Question 1

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)   a decrease in the money supply
B)   increases in the profitability of capital due perhaps to technological progress.
C)   the repeal of an investment tax credit
D)   a decrease in the price levelE) A) and D)
F) All of the above

Question 2

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.E) None of the above
F) A) and B)

Question 3

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

Question 4

The quantity of money has no real impact on things people really care about like whether or not they have a job.Most economists would agree that this statement is appropriate concerning

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

Question 5

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following accounts for about two-thirds of the decline in output during a recession?

Accepted Answer

A)   the decline in consumption expenditures on consumer durables alone
B)   the decline in total consumption spending alone
C)   the decline in investment spending alone
D)   the combined decline in consumption and investment spendingE) A) and B)
F) C) and D)

Question 7

The position of the long-run aggregate supply curve

Accepted Answer

A)   is determined by the things that determine output in the classical model.
B)   is at the point where the unemployment rate is zero.
C)   shifts to the right when the price level increases.
D)   is at the point where the economy would cease to grow.E) All of the above
F) C) and D)

Question 8

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Accepted Answer

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

Question 9

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

Accepted Answer

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

Question 10

The aggregate demand and aggregate supply graph has the

Accepted Answer

A)   quantity of output on the horizontal axis.Output is best measured by real GDP.
B)   quantity of output on the horizontal axis.Output is best measured by nominal GDP.
C)   quantity of output on the vertical axis.Output is best measured by real GDP.
D)   quantity of output on the vertical axis.Output is best measured by nominal GDP.E) A) and D)
F) None of the above

Question 11

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

Question 12

When the price level falls

Accepted Answer

A)   people want to hold less money.
B)   the interest rate falls.
C)   investment spending rises.
D)   All of the above are correct.E) C) and D)
F) None of the above

Question 13

Which of the following is correct?

Accepted Answer

A)   Over the business cycle consumption fluctuates more than investment.
B)   Economic fluctuations are easy to predict.
C)   During recessions sales and profits tend to fall.
D)   Because of government policy the U.S.has suffered no recessions in the last 25 years.E) A) and C)
F) A) and B)

Question 14

Refer to U.S.Financial Crisis.U.S.net exports would

Accepted Answer

A)   rise which by itself would increase aggregate demand.
B)   rise which by itself would decrease aggregate demand.
C)   fall which by itself would increase aggregate demand.
D)   fall which by itself would decrease aggregate demand.E) None of the above
F) A) and C)

Question 15

The primary purpose of the aggregate demand and aggregate supply model is to demonstrate the classical dichotomy.

Accepted Answer

A) True 
 B)False

Question 16

As the price level falls

Accepted Answer

A)   people will want to buy more bonds,so the interest rate rises.
B)   people will want to buy fewer bonds,so the interest rate falls.
C)   people will want to buy more bonds,so the interest rate falls.
D)   people will want to buy fewer bonds,so the interest rate rises.E) B) and D)
F) All of the above

Question 17

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

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.E) A) and B)
F) None of the above

Question 18

From 2006 to 2008 there was a dramatic fall in the price of houses.If this fall made people feel less wealthy,then it would have shifted

Accepted Answer

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

Question 19

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

Accepted Answer

A)   a decrease in the actual price level
B)   an increase in the actual price level
C)   a decrease in the expected price level
D)   an increase in the expected price levelE) B) and D)
F) A) and B)

Question 20

Which of the following shifts aggregate demand right?

Accepted Answer

A)   both a decrease in the price level and the implementation of an investment tax credit
B)   a decrease in the price level but not the implementation of an investment tax credit
C)   the implementation of an investment tax credit but not a decrease in the price level
D)   neither a decrease in the price level nor the implementation of an investment tax creditE) C) and D)
F) B) and D)

Exam 33: Aggregate Demand and Aggregate Supply

From 2006 to 2008 there was a dramatic fall in the price of houses.If this fall made people feel less wealthy,then it would have shifted

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When the price level falls

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Which of the following is correct?

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

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The primary purpose of the aggregate demand and aggregate supply model is to demonstrate the classical dichotomy.

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

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As the price level falls

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Refer to U.S.Financial Crisis.U.S.net exports would

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When the money supply decreases

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Which of the following shifts aggregate demand to the right?

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Which of the following shifts aggregate demand right?

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

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The quantity of money has no real impact on things people really care about like whether or not they have a job.Most economists would agree that this statement is appropriate concerning

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The long-run aggregate supply curve shifts right if

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The aggregate demand and aggregate supply graph has the

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Which of the following accounts for about two-thirds of the decline in output during a recession?

Correct AnswerverifiedShow Answer

As the price level falls

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The position of the long-run aggregate supply curve

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Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Correct AnswerverifiedShow Answer

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Correct AnswerverifiedShow Answer

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