Question 1

During recessions which type of spending falls?

Accepted Answer

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

Question 2

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Sticky wages,sticky ...

Question 3

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

Accepted Answer

A)   an increase in either the physical or human capital stock
B)   an increase in the human but not the physical capital stock
C)   an increase in the physical capital stock,but no the human capital stock
D)   neither an increase in the physical capital stock or the human capital stockE) C) and D)
F) A) and C)

Question 4

If not all prices adjust instantly to changing economic circumstances,an unexpected fall in the price level leaves some firms with higher-than-desired prices,and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

Figure 20-2. 
-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) All of the above
F) B) and D)

Question 7

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

Accepted Answer

A)   variables measured in terms of money and variables measured in terms of quantities or relative prices
B)   variables measured in terms of money but not variables measured in terms of quantities or relative prices
C)   variables measured in terms of quantities or relative prices,but not variables measured in terms of money
D)   neither variables measured in terms of money nor variables measured in terms of quantities or relative pricesE) All of the above
F) B) and C)

Question 8

Most economist agree that money changes real GDP in both the short and long run.

Accepted Answer

A) True 
 B)False

Question 9

Other things the same,if the U.S.price level rises,then

Accepted Answer

A)   the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate rises.
B)   the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate falls.
C)   the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate rises.
D)   the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate falls.E) C) and D)
F) B) and C)

Question 10

Other things the same,what happens in the short run to the price level and quantity of output when the aggregate demand curve shifts to the left?

Accepted Answer

The price ...

Question 11

Other things the same,if the long-run aggregate supply curve shifts right,prices

Accepted Answer

A)   and output both increase.
B)   and output both decrease.
C)   increase and output decreases.
D)   decrease and output increases.E) A) and B)
F) All of the above

Question 12

Which of the following affected aggregate demand during the recession of 2008-2009?

Accepted Answer

A)   a decline in residential construction and a decrease in lending
B)   a decline in residential construction but not a decrease in lending
C)   a decrease in lending but not a decline in residential construction
D)   neither a decrease in residential construction nor a decrease in lendingE) B) and D)
F) A) and B)

Question 13

Which of the following would cause prices and real GDP to rise in the short run?

Accepted Answer

A)   an increase in the expected price level
B)   an increase in the money supply
C)   a decrease in the capital stock
D)   None of the above is correct.E) B) and C)
F) C) and D)

Question 14

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

Accepted Answer

A)   rise,which means consumers will want to spend more on homebuilding.
B)   rise,which means consumers will want to spend less on homebuilding.
C)   fall,which means consumers will want to spend more on homebuilding.
D)   fall,which means consumers will want to spend less on homebuilding.E) A) and C)
F) A) and B)

Question 15

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will have

Accepted Answer

A)   higher than desired prices which leads to an increase in the aggregate quantity of goods and services supplied.
B)   higher than desired prices which leads to a decrease in the aggregate quantity of goods and service supplied.
C)   lower than desired prices which leads to an increase in the aggregate quantity of goods and services supplied.
D)   lower than desired prices which leads to a decrease in the aggregate quantity of goods and services suppliedE) None of the above
F) A) and B)

Question 16

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

Accepted Answer

A)   stagflation.
B)   the classical dichotomy.
C)   short-run economic fluctuations.
D)   how changes in the money supply had created the Great Depression.E) A) and D)
F) A) and C)

Question 17

Which of the following shifts short-run,but not long-run aggregate supply right?

Accepted Answer

A)   a decrease in the actual price level
B)   a decrease in the expected price level
C)   a decrease in the capital stock
D)   an increase in the money supplyE) A) and D)
F) B) and D)

Question 18

Wages tend to be sticky

Accepted Answer

A)   because of contracts,social norms,and notions of fairness.
B)   because of contracts,but not social norms or notions of fairness.
C)   because of social norms and notions of fairness,but not contracts.
D)   None of the above are correct.E) B) and C)
F) B) and D)

Question 19

When production costs rise,

Accepted Answer

A)   the short-run aggregate supply curve shifts to the right.
B)   the short-run aggregate supply curve shifts to the left.
C)   the aggregate demand curve shifts to the right.
D)   the aggregate demand curve shifts to the left.E) A) and D)
F) A) and B)

Question 20

Using the aggregate demand and aggregate supply model,an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

Accepted Answer

The answer of Using the aggregate demand and aggregate supply...

Exam 33: Aggregate Demand and Aggregate Supply

Wages tend to be sticky

Correct AnswerverifiedShow Answer

Which of the following would cause prices and real GDP to rise in the short run?

Correct AnswerverifiedShow Answer

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will have

Correct AnswerverifiedShow Answer

Using the aggregate demand and aggregate supply model,an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

Correct AnswerverifiedShow Answer

If not all prices adjust instantly to changing economic circumstances,an unexpected fall in the price level leaves some firms with higher-than-desired prices,and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Correct AnswerverifiedShow Answer

Which of the following shifts short-run,but not long-run aggregate supply right?

Correct AnswerverifiedShow Answer

Other things the same,if the long-run aggregate supply curve shifts right,prices

Correct AnswerverifiedShow Answer

Other things the same,if the U.S.price level rises,then

Correct AnswerverifiedShow Answer

The price level rises in the short run if

Correct AnswerverifiedShow Answer

When production costs rise,

Correct AnswerverifiedShow Answer

Most economist agree that money changes real GDP in both the short and long run.

Correct AnswerverifiedShow Answer

During recessions which type of spending falls?

Correct AnswerverifiedShow Answer

Other things the same,what happens in the short run to the price level and quantity of output when the aggregate demand curve shifts to the left?

Correct AnswerverifiedThe price ...View AnswerShow Answer

Which of the following affected aggregate demand during the recession of 2008-2009?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Correct AnswerverifiedSticky wages,sticky ...View AnswerShow Answer

Figure 20-2. -Refer to Optimism.In the long run,the change in price expectations created by optimism shifts

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

Correct AnswerverifiedShow Answer

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The price ...
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Sticky wages,sticky ...
View Answer

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Correct Answer
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