Question 1

Other things the same, a decrease in the price level makes the dollars people hold worth

Accepted Answer

A)  more, so they can buy more.
B)  more, so they can buy less.
C)  less, so they can buy more.
D)  less, so they can buy less.E) B) and C)
F) A) and D)

Question 2

In which case can we be sure real GDP rises in the short run?

Accepted Answer

A)  government purchases increase and taxes rise.
B)  government purchases increase and taxes fall.
C)  government purchases decrease and taxes rise.
D)  government purchases decrease and taxes fall.E) A) and B)
F) All of the above

Question 3

Which of the following would increase the price level?

Accepted Answer

A)  an increase in the money supply.
B)  an increase in taxes.
C)  a decrease in the expected price level.
D)  a decrease in the natural rate of unemployment.E) A) and B)
F) C) and D)

Question 4

Which of the following, other things the same, would make the price level increase and real GDP decrease?​

Accepted Answer

A)  ​long-run aggregate supply shifts left.
B)  ​long-run aggregate supply shifts right.
C)  ​aggregate demand shifts right.
D)  ​aggregate demand shifts left.E) C) and D)
F) A) and B)

Question 5

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 6

The division of variables into real and nominal is a dichotomy assumed by

Accepted Answer

A)  classical economists.
B)  John Maynard Keynes.
C)  the wealth effect.
D)  short-run macroeconomic theory.E) A) and D)
F) A) and C)

Question 7

​The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level

Accepted Answer

A)  ​decreases by more than expected so that firms believe the relative price of their output has decreased.
B)  ​decreases by more than expected so that firms believe the relative price of their output has increased.
C)  ​decreases by less than expected so that firms believe the relative price of their output has decreased.
D)  ​decreases by less than expected so that firms believe the relative price of their output has increased.E) C) and D)
F) A) and B)

Question 8

When interest rates fall

Accepted Answer

A)  firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.
B)  firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding.
C)  firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding.
D)  firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding.E) B) and D)
F) All of the above

Question 9

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Accepted Answer

A)  production is more profitable and employment rises.
B)  production is more profitable and employment falls.
C)  production is less profitable and employment rises.
D)  production is less profitable and employment falls.E) All of the above
F) A) and B)

Question 10

Figure 33-12. 
-Refer to Figure 33-12. Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

Accepted Answer

The aggregate-demand...

Question 11

When the price level falls the quantity of

Accepted Answer

A)  consumption goods demanded rises, while the quantity of net exports demanded falls.
B)  consumption goods demanded and the quantity of net exports demanded both rise.
C)  consumption goods demanded and the quantity of net exports demanded both fall.
D)  consumption goods demanded falls, while the quantity of net exports demand rises.E) A) and D)
F) A) and C)

Question 12

A decrease in the availability of an important major resource such as oil shifts

Accepted Answer

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

Question 13

Real and nominal variables are highly intertwined, and changes in the money supply change real GDP. Most economists would agree that this statement accurately describes

Accepted Answer

A)  both the short run and the long run.
B)  the short run, but not the long run.
C)  the long run, but not the short run.
D)  neither the long run nor the short run.E) B) and C)
F) None of the above

Question 14

Aggregate demand shifts left if

Accepted Answer

A)  government purchases increase and shifts left if stock prices rise.
B)  government purchases increase and shifts left if stock prices fall.
C)  government purchases decrease and shifts left if stock prices rise.
D)  government purchases decrease and shifts left is stock prices fall.E) B) and D)
F) A) and B)

Question 15

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Accepted Answer

A)  aggregate demand shifted right
B)  aggregate demand shifted left
C)  aggregate supply shifted right
D)  aggregate supply shifted leftE) A) and B)
F) A) and C)

Question 16

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Accepted Answer

A) True 
 B)False

Question 17

From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted

Accepted Answer

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

Question 18

Other things the same, the aggregate quantity of output supplied will increase if the price level

Accepted Answer

A)  is lower than expected so that firms believe the relative price of their output has increased.
B)  is lower than expected so that firms believe the relative price of their output has decreased.
C)  is higher than expected so that firms believe the relative price of their output has increased.
D)  is higher than expected so that firms believe the relative price of their output has decreased.E) A) and B)
F) A) and C)

Question 19

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) B) and C)
F) All of the above

Question 20

Refer to Optimism. In the long run, the change in price expectations created by optimism shifts

Accepted Answer

A)  long-run aggregate supply right.
B)  long-run aggregate supply left.
C)  short-run aggregate supply right.
D)  short-run aggregate supply left.E) B) and D)
F) C) and D)

Exam 33: Aggregate Demand and Aggregate Supply

Other things the same, a decrease in the price level makes the dollars people hold worth

Correct AnswerverifiedShow Answer

From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted

Correct AnswerverifiedShow Answer

When interest rates fall

Correct AnswerverifiedShow Answer

Real and nominal variables are highly intertwined, and changes in the money supply change real GDP. Most economists would agree that this statement accurately describes

Correct AnswerverifiedShow Answer

Which of the following, other things the same, would make the price level increase and real GDP decrease?​

Correct AnswerverifiedShow Answer

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

Correct AnswerverifiedShow Answer

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Correct AnswerverifiedShow Answer

Figure 33-12. -Refer to Figure 33-12. Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

Correct AnswerverifiedThe aggregate-demand...View AnswerShow Answer

The division of variables into real and nominal is a dichotomy assumed by

Correct AnswerverifiedShow Answer

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Correct AnswerverifiedShow Answer

When the price level falls the quantity of

Correct AnswerverifiedShow Answer

Which of the following would increase the price level?

Correct AnswerverifiedShow Answer

Refer to Optimism. In the long run, the change in price expectations created by optimism shifts

Correct AnswerverifiedShow Answer

​The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level

Correct AnswerverifiedShow Answer

In which case can we be sure real GDP rises in the short run?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A decrease in the availability of an important major resource such as oil shifts

Correct AnswerverifiedShow Answer

Aggregate demand shifts left if

Correct AnswerverifiedShow Answer

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Correct AnswerverifiedShow Answer

Other things the same, the aggregate quantity of output supplied will increase if the price level

Correct AnswerverifiedShow Answer

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Which of the following, other things the same, would make the price level increase and real GDP decrease?

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The aggregate-demand...
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The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level

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