Question 1

An increase in the money supply

Accepted Answer

A)   and an investment tax credit both cause aggregate demand to shift right.
B)   and an investment tax credit both cause aggregate demand to shift left.
C)   causes aggregate demand to shift right, while an investment tax credit causes aggregate demand to shift left.
D)   causes aggregate demand to shift left, while an investment tax credit causes aggregate demand to shift right.E) B) and D)
F) A) and C)

Question 2

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   either immigration from abroad increases or technology improves.
B)   immigration from abroad increases, but not if technology improves.
C)   technology improves, but not if immigration from abroad increases.
D)   None of the above are correct.E) C) and D)
F) A) and B)

Question 3

Recessions in Canada and Mexico would cause

Accepted Answer

A)   the U.S. price level and real GDP to rise.
B)   the U.S. price level and real GDP to fall.
C)   the U.S. price level to rise and real GDP to fall.
D)   the U.S. price level to fall and real GDP to rise.E) A) and D)
F) A) and B)

Question 4

When the money supply decreases

Accepted Answer

A)   interest rates fall and so aggregate demand shifts right.
B)   interest rates fall and so aggregate demand shifts left.
C)   interest rates rise and so aggregate demand shifts right.
D)   interest rates rise and so aggregate demand shifts left.E) A) and B)
F) A) and C)

Question 5

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Accepted Answer

A)   both investment and consumption
B)   consumption but not investment
C)   investment but not consumption
D)   neither investment nor consumptionE) All of the above
F) A) and B)

Question 6

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Accepted Answer

A)   nominal wages are slow to adjust to changing economic conditions
B)   as the price level falls, the exchange rate falls
C)   an increase in the money supply lowers the interest rate
D)   an increase in the interest rate increases investment spendingE) A) and D)
F) A) and C)

Question 7

Figure 33-5. 
-Refer to Figure 33-5. In Figure 33-5,

Accepted Answer

A)   Point B represents a short-run equilibrium and a long-run equilibrium.
B)   Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium.
C)   Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium.
D)   Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium.E) A) and B)
F) A) and C)

Question 8

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

Accepted Answer

A)   above the natural rate, so real GDP growth was likely low.
B)   above the natural rate, so real GDP growth was likely high.
C)   below the natural rate, so real GDP growth was likely low.
D)   below the natural rate, so real GDP growth was likely high.E) A) and C)
F) C) and D)

Question 9

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

Question 10

Other things the same, continued increases in the money supply lead to

Accepted Answer

A)   continued increases in the price level and real GDP.
B)   continued increases in the price level but not continued increases in real GDP.
C)   continued increases in real GDP but not continued increases in the price level.
D)   a one-time permanent increase in both prices and real GDP.E) A) and B)
F) B) and C)

Question 11

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

Accepted Answer

A)   an increase in the price level
B)   an increase in the minimum wage
C)   a decrease in the price of oil
D)   more people migrate abroad than immigrate from abroadE) A) and D)
F) B) and D)

Question 12

Suppose a recession overseas reduces a country's exports. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Accepted Answer

The aggregate-demand...

Question 13

As the price level rises, the exchange rate

Accepted Answer

A)   falls, so exports rise and imports fall.
B)   falls, so exports fall and imports rise.
C)   rises, so exports rise and imports fall.
D)   rises, so exports fall and imports rise.E) A) and D)
F) A) and B)

Question 14

Other things the same, when the price level rises, interest rates

Accepted Answer

A)   rise, so firms increase investment.
B)   rise, so firms decrease investment.
C)   fall, so firms increase investment.
D)   fall, so firms decrease investment.E) A) and C)
F) A) and D)

Question 15

During recessions employment typically

Accepted Answer

A)   falls substantially. As the recession ends, employment rises rapidly.
B)   rises substantially. As the recession ends, employment declines gradually.
C)   falls substantially. As the recession ends, employment rises gradually.
D)   rises substantially. As the recession ends, employment declines rapidly.E) B) and D)
F) All of the above

Question 16

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 17

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Accepted Answer

The price ...

Question 18

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

Accepted Answer

A)   A to B.
B)   B to C.
C)   C to D.
D)   D to A.E) A) and B)
F) A) and C)

Question 19

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

Accepted Answer

A)   above the natural rate, so real GDP growth was likely low.
B)   above the natural rate, so real GDP growth was likely high.
C)   below the natural rate, so real GDP growth was likely low.
D)   below the natural rate, so real GDP growth was likely high.E) B) and D)
F) B) and C)

Question 20

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

Accepted Answer

A)   unemployment and the price level.
B)   unemployment but not the price level.
C)   the price level, but not unemployment.
D)   neither the price level nor unemployment.E) C) and D)
F) B) and D)

Exam 33: Aggregate Demand and Aggregate Supply

As the price level rises, the exchange rate

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

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During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

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The long-run aggregate supply curve shifts right if

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Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

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During recessions employment typically

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Which of the following decreases in response to the interest-rate effect from an increase in the price level?

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Other things the same, continued increases in the money supply lead to

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When the money supply decreases

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

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Other things the same, when the price level rises, interest rates

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

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Suppose a recession overseas reduces a country's exports. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Correct AnswerverifiedThe aggregate-demand...View AnswerShow Answer

Which of the following can explain the upward slope of the short-run aggregate supply curve?

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Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Correct AnswerverifiedThe price ...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

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

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Recessions in Canada and Mexico would cause

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An increase in the money supply

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Figure 33-5. -Refer to Figure 33-5. In Figure 33-5,

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The aggregate-demand...
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The price ...
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The short-run and lo...
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