Question 1

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 D)
F) B) and C)

Question 2

Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that

Accepted Answer

A)   real GDP and the price level are lower in country B.
B)   real GDP, but not the price level, is lower in country B.
C)   the price level, but not real GDP is lower in country B.
D)   neither the price level or real GDP is lower in country B.E) A) and D)
F) All of the above

Question 3

Other things the same, when the price level rises more than expected, some firms will have

Accepted Answer

A)   higher than desired prices, which increases their sales.
B)   higher than desired prices, which depresses their sales.
C)   lower than desired prices, which increases their sales.
D)   lower than desired prices, which depresses their sales.E) B) and D)
F) B) and C)

Question 4

Which of the following shifts the short-run aggregate supply curve to the right?

Accepted Answer

A)   a decrease in the actual price level
B)   an increase in the actual price level
C)   a decrease in the expected price level
D)   an increase in the expected price levelE) B) and D)
F) B) and C)

Question 5

The model of aggregate demand and aggregate supply

Accepted Answer

A)   is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships.
B)   is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model.
C)   is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted.
D)   is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted.E) None of the above
F) A) and B)

Question 6

In 1986, OPEC countries increased their production of oil. This caused

Accepted Answer

A)   the price level to rise.
B)   aggregate supply to shift right.
C)   unemployment to rise.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 7

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)   The price level rises.
B)   Interest rates fall.
C)   The dollar depreciates for some reason other than a change in the price level.
D)   Stock prices fall for some reason other than a change in the price level.E) B) and C)
F) A) and D)

Question 8

The effects of a higher than expected price level are shown by

Accepted Answer

A)   shifting the short-run aggregate supply curve right.
B)   shifting the short-run aggregate supply curve left.
C)   moving to the right along a given aggregate supply curve.
D)   moving to the left along a given aggregate supply curve.E) All of the above
F) A) and C)

Question 9

The price level rises in the short run if

Accepted Answer

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

Question 10

Figure 33-1. 
-Refer to Figure 33-1. Line A is

Accepted Answer

A)   investment spending.
B)   real GDP.
C)   unemployment rate.
D)   CPI.E) All of the above
F) B) and D)

Question 11

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 C)
F) A) and B)

Question 12

Which of the following is a lesson concerning shifts in aggregate demand?

Accepted Answer

A)   they contribute to fluctuations in output.
B)   in the long-run they change real output, but not the price level.
C)   policymakers are unable to mitigate the severity of economic fluctuations.
D)   All of the above are correct.E) B) and D)
F) All of the above

Question 13

Tax cuts shift aggregate demand

Accepted Answer

A)   right as do increases in government spending.
B)   right while increases in government spending shift aggregate demand left.
C)   left as do increases in government spending.
D)   left while increases in government spending shift aggregate demand right.E) A) and B)
F) All of the above

Question 14

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

Accepted Answer

A) True 
 B)False

Question 15

As the price level rises, the interest rate

Accepted Answer

A)   falls, so the supply of dollars in the market for foreign currency exchange shifts left.
B)   falls, so the supply of dollars in the market for foreign currency exchange shifts right.
C)   rises, so the supply of dollars in the market for foreign currency exchange shifts left.
D)   rises, so the supply of dollars in the market for foreign currency exchange shifts right.E) B) and D)
F) All of the above

Question 16

Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

Accepted Answer

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

Question 17

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 18

Historically, the change in real GDP during recessions has been

Accepted Answer

A)   mostly a change in investment spending.
B)   mostly a change in consumption spending.
C)   about equally divided between consumption and investment spending.
D)   sometimes mostly a change in consumption and sometimes mostly a change in investment.E) A) and C)
F) C) and D)

Question 19

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Accepted Answer

labor, cap...

Question 20

When looking at a graph of aggregate demand, which of the following is correct?

Accepted Answer

A)   There are nominal variables on both the vertical and the horizontal axes.
B)   There are real variables on both the vertical and horizontal axes.
C)   The variable on the vertical axis is nominal; the variable on the horizontal axis is real
D)   The variable on the vertical axis is real; the variable on the horizontal axis is nominalE) B) and D)
F) A) and B)

Exam 33: Aggregate Demand and Aggregate Supply

The model of aggregate demand and aggregate supply

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In 1986, OPEC countries increased their production of oil. This caused

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Tax cuts shift aggregate demand

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The effects of a higher than expected price level are shown by

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

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Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Correct Answerverifiedlabor, cap...View AnswerShow Answer

Other things the same, when the price level rises more than expected, some firms will have

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Which of the following is a lesson concerning shifts in aggregate demand?

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The price level rises in the short run if

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Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

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Which of the following shifts aggregate demand to the left?

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The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

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When looking at a graph of aggregate demand, which of the following is correct?

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Historically, the change in real GDP during recessions has been

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

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Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that

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As the price level rises, the interest rate

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An increase in the money supply shifts the long-run aggregate supply curve to the right.

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Figure 33-1. -Refer to Figure 33-1. Line A is

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Which of the following shifts the short-run aggregate supply curve to the right?

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labor, cap...
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