Question 1

Which of the following fall during a recession?

Accepted Answer

A)   both retail sales and employment
B)   retail sales but not employment
C)   employment but not retail sales
D)   neither employment nor retail salesE) None of the above
F) A) and B)

Question 2

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A)   an increase in government purchases.
B)   an decrease in oil prices
C)   a decrease in the money supply
D)   technical progressE) None of the above
F) B) and C)

Question 3

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 4

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 B)
F) All of the above

Question 5

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

Accepted Answer

A)   a fall in stock prices.
B)   a decrease in the supply of an important resource.
C)   an increase in government expenditures.
D)   an increase in taxes.E) B) and D)
F) All of the above

Question 6

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

Accepted Answer

A)   short-run aggregate supply shifts right
B)   short-run aggregate supply shifts left
C)   aggregate demand shifts right
D)   aggregate demand shifts leftE) A) and D)
F) A) and B)

Question 7

The investment component of GDP measures spending on

Accepted Answer

A)   financial assets such as stocks and bonds. During recessions it declines by a relatively large amount.
B)   residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively large amount.
C)   financial assets such as stocks and bonds. During recessions it declines by a relatively small amount.
D)   residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively small amount.E) B) and C)
F) A) and B)

Question 8

Other things the same, as the price level rises, the real value of money

Accepted Answer

A)   and the exchange rate rise.
B)   and the exchange rate fall.
C)   rises and the exchange rate falls.
D)   falls and the exchange rate rises.E) A) and D)
F) All of the above

Question 9

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

Question 10

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 becomes more profitable so firms will hire more workers.E) A) and B)
F) A) and C)

Question 11

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level) , where a is a positive number, represents

Accepted Answer

A)   an upward-sloping short-run aggregate supply curve
B)   a vertical short-run aggregate supply curve
C)   a downward-sloping aggregate demand curve
D)   None of the above is correct.E) B) and C)
F) A) and D)

Question 12

Make a list of things that would shift the long-run aggregate supply curve to the right.

Accepted Answer

Examples in the text (or variations) inc...

Question 13

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

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

Question 14

Suppose that during the Great Depression long-run aggregate supply shifted left. To be consistent with what happened to the price level and output, what would have had to happen to aggregate demand?

Accepted Answer

A)   It would have to have shifted left by less than aggregate supply.
B)   It would have to have shifted left by more than aggregate supply.
C)   It would have to have shifted right by less than aggregate supply.
D)   It would have to have shifted right by more than aggregate supply.E) C) and D)
F) A) and B)

Question 15

As the price level falls,

Accepted Answer

A)   the exchange rate falls, so net exports fall.
B)   the exchange rate falls, so net exports rise.
C)   the exchange rate rises, so net exports fall.
D)   the exchange rate rises, so net exports rise.E) A) and B)
F) C) and D)

Question 16

In 2008, the United States was in recession. Which of the following things would you not expect to have happened?

Accepted Answer

A)   increased layoffs and firings.
B)   a higher rate of bankruptcy.
C)   increased claims for unemployment insurance.
D)   increased real GDP.E) C) and D)
F) B) and D)

Question 17

The position of the long-run aggregate supply curve

Accepted Answer

A)   is determined by resource usage and technology.
B)   is at the point where the unemployment rate is zero.
C)   shifts to the right when the money supply increases.
D)   is at the point where the economy would cease to grow.E) A) and C)
F) A) and B)

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

Question 19

According to the classical model, which of the following would double if the quantity of money doubled?

Accepted Answer

A)   prices but not nominal income
B)   nominal income but not prices
C)   both prices and nominal income
D)   neither prices nor nominal incomeE) A) and C)
F) A) and B)

Question 20

Which of the following accounts for about two-thirds of the decline in output during a recession?

Accepted Answer

A)   the decline in government purchases.
B)   the decline in total consumption spending.
C)   the decline in investment spending.
D)   the decline in net exports.E) All of the above
F) A) and B)

Exam 33: Aggregate Demand and Aggregate Supply

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

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

A decrease in U.S. interest rates leads to

Correct AnswerverifiedShow Answer

Which of the following will reduce the price level and real output in the short run?

Correct AnswerverifiedShow Answer

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that during the Great Depression long-run aggregate supply shifted left. To be consistent with what happened to the price level and output, what would have had to happen to aggregate demand?

Correct AnswerverifiedShow Answer

According to the classical model, which of the following would double if the quantity of money doubled?

Correct AnswerverifiedShow Answer

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

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In 2008, the United States was in recession. Which of the following things would you not expect to have happened?

Correct AnswerverifiedShow Answer

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

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As the price level falls,

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Other things the same, as the price level rises, the real value of money

Correct AnswerverifiedShow Answer

The investment component of GDP measures spending on

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following accounts for about two-thirds of the decline in output during a recession?

Correct AnswerverifiedShow Answer

Which of the following fall during a recession?

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Make a list of things that would shift the long-run aggregate supply curve to the right.

Correct AnswerverifiedExamples in the text (or variations) inc...View AnswerShow Answer

The position of the long-run aggregate supply curve

Correct AnswerverifiedShow Answer

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level) , where a is a positive number, represents

Correct AnswerverifiedShow Answer

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Examples in the text (or variations) inc...
View Answer

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