Question 1

Suppose a country offers a new investment tax credit. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Accepted Answer

The aggregate-demand...

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

During World War II, the economy's production increased about

Accepted Answer

A)   25 percent and prices rose about 5 percent.
B)   50 percent and prices rose about 10 percent.
C)   75 percent and prices rose about 15 percent.
D)   100 percent and prices rose about 20 percent.

Question 4

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

Accepted Answer

Sticky wages, sticky...

Question 5

The saying "Money is a veil." means that

Accepted Answer

A)   while nominal variables are the first thing we may observe about an economy, what's important are the real variables and the forces that determine them.
B)   money is the principal medium of exchange in most economies.
C)   the primary determinant of short-run economic fluctuations is not real variables, but rather changes in the money supply.
D)   in the long run money is of no importance to the determination of either real or nominal variables.

Question 6

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Accepted Answer

A)   employment and production would rise.
B)   employment would rise and production would fall.
C)   employment would fall and production would rise.
D)   employment and production would fall.

Question 7

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.
-Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Accepted Answer

A)   aggregate demand right.
B)   aggregate demand left.
C)   short-run aggregate supply right.
D)   short-run aggregate supply left.

Question 8

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   immigration from abroad increases.
B)   the capital stock increases.
C)   technology advances.
D)   All of the above are correct.

Question 9

Which of the following is most commonly used to monitor short-run changes in economic activity?

Accepted Answer

A)   the inflation rate.
B)   real GDP.
C)   interest rates.
D)   value of the U.S. dollar in the foreign exchange market.

Question 10

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Accepted Answer

A) True 
 B)False

Question 11

As the price level falls

Accepted Answer

A)   people will want to hold more money, so the interest rate rises.
B)   people will want to hold more money, so the interest rate falls.
C)   people will want to hold less money, so the interest rate falls.
D)   people will want to hold less money, so the interest rate rises.

Question 12

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

Accepted Answer

A)   an increase in the actual price level
B)   an increase in the expected price level
C)   an increase in the capital stock
D)   None of the above is correct.

Question 13

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Accepted Answer

A) True 
 B)False

Question 14

The classical dichotomy refers to the separation of

Accepted Answer

A)   prices and nominal interest rates.
B)   taxes and government spending.
C)   decisions made by the public and decisions made by the government.
D)   real and nominal variables.

Question 15

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A)   an increase in government purchases.
B)   an decrease in oil prices
C)   a decrease in the money supply
D)   technical progress

Question 16

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.

Question 17

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

Accepted Answer

The aggregate-demand...

Question 18

Explain how a recession differs from a depression.

Accepted Answer

Recessions are relatively mild...

Question 19

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Accepted Answer

A)   real wealth falls.
B)   the interest rate rises.
C)   the dollar depreciates.
D)   None of the above is correct.

Question 20

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Quantity of output s...

Exam 23: Aggregate Demand and Aggregate Supply

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Correct Answer
verified

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Correct Answer
verified

The classical dichotomy refers to the separation of

Correct Answer
verified

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Correct Answer
verified
Quantity of output s...
View Answer

Explain how a recession differs from a depression.

Correct Answer
verified
Recessions are relatively mild...
View Answer

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

Correct Answer
verified
The aggregate-demand...
View Answer

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

Correct Answer
verified
Sticky wages, sticky...
View Answer

Suppose a country offers a new investment tax credit. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Correct Answer
verified
The aggregate-demand...
View Answer

As the price level falls

Correct Answer
verified

Which of the following is most commonly used to monitor short-run changes in economic activity?

Correct Answer
verified

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Correct Answer
verified

Which of the following will reduce the price level and real output in the short run?

Correct Answer
verified

The long-run aggregate supply curve shifts right if

Correct Answer
verified

During World War II, the economy's production increased about

Correct Answer
verified

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

Correct Answer
verified

The saying "Money is a veil." means that

Correct Answer
verified

Correct Answer
verified

When production costs rise,

Correct Answer
verified

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Correct Answer
verified

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

Correct Answer
verified

Exam 23: Aggregate Demand and Aggregate Supply

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Correct AnswerverifiedShow Answer

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Correct AnswerverifiedShow Answer

The classical dichotomy refers to the separation of

Correct AnswerverifiedShow Answer

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Correct AnswerverifiedQuantity of output s...View AnswerShow Answer

Explain how a recession differs from a depression.

Correct AnswerverifiedRecessions are relatively mild...View AnswerShow Answer

Suppose a recession overseas reduces a country's exports. Which curves) 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

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

Correct AnswerverifiedSticky wages, sticky...View AnswerShow Answer

Suppose a country offers a new investment tax credit. Which curves) 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

As the price level falls

Correct AnswerverifiedShow Answer

Which of the following is most commonly used to monitor short-run changes in economic activity?

Correct AnswerverifiedShow Answer

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Correct AnswerverifiedShow Answer

Which of the following will reduce the price level and real output in the short run?

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve shifts right if

Correct AnswerverifiedShow Answer

During World War II, the economy's production increased about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The saying "Money is a veil." means that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When production costs rise,

Correct AnswerverifiedShow Answer

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Quantity of output s...
View Answer

Correct Answer
verified
Recessions are relatively mild...
View Answer

Correct Answer
verified
The aggregate-demand...
View Answer

Correct Answer
verified
Sticky wages, sticky...
View Answer

Correct Answer
verified
The aggregate-demand...
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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified