Question 1

Suppose a country experiences an increase in its capital stock. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Accepted Answer

The short-run and lo...

Question 2

The term ​business cycle​ implies that economic fluctuations follow a regular, predictable pattern.​

Accepted Answer

A) True 
 B)False

Question 3

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Accepted Answer

A) True 
 B)False

Question 4

The economic boom of the early 1940s resulted mostly from

Accepted Answer

A)  increased government expenditures.
B)  falling prices of oil and other natural resources.
C)  an increase in the growth rate of the money supply.
D)  rapid developments in transportation, electronics, and communication.E) None of the above
F) A) and B)

Question 5

Other things the same, as the price level falls, the exchange rate rises. A rise in the exchange rate leads to a decrease in net exports.

Accepted Answer

A) True 
 B)False

Question 6

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

Accepted Answer

See graph.

Over time, technological...

Question 7

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Accepted Answer

When the price level increases, the purc...

Question 8

Scenario 33-1
Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that they desire to purchase more U.S assets.
-Refer to Scenario 33-1. What would the change in the exchange rate make happen to U.S. net exports and U.S. aggregate demand?

Accepted Answer

A)  Net exports would rise which by itself would increase U.S.aggregate demand.
B)  Net exports would rise which by itself would decrease U.S.aggregate demand.
C)  Net exports would fall which by itself would increase U.S.aggregate demand.
D)  Net exports would fall which by itself would decrease U.S.aggregate demand.E) None of the above
F) C) and D)

Question 9

A change in the supply of labor, all else remaining the same, will shift the short-run aggregate-supply curve.​

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

When output rises, unemployment falls.

Accepted Answer

A) True 
 B)False

Question 12

List the three reasons for why the aggregate-demand curve slopes downward.

Accepted Answer

The wealth effect, t...

Question 13

Figure 33-2  ​
-Refer to Figure 33-2. If the economy is in long-run equilibrium, a favorable shift in short-run aggregate supply curve would move the economy from

Accepted Answer

A)  S to T.
B)  T to U.
C)  U to V.
D)  V to S.E) B) and C)
F) B) and D)

Question 14

An increase in household saving causes consumption to

Accepted Answer

A)  rise and aggregate demand to increase.
B)  rise and aggregate demand to decrease.
C)  fall and aggregate demand to increase.
D)  fall and aggregate demand to decrease.E) All of the above
F) None of the above

Question 15

Stagflation results from continued decreases in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 16

When the Fed buys bonds the supply of money

Accepted Answer

A)  increases and so aggregate demand shifts right.
B)  decreases and so aggregate demand shifts left.
C)  decreases and so aggregate demand shifts right.
D)  increases and so aggregate demand shifts left.E) A) and B)
F) C) and D)

Question 17

Aggregate demand includes

Accepted Answer

A)  the quantity of goods and services the government, households, firms, and customers abroad want to buy.
B)  neither the quantity of goods and services the government, households, nor firms want to buy nor the quantity of goods and services customers abroad want to buy.
C)  the quantity of goods and service the government wants to buy, but not the quantity of goods and services households, firms, or customers abroad want to buy.
D)  the quantity of goods and services households and firms want to buy, but not the quantity of goods and services the government wants to buy.E) A) and B)
F) A) and C)

Question 18

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Accepted Answer

Consumption expendit...

Question 19

Scenario 33-2
Imagine that in the current year the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
-Refer to Scenario 33-2. Which curve shifts and in which direction?

Accepted Answer

A)  Aggregate demand shifts right.
B)  Aggregate demand shifts left.
C)  Aggregate supply shifts right.
D)  Aggregate supply shifts left.E) None of the above
F) All of the above

Question 20

Other things the same, if technology increases, then in the long run

Accepted Answer

A)  both output and prices are higher.
B)  output is higher and prices are lower.
C)  output is lower and prices are higher.
D)  both output and prices are lower.E) A) and B)
F) B) and C)

Exam 33: Aggregate Demand and Aggregate Supply

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Correct Answer
verified
When the price level increases, the purc...
View Answer

The term business cycle implies that economic fluctuations follow a regular, predictable pattern.

Correct Answer
verified

Figure 33-2 -Refer to Figure 33-2. If the economy is in long-run equilibrium, a favorable shift in short-run aggregate supply curve would move the economy from

Correct Answer
verified

Other things the same, as the price level falls, the exchange rate rises. A rise in the exchange rate leads to a decrease in net exports.

Correct Answer
verified

Other things the same, if technology increases, then in the long run

Correct Answer
verified

List the three reasons for why the aggregate-demand curve slopes downward.

Correct Answer
verified
The wealth effect, t...
View Answer

The economic boom of the early 1940s resulted mostly from

Correct Answer
verified

A change in the supply of labor, all else remaining the same, will shift the short-run aggregate-supply curve.

Correct Answer
verified

Correct Answer
verified

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

Correct Answer
verified
See graph.

Over time, technological...
View Answer

Aggregate demand includes

Correct Answer
verified

Scenario 33-2 Imagine that in the current year the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Scenario 33-2. Which curve shifts and in which direction?

Correct Answer
verified

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Correct Answer
verified

When the Fed buys bonds the supply of money

Correct Answer
verified

An increase in household saving causes consumption to

Correct Answer
verified

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

Correct Answer
verified

Stagflation results from continued decreases in aggregate demand.

Correct Answer
verified

When output rises, unemployment falls.

Correct Answer
verified

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Correct Answer
verified
Consumption expendit...
View Answer

Suppose a country experiences an increase in its capital stock. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

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

Exam 33: Aggregate Demand and Aggregate Supply

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Correct AnswerverifiedWhen the price level increases, the purc...View AnswerShow Answer

The term ​business cycle​ implies that economic fluctuations follow a regular, predictable pattern.​

Correct AnswerverifiedShow Answer

Figure 33-2 ​ -Refer to Figure 33-2. If the economy is in long-run equilibrium, a favorable shift in short-run aggregate supply curve would move the economy from

Correct AnswerverifiedShow Answer

Other things the same, as the price level falls, the exchange rate rises. A rise in the exchange rate leads to a decrease in net exports.

Correct AnswerverifiedShow Answer

Other things the same, if technology increases, then in the long run

Correct AnswerverifiedShow Answer

List the three reasons for why the aggregate-demand curve slopes downward.

Correct AnswerverifiedThe wealth effect, t...View AnswerShow Answer

The economic boom of the early 1940s resulted mostly from

Correct AnswerverifiedShow Answer

A change in the supply of labor, all else remaining the same, will shift the short-run aggregate-supply curve.​

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

Correct AnswerverifiedSee graph.​ ​Over time, technological...View AnswerShow Answer

Aggregate demand includes

Correct AnswerverifiedShow Answer

Scenario 33-2 Imagine that in the current year the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Scenario 33-2. Which curve shifts and in which direction?

Correct AnswerverifiedShow Answer

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Correct AnswerverifiedShow Answer

When the Fed buys bonds the supply of money

Correct AnswerverifiedShow Answer

An increase in household saving causes consumption to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Stagflation results from continued decreases in aggregate demand.

Correct AnswerverifiedShow Answer

When output rises, unemployment falls.

Correct AnswerverifiedShow Answer

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Correct AnswerverifiedConsumption expendit...View AnswerShow Answer

Suppose a country experiences an increase in its capital stock. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

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

Correct Answer
verified
When the price level increases, the purc...
View Answer

The term business cycle implies that economic fluctuations follow a regular, predictable pattern.

Correct Answer
verified

Figure 33-2 -Refer to Figure 33-2. If the economy is in long-run equilibrium, a favorable shift in short-run aggregate supply curve would move the economy from

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The wealth effect, t...
View Answer

Correct Answer
verified

A change in the supply of labor, all else remaining the same, will shift the short-run aggregate-supply curve.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
See graph.

Over time, technological...
View 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
Consumption expendit...
View Answer

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