Question 1

Other things equal, if the U.S.dollar were to depreciate, the

Accepted Answer

A)  aggregate demand curve would remain fixed in place.
B)  aggregate supply curve would shift to the left.
C)  aggregate supply curve would shift to the right.
D)  aggregate demand curve would shift to the left.E) None of the above
F) C) and D)

Question 2

Cost-push inflation is characterized by a(n)

Accepted Answer

A)  increase in aggregate supply and a decrease in aggregate demand.
B)  increase in aggregate demand and no change in aggregate supply.
C)  decrease in aggregate supply and no change in aggregate demand.
D)  decrease in both aggregate supply and aggregate demand.E) A) and B)
F) B) and D)

Question 3

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Given an increase in input price from $4 to $6, we would expect the aggregate

Accepted Answer

A)  supply curve to shift to the left.
B)  supply curve to shift to the right.
C)  demand curve to shift to the left.
D)  supply and demand curves to both remain unchanged.E) All of the above
F) A) and B)

Question 4

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit.If productivity increased such that 3,000 units are now produced with the quantity of inputs still equal to 60, then per-unit production costs would

Accepted Answer

A)  decrease and aggregate supply would decrease.
B)  decrease and aggregate supply would increase.
C)  increase and aggregate supply would decrease.
D)  remain unchanged and aggregate supply would remain unchanged.E) B) and C)
F) A) and C)

Question 5

An increase in productivity will

Accepted Answer

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

Question 6

An expected increase in the prices of consumer goods in the near future will

Accepted Answer

A)  decrease (or shift left)  in aggregate demand now.
B)  increase (or shift right)  in aggregate demand now.
C)  decrease in the quantity of real output demanded (or movement up along A
D)  .
D)  increase in the quantity of real output demanded (or movement down along A
D)  .E) A) and C)
F) A) and D)

Question 7

A decline in investment will shift the AD curve to the

Accepted Answer

A)  left by a multiple of the change in investment.
B)  left by the same amount as the change in investment.
C)  right by the same amount as the change in investment.
D)  right by a multiple of the change in investment.E) C) and D)
F) B) and D)

Question 8

An increase in net exports will shift the

Accepted Answer

A)  aggregate expenditures curve upward and the aggregate demand curve rightward.
B)  aggregate expenditures curve upward and the aggregate demand curve leftward.
C)  aggregate expenditures curve downward and the aggregate demand curve rightward.
D)  aggregate expenditures curve downward and the aggregate demand curve leftward.E) None of the above
F) A) and D)

Question 9

Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Which of the factors best explain the downward slope of aggregate demand curve?

Accepted Answer

A)  2, 4, and 6
B)  7, 9, and 10
C)  1, 3, and 8
D)  4, 6, and 7E) A) and D)
F) C) and D)

Question 10

A decrease in aggregate supply means

Accepted Answer

A)  both the real domestic output and the price level will decrease.
B)  the real domestic output will increase and rises in the price level will become smaller.
C)  the real domestic output will decrease and the price level will rise.
D)  both the real domestic output and rises in the price level will become greater.E) C) and D)
F) A) and B)

Question 11

The aggregate expenditures schedule relates total spending with the price level, while the aggregate demand schedule relates total demand for output with income.

Accepted Answer

A) True 
 B)False

Question 12

If the dollar appreciates relative to foreign currencies, then

Accepted Answer

A)  U.S.goods will look cheaper to foreign buyers..
B)  foreign goods will look more expensive to U.S.buyers.
C)  net exports of the U.S.will increase.
D)  foreign buyers will find U.S.goods become more expensive.E) A) and B)
F) None of the above

Question 13

A decrease in aggregate demand will cause a greater decline in real output the

Accepted Answer

A)  less flexible is the economy's price level.
B)  more flexible is the economy's price level.
C)  steeper is the economy's AS curve.
D)  larger is the economy's marginal propensity to save.E) A) and D)
F) All of the above

Question 14

An increase in imports (independent of a change in the U.S.price level) will increase both U.S.aggregate supply and U.S.aggregate demand.

Accepted Answer

A) True 
 B)False

Question 15

The interest rate effect on aggregate demand indicates that a(n)

Accepted Answer

A)  decrease in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending.
B)  decrease in the price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending.
C)  increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending.
D)  increase in the supply of money will increase interest rates and decrease interest-sensitive consumption and investment spending.E) None of the above
F) B) and D)

Question 16

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit.The level of productivity in this economy is

Accepted Answer

A)  20.
B)  30.
C)  40.
D)  50.E) C) and D)
F) B) and C)

Question 17

Disinflation refers to a situation where

Accepted Answer

A)  the price level falls, but the rate inflation does not.
B)  the price level rises, but the rate of inflation does not.
C)  the rate of inflation falls, but the price level does not.
D)  the rate of inflation rises, but the price level does not.E) B) and C)
F) C) and D)

Question 18

The immediate-short-run aggregate supply curve is

Accepted Answer

A)  vertical.
B)  horizontal.
C)  upward-sloping.
D)  downward-sloping.E) All of the above
F) A) and B)

Question 19

The foreign purchases effect suggests that a decrease in the U.S.price level relative to other countries will

Accepted Answer

A)  shift the aggregate demand curve leftward.
B)  shift the aggregate supply curve leftward.
C)  decrease U.S.exports and increase U.S.imports.
D)  increase U.S.exports and decrease U.S.imports.E) None of the above
F) A) and B)

Question 20

Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Investment spending would most likely be influenced by changes in

Accepted Answer

A)  1 and 3.
B)  4 and 6.
C)  5 and 10.
D)  8 and 9.E) B) and C)
F) None of the above

Exam 32: Aggregate Demand and Aggregate Supply

An increase in productivity will

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A decrease in aggregate demand will cause a greater decline in real output the

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Disinflation refers to a situation where

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Other things equal, if the U.S.dollar were to depreciate, the

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Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Given an increase in input price from $4 to $6, we would expect the aggregate

Correct AnswerverifiedShow Answer

A decline in investment will shift the AD curve to the

Correct AnswerverifiedShow Answer

An expected increase in the prices of consumer goods in the near future will

Correct AnswerverifiedShow Answer

The interest rate effect on aggregate demand indicates that a(n)

Correct AnswerverifiedShow Answer

Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Investment spending would most likely be influenced by changes in

Correct AnswerverifiedShow Answer

The immediate-short-run aggregate supply curve is

Correct AnswerverifiedShow Answer

Cost-push inflation is characterized by a(n)

Correct AnswerverifiedShow Answer

An increase in imports (independent of a change in the U.S.price level) will increase both U.S.aggregate supply and U.S.aggregate demand.

Correct AnswerverifiedShow Answer

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit.If productivity increased such that 3,000 units are now produced with the quantity of inputs still equal to 60, then per-unit production costs would

Correct AnswerverifiedShow Answer

A decrease in aggregate supply means

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The foreign purchases effect suggests that a decrease in the U.S.price level relative to other countries will

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An increase in net exports will shift the

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If the dollar appreciates relative to foreign currencies, then

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Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Which of the factors best explain the downward slope of aggregate demand curve?

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Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit.The level of productivity in this economy is

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The aggregate expenditures schedule relates total spending with the price level, while the aggregate demand schedule relates total demand for output with income.

Correct AnswerverifiedShow Answer

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