Question 1

Aggregate demand shifts right 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) All of the above
F) C) and D)

Question 2

Suppose a country experiences a change in weather patterns that makes farming more difficult. 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 3

As the price level rises

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

Question 4

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

Question 5

Which of the following would not be included in aggregate demand?

Accepted Answer

A)  an increase in firms' inventories.
B)  purchases of goods by households.
C)  firms' purchases of newly produced machinery.
D)  government's tax collections.E) All of the above
F) B) and D)

Question 6

In the context of the aggregate-demand curve, the interest-rate effect refers to the idea that, when the price level increases,

Accepted Answer

A)  the real value of money decreases; in turn, the real value of the dollar increases in foreign exchange markets, which decreases net exports.
B)  the real value of money decreases; in turn, interest rates increase, which decreases net exports.
C)  households increase their holdings of money; in turn, interest rates decrease, which reduces spending on investment goods.
D)  households increase their holdings of money; in turn, interest rates increase, which reduces spending on investment goods.E) B) and D)
F) All of the above

Question 7

When taxes increase, consumption

Accepted Answer

A)  decreases as shown by a movement to the left along a given aggregate-demand curve.
B)  decreases as shown by a shift of the aggregate demand curve to the left.
C)  increases as shown by a movement to the right along a given aggregate-demand curve.
D)  increases as shown by a shift of the aggregate demand curve to the right.E) All of the above
F) A) and B)

Question 8

The classical dichotomy and monetary neutrality are represented graphically by

Accepted Answer

A)  an upward-sloping long-run aggregate-supply curve.
B)  a vertical long-run aggregate-supply curve.
C)  an upward-sloping short-run aggregate-curve.
D)  a downward-sloping aggregate-demand curve.E) All of the above
F) B) and D)

Question 9

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

Accepted Answer

A)  both an increase in the capital stock and technological improvements
B)  an increase in the capital stock but not technological improvements
C)  An increase in the capital stock but not technological improvements
D)  neither an increase in the capital stock nor an technological improvementsE) All of the above
F) A) and B)

Question 10

The model of short-run economic fluctuations focuses on

Accepted Answer

A)  the price level and real GDP.
B)  productivity and economic growth.
C)  the neutrality of money and inflation.
D)  None of the above is correct.E) None of the above
F) B) and C)

Question 11

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

Accepted Answer

A)  an increase in the expected price level.
B)  an increase in the capital stock.
C)  an increase in the money supply.
D)  an increase in taxes.E) B) and C)
F) A) and B)

Question 12

Other things the same, as the price level rises,

Accepted Answer

A)  the dollar depreciates.
B)  the interest rate falls.
C)  people feel less wealthy.
D)  All of the above are correct.E) None of the above
F) A) and B)

Question 13

Figure 33-7. 
-Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at

Accepted Answer

A)  V.
B)  W.
C)  X.
D)  Z.E) C) and D)
F) B) and D)

Question 14

Who is credited for the original development of the model of aggregate demand and aggregate supply?

Accepted Answer

The answer of Who is credited for the original development...

Question 15

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Accepted Answer

A) True 
 B)False

Question 16

Other things the same, an unexpected fall in the price level results in some firms having

Accepted Answer

A)  lower than desired prices, which increases their sales.
B)  lower than desired prices, which depresses their sales.
C)  higher than desired prices, which increases their sales.
D)  higher than desired prices, which depresses their sales.E) All of the above
F) A) and B)

Question 17

Figure 33-12. 
-Refer to Figure 33-12. Identify periods 1 and 2.

Accepted Answer

Period 1 is the Grea...

Question 18

Which of the following did not happen during the onset of the Great Depression?

Accepted Answer

A)  The money supply fell as households took money out of bank deposits.
B)  The Fed conducted expansionary monetary policy.
C)  Stock prices fell about 90 percent.
D)  Disruption of the banking system made it difficult for some firms to obtain funds for investment.E) B) and C)
F) A) and D)

Question 19

Most economists believe that classical macroeconomic theory is a good description of the economy

Accepted Answer

A)  in neither the short nor long run.
B)  in the short run and in the long run.
C)  in the short run, but not in the long run.
D)  in the long run, but not in the short run.E) A) and D)
F) B) and D)

Question 20

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Accepted Answer

why the ag...

Exam 33: Aggregate Demand and Aggregate Supply

Which of the following did not happen during the onset of the Great Depression?

Correct AnswerverifiedShow Answer

Suppose a country experiences a change in weather patterns that makes farming more difficult. 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

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Correct Answerverifiedwhy the ag...View AnswerShow Answer

Which of the following would not be included in aggregate demand?

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

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As the price level rises

Correct AnswerverifiedShow Answer

In the context of the aggregate-demand curve, the interest-rate effect refers to the idea that, when the price level increases,

Correct AnswerverifiedShow Answer

When taxes increase, consumption

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Who is credited for the original development of the model of aggregate demand and aggregate supply?

Correct AnswerverifiedShow Answer

Other things the same, as the price level rises,

Correct AnswerverifiedShow Answer

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Correct AnswerverifiedShow Answer

Aggregate demand shifts right if

Correct AnswerverifiedShow Answer

The classical dichotomy and monetary neutrality are represented graphically by

Correct AnswerverifiedShow Answer

Figure 33-7. -Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at

Correct AnswerverifiedShow Answer

Other things the same, an unexpected fall in the price level results in some firms having

Correct AnswerverifiedShow Answer

The model of short-run economic fluctuations focuses on

Correct AnswerverifiedShow Answer

Most economists believe that classical macroeconomic theory is a good description of the economy

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 33-12. -Refer to Figure 33-12. Identify periods 1 and 2.

Correct AnswerverifiedPeriod 1 is the Grea...View AnswerShow Answer

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The short-run and lo...
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why the ag...
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Period 1 is the Grea...
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