Question 1

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.
-Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

Accepted Answer

A)   both the price level and real GDP rise.
B)   both the price level and real GDP fall.
C)   the price level rises and real GDP falls.
D)   the price level falls and real GDP rises.E) A) and C)
F) A) and B)

Question 2

Suppose technology advances within a nation. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run and lo...

Question 3

Microeconomic substitution is impossible for the economy as a whole because

Accepted Answer

A)   money is a veil.
B)   real GDP measures the total quantity of goods and services produced by all firms in all markets.
C)   the prices of some goods and services adjust sluggishly in response to changing economic conditions.
D)   a lower price level increases real wealth, which stimulates spending by consumers and vice-versa.E) A) and C)
F) None of the above

Question 4

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

Accepted Answer

A)   increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases.
B)   increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.
C)   decrease foreign bond purchases, so the supply of dollars in market for foreign-currency exchange increases.
D)   decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.E) A) and B)
F) C) and D)

Question 5

Aggregate demand shifts right if at a given price level

Accepted Answer

A)   taxes rise and shifts left if the money supply increases.
B)   taxes rise and shifts right if the money supply increases.
C)   taxes fall and shifts left if the money supply increases.
D)   taxes fall and shifts right if the money supply increases.E) B) and D)
F) B) and C)

Question 6

The average price level is measured by

Accepted Answer

A)   the price of oil.
B)   the rate of inflation.
C)   the nominal interest rate.
D)   the GDP deflator.E) A) and B)
F) A) and C)

Question 7

Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar decreases. At the same time, people in the U.S. revise their expectations so that the expected price level rises. We would expect that 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) A) and D)
F) B) and C)

Question 8

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

Examples and variations on examples) in ...

Question 9

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Accepted Answer

A)   aggregate demand shifted right
B)   aggregate demand shifted left
C)   aggregate supply shifted right
D)   aggregate supply shifted leftE) All of the above
F) C) and D)

Question 10

During the 2008-2009 unemployment rose from about 4.4% to about

Accepted Answer

A)   6%
B)   8%
C)   10%
D)   12%E) A) and D)
F) A) and C)

Question 11

Other things the same, as the price level falls, the real value of a dollar

Accepted Answer

A)   rises, and interest rates rise.
B)   rises, and interest rates fall.
C)   falls, and interest rates rise.
D)   falls, and interest rates fall.E) B) and C)
F) A) and D)

Question 12

The aggregate-demand curve

Accepted Answer

A)   has a slope that is explained in the same way as the slope of the demand curve for a particular product.
B)   is vertical in the long run.
C)   shows an inverse relation between the price level and the quantity of all goods and services demanded.
D)   All of the above are correct.E) A) and C)
F) C) and D)

Question 13

Which of the following would raise the price level in both the short and long run?

Accepted Answer

A)   an increase in taxes
B)   an increase in government expenditures
C)   a decrease in the minimum wage
D)   an increase in the capital stockE) B) and D)
F) A) and C)

Question 14

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

Accepted Answer

A)   
B)   
C)   
D)   E) C) and D)
F) All of the above

Question 15

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

Accepted Answer

A)   an increase in the actual price level
B)   an increase in the expected price level
C)   an increase in the capital stock
D)   None of the above is correct.E) None of the above
F) All of the above

Question 16

Which of the following shifts aggregate demand right?

Accepted Answer

A)   both a decrease in the price level and the implementation of an investment tax credit
B)   a decrease in the price level but not the implementation of an investment tax credit
C)   the implementation of an investment tax credit but not a decrease in the price level
D)   neither a decrease in the price level nor the implementation of an investment tax creditE) All of the above
F) B) and C)

Question 17

Aggregate demand shifts to the left if the money supply increases.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following effects provide incentives for consumers to spend less when the price level rises?

Accepted Answer

A)   the wealth effect and the interest-rate effect
B)   the wealth effect but not the interest-rate effect
C)   the interest-rate effect but not the wealth effect
D)   neither the wealth-effect nor the interest rate effectE) C) and D)
F) B) and C)

Question 19

The aggregate-demand curve shows the

Accepted Answer

A)   quantity of labor and other inputs that firms want to buy at each price level.
B)   quantity of labor and other inputs that firms want to buy at each inflation rate.
C)   quantity of domestically produced goods and services that households want to buy at each price level.
D)   quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.E) A) and D)
F) None of the above

Question 20

If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then

Accepted Answer

A)   U.S. goods become more expensive relative to foreign goods so aggregate demand shifts right.
B)   U.S. goods become less expensive relative to foreign goods so aggregate demand shifts right.
C)   U.S. goods become more expensive relative to foreign goods so aggregate demand shifts left.
D)   U.S. goods become less expensive relative to foreign goods so aggregate demand shifts left.E) All of the above
F) A) and D)

Exam 23: Aggregate Demand and Aggregate Supply

Other things the same, as the price level falls, the real value of a dollar

Correct Answer
verified

The aggregate-demand curve

Correct Answer
verified

Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar decreases. At the same time, people in the U.S. revise their expectations so that the expected price level rises. We would expect that in the short-run

Correct Answer
verified

Make a list of things that would shift the aggregate demand curve to the right.

Correct Answer
verified
Examples and variations on examples) in ...
View Answer

Microeconomic substitution is impossible for the economy as a whole because

Correct Answer
verified

The aggregate-demand curve shows the

Correct Answer
verified

Aggregate demand shifts to the left if the money supply increases.

Correct Answer
verified

Correct Answer
verified

Which of the following would raise the price level in both the short and long run?

Correct Answer
verified

Which of the following effects provide incentives for consumers to spend less when the price level rises?

Correct Answer
verified

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

Correct Answer
verified

Aggregate demand shifts right if at a given price level

Correct Answer
verified

During the 2008-2009 unemployment rose from about 4.4% to about

Correct Answer
verified

If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then

Correct Answer
verified

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

Correct Answer
verified

The average price level is measured by

Correct Answer
verified

Suppose technology advances within a nation. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Correct Answer
verified
The short run and lo...
View Answer

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

Correct Answer
verified

Which of the following shifts aggregate demand right?

Correct Answer
verified

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Correct Answer
verified

Exam 23: Aggregate Demand and Aggregate Supply

Other things the same, as the price level falls, the real value of a dollar

Correct AnswerverifiedShow Answer

The aggregate-demand curve

Correct AnswerverifiedShow Answer

Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar decreases. At the same time, people in the U.S. revise their expectations so that the expected price level rises. We would expect that in the short-run

Correct AnswerverifiedShow Answer

Make a list of things that would shift the aggregate demand curve to the right.

Correct AnswerverifiedExamples and variations on examples) in ...View AnswerShow Answer

Microeconomic substitution is impossible for the economy as a whole because

Correct AnswerverifiedShow Answer

The aggregate-demand curve shows the

Correct AnswerverifiedShow Answer

Aggregate demand shifts to the left if the money supply increases.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would raise the price level in both the short and long run?

Correct AnswerverifiedShow Answer

Which of the following effects provide incentives for consumers to spend less when the price level rises?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Aggregate demand shifts right if at a given price level

Correct AnswerverifiedShow Answer

During the 2008-2009 unemployment rose from about 4.4% to about

Correct AnswerverifiedShow Answer

If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The average price level is measured by

Correct AnswerverifiedShow Answer

Suppose technology advances within a nation. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Correct AnswerverifiedThe short run and lo...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand right?

Correct AnswerverifiedShow Answer

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Correct AnswerverifiedShow Answer

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Examples and variations on examples) in ...
View Answer

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The short run and lo...
View Answer

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