Question 1

Other things the same,if the U.S.price level falls,then

Accepted Answer

A)   the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate rises.
B)   the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate falls.
C)   the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate rises.
D)   the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate falls.E) B) and D)
F) All of the above

Question 2

Other things the same,as the price level rises,

Accepted Answer

A)   the dollar depreciates.
B)   the interest rate falls.
C)   people feel less wealthy.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 3

Other things the same,an unexpected fall in the price level results in some firms having

Accepted Answer

A)   lower than desired prices which increases their sales.
B)   lower than desired prices which depresses their sales.
C)   higher than desired prices which increases their sales.
D)   higher than desired prices which depresses their sales.E) A) and B)
F) All of the above

Question 4

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Accepted Answer

A) True 
 B)False

Question 5

The long-run aggregate supply curve would shift right if the government were to

Accepted Answer

A)   increase the minimum-wage.
B)   make unemployment benefits more generous.
C)   raise taxes on investment spending.
D)   None of the above is correct.E) C) and D)
F) A) and C)

Question 6

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 D)
F) A) and C)

Question 7

If the price level falls,the real value of a dollar

Accepted Answer

A)   rises,so people will want to buy more.This response helps explain the slope of the aggregate demand curve.
B)   rises,so people will want to buy more.This response shifts aggregate demand to the right.
C)   falls,so people will want to buy less.This response helps explain the slope of the aggregate demand curve.
D)   falls,so people will want to buy less.This response shifts aggregate demand to the left.E) B) and D)
F) B) and C)

Question 8

During World War II,

Accepted Answer

A)   government purchases of goods and services increased fivefold.
B)   the economy's production increased about 25 percent.
C)   unemployment fell to about 5%.
D)   All of the above are correct.E) None of the above
F) B) and D)

Question 9

As recessions begin,production

Accepted Answer

A)   and unemployment both rise.
B)   rises and unemployment falls.
C)   falls and unemployment rises.
D)   and unemployment both fall.E) A) and B)
F) A) and C)

Question 10

Other things the same,if the price level rises,people

Accepted Answer

A)   increase foreign bond purchases,so the dollar appreciates.
B)   increase foreign bond purchases,so the dollar depreciates.
C)   increase domestic bond purchases,so the dollar appreciates.
D)   increase domestic bond purchases,so the dollar depreciates.E) A) and C)
F) A) and B)

Question 11

Suppose that a decrease in the demand for goods and services pushes the economy into recession.What happens to the price level? If the government does nothing,what ensures that the economy still eventually gets back to the natural rate of output?

Accepted Answer

A decrease in aggregate demand causes th...

Question 12

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)   government expenditures increase and the money supply increases
D)   None of the above are correct.E) A) and C)
F) A) and B)

Question 13

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

Accepted Answer

A)   foreign economies expand and taxes rise
B)   foreign economies expand and taxes fall
C)   foreign economies contract and taxes fall
D)   None of the above are correct.E) A) and B)
F) None of the above

Question 14

Other things the same,as the price level falls,which of the following increases?

Accepted Answer

A)   lending and investment spending
B)   lending,but not investment spending
C)   investment spending,but not lending
D)   neither investment spending nor lendingE) All of the above
F) B) and C)

Question 15

Which of the following typically rises during a recession?

Accepted Answer

A)   consumption
B)   unemployment
C)   corporate profits
D)   automobile salesE) All of the above
F) A) and C)

Question 16

Figure 20-1 
-Refer to Figure 20-1.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 B)
F) None of the above

Question 17

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

Accepted Answer

A)   increased consumption,which shifts the aggregate-demand curve right.
B)   increased consumption,which shifts the aggregate-demand curve left.
C)   decreased consumption,which shifts the aggregate-demand curve right.
D)   decreased consumption,which shifts the aggregate-demand curve left.E) A) and D)
F) All of the above

Question 18

Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

Accepted Answer

A)   real wealth falls.
B)   the interest rate rises.
C)   the dollar depreciates.
D)   None of the above is correct.E) A) and B)
F) None of the above

Question 19

The economic boom of the early 1940s resulted mostly from

Accepted Answer

A)   increased government expenditures.
B)   falling prices of oil and other natural resources.
C)   an increase in the growth rate of the money supply.
D)   rapid developments in transportation,electronics,and communication.E) A) and B)
F) None of the above

Question 20

If the price level rises above what was expected and nominal wages are fixed,then

Accepted Answer

A)   production becomes less profitable so firms will hire fewer workers.
B)   production becomes less profitable so firms will hire more workers.
C)   production becomes more profitable so firms will hire fewer workers.
D)   production become more profitable so firms will hire more workers.E) A) and D)
F) A) and B)

Exam 33: Aggregate Demand and Aggregate Supply

Other things the same,as the price level falls,which of the following increases?

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The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Correct AnswerverifiedShow Answer

Other things the same,an unexpected fall in the price level results in some firms having

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Which of the following typically rises during a recession?

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During World War II,

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Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

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The economic boom of the early 1940s resulted mostly from

Correct AnswerverifiedShow Answer

Other things the same,if the price level rises,people

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Other things the same,as the price level rises,

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As recessions begin,production

Correct AnswerverifiedShow Answer

Other things the same,if the U.S.price level falls,then

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Figure 20-1 -Refer to Figure 20-1.If the economy is at A and there is a fall in aggregate demand,in the short run the economy

Correct AnswerverifiedShow Answer

If the price level falls,the real value of a dollar

Correct AnswerverifiedShow Answer

Suppose that a decrease in the demand for goods and services pushes the economy into recession.What happens to the price level? If the government does nothing,what ensures that the economy still eventually gets back to the natural rate of output?

Correct AnswerverifiedA decrease in aggregate demand causes th...View AnswerShow Answer

A decrease in the expected price level shifts

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve would shift right if the government were to

Correct AnswerverifiedShow Answer

If the price level rises above what was expected and nominal wages are fixed,then

Correct AnswerverifiedShow Answer

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

Correct AnswerverifiedShow Answer

Which of the following would both shift aggregate demand right?

Correct AnswerverifiedShow Answer

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A decrease in aggregate demand causes th...
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