Question 1

Other things the same,continued increases in technology lead to

Accepted Answer

A)   continued increases in the price level and real GDP.
B)   continued increases in the price level but not continued increases in real GDP.
C)   continued increases in real GDP but not continued increases in the price level.
D)   None of the above are correct.E) B) and D)
F) All of the above

Question 2

The long-run aggregate supply curve would shift right if immigration from abroad

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) C) and D)
F) None of the above

Question 3

The model of short-run economic fluctuations focuses on the price level and

Accepted Answer

A)   real GDP.
B)   economic growth.
C)   the neutrality of money.
D)   None of the above is correct.E) A) and B)
F) None of the above

Question 4

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will have

Accepted Answer

A)   higher than desired prices which leads to an increase in the aggregate quantity of goods and services supplied.
B)   higher than desired prices which leads to a decrease in the aggregate quantity of goods and service supplied.
C)   lower than desired prices which leads to an increase in the aggregate quantity of goods and services supplied.
D)   lower than desired prices which leads to a decrease in the aggregate quantity of goods and services suppliedE) A) and B)
F) A) and C)

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) C) and D)

Question 6

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Accepted Answer

A)   increase which shifts aggregate demand right.
B)   increase which shifts aggregate demand left.
C)   decrease which shifts aggregate demand right.
D)   decrease which shifts aggregate demand left.E) B) and C)
F) All of the above

Question 7

If speculators lost confidence in foreign economies and so wanted to buy more U.S.bonds

Accepted Answer

A)   the dollar would appreciate which would cause aggregate demand to shift right.
B)   the dollar would appreciate which would cause aggregate demand to shift left.
C)   the dollar would depreciate which would cause aggregate demand to shift right.
D)   the dollar would depreciate which would cause aggregate demand to shift left.E) B) and C)
F) A) and B)

Question 8

If not all prices adjust instantly to changing economic circumstances,an unexpected fall in the price level leaves some firms with higher-than-desired prices,and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Accepted Answer

A) True 
 B)False

Question 9

As the price level falls

Accepted Answer

A)   people will want to buy more bonds,so the interest rate rises.
B)   people will want to buy fewer bonds,so the interest rate falls.
C)   people will want to buy more bonds,so the interest rate falls.
D)   people will want to buy fewer bonds,so the interest rate rises.E) B) and D)
F) C) and D)

Question 10

Other things the same,technological progress raises the price level..

Accepted Answer

A) True 
 B)False

Question 11

Other things the same,an increase in the price level makes consumers feel

Accepted Answer

A)   less wealthy,so the quantity of goods and services demanded falls.
B)   less wealthy,so the quantity of goods and services demanded rises.
C)   more wealthy,so the quantity of goods and services demanded rises.
D)   more wealthy,so the quantity of goods and services demanded falls.E) None of the above
F) All of the above

Question 12

When interest rates fall

Accepted Answer

A)   firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.
B)   firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding.
C)   firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding.
D)   firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding.E) C) and D)
F) A) and B)

Question 13

If aggregate demand and aggregate supply both shift right,we can be sure that the price level is higher in the short run.

Accepted Answer

A) True 
 B)False

Question 14

Wages tend to be sticky

Accepted Answer

A)   because of contracts,social norms,and notions of fairness.
B)   because of contracts,but not social norms or notions of fairness.
C)   because of social norms and notions of fairness,but not contracts.
D)   None of the above are correct.E) B) and C)
F) None of the above

Question 15

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Accepted Answer

A) True 
 B)False

Question 16

Other things the same,when the price level falls,interest rates

Accepted Answer

A)   rise,so firms increase investment.
B)   rise,so firms decrease investment.
C)   fall,so firms increase investment.
D)   fall,so firms decrease investment.E) B) and C)
F) A) and C)

Question 17

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

Accepted Answer

A)   the price level and real output.
B)   real output and employment.
C)   employment and the inflation rate.
D)   the value of money and the price level.E) C) and D)
F) A) and B)

Question 18

Other things the same,as the price level rises,exchange rates

Accepted Answer

A)   and interest rates rise.
B)   and interest rates fall.
C)   fall and interest rates rise.
D)   rise and interest rates fall.E) All of the above
F) C) and D)

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) C) and D)

Question 20

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

Accepted Answer

A)   an increase in the expected price level
B)   an increase in the money supply
C)   a decrease in the capital stock
D)   None of the above is correct.E) B) and C)
F) A) and D)

Exam 33: Aggregate Demand and Aggregate Supply

Other things the same,technological progress raises the price level..

Correct AnswerverifiedShow Answer

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Correct AnswerverifiedShow Answer

Wages tend to be sticky

Correct AnswerverifiedShow Answer

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve would shift right if immigration from abroad

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If not all prices adjust instantly to changing economic circumstances,an unexpected fall in the price level leaves some firms with higher-than-desired prices,and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Correct AnswerverifiedShow Answer

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Correct AnswerverifiedShow Answer

If speculators lost confidence in foreign economies and so wanted to buy more U.S.bonds

Correct AnswerverifiedShow Answer

Other things the same,an increase in the price level makes consumers feel

Correct AnswerverifiedShow Answer

When the dollar appreciates,U.S.

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Other things the same,as the price level rises,exchange rates

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

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Other things the same,when the price level falls,interest rates

Correct AnswerverifiedShow Answer

The model of short-run economic fluctuations focuses on the price level and

Correct AnswerverifiedShow Answer

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will have

Correct AnswerverifiedShow Answer

If aggregate demand and aggregate supply both shift right,we can be sure that the price level is higher in the short run.

Correct AnswerverifiedShow Answer

Other things the same,continued increases in technology lead to

Correct AnswerverifiedShow Answer

When interest rates fall

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As the price level falls

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