

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

Question 19

In the first few years of the Great Depression, unemployment rose to about

Accepted Answer

A)  10 percent, and prices rose about 14 percent.
B)  15 percent, and prices rose about 22 percent.
C)  20 percent, and prices fell about 14 percent.
D)  25 percent, and prices fell about 22 percent.E) B) and C)
F) A) and B)

Question 20

Aggregate demand shifts right when the government

Accepted Answer

A)  decreases taxes.
B)  cuts military expenditures.
C)  repeals an investment tax credit.
D)  None of the above is correct.E) All of the above
F) C) and D)

Exam 33: Aggregate Demand and Aggregate Supply

Which of the following adjust to bring aggregate supply and demand into balance?

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During recessions investment

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Most economists believe that classical theory describes the world

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

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Figure 33-11. -Refer to Figure 33-11. A movement from P1 and Y2, to P2 and Y1 would be consistent with

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Aggregate demand shifts right when the government

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Which of the following would both shift aggregate demand right?

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

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When the dollar appreciates, U.S.

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Other things the same, what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Correct AnswerverifiedThe price ...View AnswerShow Answer

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

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A decrease in the expected price level shifts

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Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy

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Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

Correct AnswerverifiedThe price level woul...View AnswerShow Answer

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

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Which of the following would increase output in the short run?

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An increase in the price level and a reduction in output would result from

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In the first few years of the Great Depression, unemployment rose to about

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An increase in household saving causes consumption to

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Which of the following rises when the U.S. price level falls?

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Figure 33-11. -Refer to Figure 33-11. A movement from P₁ and Y₂, to P₂ and Y₁ would be consistent with

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The price ...
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The price level woul...
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