Question 1

Imagine that businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases.Their reaction would initially shift

Accepted Answer

A)  aggregate demand right.
B)  aggregate demand left.
C)  aggregate supply right.
D)  aggregate supply left.E) A) and B)
F) A) and C)

Question 2

Optimism
Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time.
-Refer to Optimism.In the long run,the change in price expectations created by optimism 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) A) and B)
F) All of the above

Question 3

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) A) and B)
F) B) and C)

Question 4

Other things the same,the aggregate quantity of goods demanded decreases if

Accepted Answer

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

Question 5

The Stock Market Boom of 2010
Imagine that in 2010 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
-Refer to Stock Market Boom 2010.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) B) and D)
F) A) and D)

Question 6

Suppose the economy is initially in long-run equilibrium and aggregate demand rises.In the long run prices

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

Question 7

According to classical macroeconomic theory,changes in the money supply affect

Accepted Answer

A)  nominal variables and real variables.
B)  nominal variables, but not real variables.
C)  real variables, but not nominal variables.
D)  neither nominal nor real variables.E) B) and D)
F) B) and C)

Question 8

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) A) and C)
F) All of the above

Question 9

We could explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Accepted Answer

A) True 
 B)False

Question 10

If speculators bid up the value of the dollar in the market for foreign-currency exchange,U.S.aggregate demand would shift to the left.

Accepted Answer

A) True 
 B)False

Question 11

In the long run,technological progress

Accepted Answer

A)  and increases in the money supply both make the price level rise.
B)  and increases in the money supply both make the price level fall.
C)  makes the price level rise, while increases in the money supply make prices fall.
D)  makes the price level fall, while increases in the money supply make prices rise.E) B) and D)
F) A) and B)

Question 12

People will spend more if real wealth

Accepted Answer

A)  and interest rates rise.
B)  rises and interest rates fall.
C)  falls and interest rates rise.
D)  and interest rates fall.E) A) and D)
F) None of the above

Question 13

Keynes thought that the behavior of the economy in the short run was influenced by what he called "animal spirits." By this he meant that business people sometimes felt good about the economy,and carried out lots of investment,and at other times felt bad about the economy,and so cut back on their investment spending.Explain how such fluctuations in investment would lead to fluctuations in real GDP and prices.

Accepted Answer

Fluctuations in investment cause the agg...

Question 14

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers people become pessimistic regarding the future and retain that level of pessimism for some time.
-Refer to Pessimism.How is the new long-run equilibrium different from the original one?

Accepted Answer

A)  both price and real GDP are higher.
B)  both price and real GDP are lower.
C)  the price level is the same and GDP is lower.
D)  the price level is lower and real GDP is the same.E) B) and C)
F) A) and D)

Question 15

A decrease in U.S.interest rates leads to

Accepted Answer

A)  a depreciation of the dollar that leads to greater net exports.
B)  a depreciation of the dollar that leads to smaller net exports.
C)  an appreciation of the dollar that leads to greater net exports.
D)  an appreciation of the dollar that leads to smaller net exports.E) B) and C)
F) All of the above

Question 16

An increase in the price level and a decrease in real GDP in the short run could be created by

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) B) and C)
F) All of the above

Question 17

The initial impact of the repeal of an investment tax credit is to shift

Accepted Answer

A)  aggregate demand right.
B)  aggregate demand left.
C)  aggregate supply right.
D)  aggregate supply left.E) A) and B)
F) None of the above

Question 18

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 D)
F) A) and C)

Question 19

Which of the sentences concerning the aggregate demand and aggregate supply model is correct?

Accepted Answer

A)  The aggregate demand and supply model is nothing more than a large version of the model of market demand and supply.
B)  The price level and quantity of output adjust to bring aggregate demand and supply into balance.
C)  The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price.
D)  All of the above are correct.E) None of the above
F) A) and D)

Question 20

Most economists believe that after a few years,changes in the money supply change

Accepted Answer

A)  only nominal variables, but not real variables.
B)  only real variables, but not nominal variables.
C)  neither nominal nor real variables.
D)  both nominal and real variables.E) B) and D)
F) None of the above

Exam 33: Aggregate Demand and Aggregate Supply

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

Correct Answer
verified

Correct Answer
verified

A decrease in U.S.interest rates leads to

Correct Answer
verified

An increase in the price level and a decrease in real GDP in the short run could be created by

Correct Answer
verified

Imagine that businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases.Their reaction would initially shift

Correct Answer
verified

Most economists believe that after a few years,changes in the money supply change

Correct Answer
verified

Other things the same,the aggregate quantity of goods demanded decreases if

Correct Answer
verified

The initial impact of the repeal of an investment tax credit is to shift

Correct Answer
verified

We could explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Correct Answer
verified

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

Correct Answer
verified

In the long run,technological progress

Correct Answer
verified

Suppose the economy is initially in long-run equilibrium and aggregate demand rises.In the long run prices

Correct Answer
verified

According to classical macroeconomic theory,changes in the money supply affect

Correct Answer
verified

During recessions investment

Correct Answer
verified

The Stock Market Boom of 2010 Imagine that in 2010 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2010.In the long run,the change in price expectations created by the stock market boom shifts

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Fluctuations in investment cause the agg...
View Answer

If speculators bid up the value of the dollar in the market for foreign-currency exchange,U.S.aggregate demand would shift to the left.

Correct Answer
verified

People will spend more if real wealth

Correct Answer
verified

Which of the sentences concerning the aggregate demand and aggregate supply model is correct?

Correct Answer
verified

Exam 33: Aggregate Demand and Aggregate Supply

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A decrease in U.S.interest rates leads to

Correct AnswerverifiedShow Answer

An increase in the price level and a decrease in real GDP in the short run could be created by

Correct AnswerverifiedShow Answer

Imagine that businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases.Their reaction would initially shift

Correct AnswerverifiedShow Answer

Most economists believe that after a few years,changes in the money supply change

Correct AnswerverifiedShow Answer

Other things the same,the aggregate quantity of goods demanded decreases if

Correct AnswerverifiedShow Answer

The initial impact of the repeal of an investment tax credit is to shift

Correct AnswerverifiedShow Answer

We could explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the long run,technological progress

Correct AnswerverifiedShow Answer

Suppose the economy is initially in long-run equilibrium and aggregate demand rises.In the long run prices

Correct AnswerverifiedShow Answer

According to classical macroeconomic theory,changes in the money supply affect

Correct AnswerverifiedShow Answer

During recessions investment

Correct AnswerverifiedShow Answer

The Stock Market Boom of 2010 Imagine that in 2010 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2010.In the long run,the change in price expectations created by the stock market boom shifts

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFluctuations in investment cause the agg...View AnswerShow Answer

If speculators bid up the value of the dollar in the market for foreign-currency exchange,U.S.aggregate demand would shift to the left.

Correct AnswerverifiedShow Answer

People will spend more if real wealth

Correct AnswerverifiedShow Answer

Which of the sentences concerning the aggregate demand and aggregate supply model is correct?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Fluctuations in investment cause the agg...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified