Question 1

The effect of an increase in the price level on the aggregate-demand curve is represented by a

Accepted Answer

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

Question 2

The downward slope of the aggregate demand curve is based on logic that as the price level rises,consumption,investment,and net exports all fall.

Accepted Answer

A) True 
 B)False

Question 3

The Stock Market Boom of 2015
Imagine that in 2015 the economy is in long-run equilibrium.Then stock prices rise more than expected and stay high for some time.
-Refer to Stock Market Boom 2015.In the short run what happens to the price level and real GDP?

Accepted Answer

A)   both the price level and real GDP rise.
B)   both the price level and real GDP fall.
C)   the price level rises and real GDP falls.
D)   the price level falls and real GDP rises.E) A) and D)
F) None of the above

Question 4

Suppose that during World War II the long-run aggregate supply curve shifted right.In order for price and output to have changed in the direction they did,what would have to have happened to aggregate demand?

Accepted Answer

A)   It would have to have shifted left by less than aggregate supply shifted
B)   It would have to have to shifted left by more than aggregate supply shifted.
C)   It would have to have shifted right by less than aggregate supply shifted
D)   It would have to have to shifted right by more than aggregate supply shifted.E) C) and D)
F) B) and C)

Question 5

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   technology improves.
B)   the price level decreases.
C)   the money supply increases.
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 6

During the 2008-2009 unemployment rose from about 4.4% to about

Accepted Answer

A)   6%
B)   8%
C)   10%
D)   12%E) A) and C)
F) C) and D)

Question 7

Suppose the economy is in long-run equilibrium.In a short span of time,there is a decline in the money supply,a tax increase,a pessimistic revision of expectations about future business conditions,and a rise in the value of the dollar.In the short run,we would expect

Accepted Answer

A)   the price level and real GDP both to rise.
B)   the price level and real GDP both to fall.
C)   the price level and real GDP both to stay the same.
D)   All of the above are possible.E) B) and C)
F) A) and C)

Question 8

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

Question 9

Economic expansions in Germany and Japan would cause

Accepted Answer

A)   the U.S.price level and real GDP to rise.
B)   the U.S.price level and real GDP to fall.
C)   the U.S.price level to rise and real GDP to fall.
D)   the U.S.price level to fall and real GDP to rise.E) A) and B)
F) A) and C)

Question 10

The recessions of the 1970s are often attributed to

Accepted Answer

A)   declining inflation expectations.
B)   an increase in oil prices.
C)   declines in the price of stock.
D)   decreases in the money supply.E) None of the above
F) B) and C)

Question 11

Other things the same,if the U.S.price level falls,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) A) and D)
F) C) and D) B

Question 12

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

Accepted Answer

A)   rises,shifting aggregate demand right.
B)   rises,shifting aggregate demand left.
C)   falls,shifting aggregate supply right.
D)   falls,shifting aggregate supply left.E) B) and C)
F) A) and D)

Question 13

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   either immigration from abroad increases or technology improves.
B)   immigration from abroad increases,but not if technology improves.
C)   technology improves,but not if immigration from abroad increases.
D)   None of the above are correct.E) A) and B)
F) A) and C)

Question 14

The model of aggregate demand and aggregate supply explains the relationship between

Accepted Answer

A)   the price and quantity of a particular good.
B)   unemployment and output.
C)   wages and employment.
D)   real GDP and the price level.E) A) and C)
F) B) and C)

Question 15

The initial impact of the repeal of an investment tax credit is to shift

Accepted Answer

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

Question 16

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

Question 17

Stagflation results from continued decreases in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 18

Other things the same,as the price level falls,which of the following increases?

Accepted Answer

A)   lending and investment spending
B)   lending,but not investment spending
C)   investment spending,but not lending
D)   neither investment spending nor lendingE) All of the above
F) C) and D) A

Question 19

If businesses in general decide that they have overbuilt and so now have too much capital,their response to this would initially shift

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 B)

Question 20

The exchange-rate effect is the idea that a higher U.S.price level causes the value of the dollar to increase in foreign exchange markets,and this effect contributes to the downward slope of the aggregate-demand curve.

Accepted Answer

A) True 
 B)False

Exam 23: Aggregate Demand and Aggregate Supply

The effect of an increase in the price level on the aggregate-demand curve is represented by a

Correct AnswerverifiedC

The downward slope of the aggregate demand curve is based on logic that as the price level rises,consumption,investment,and net exports all fall.

Correct AnswerverifiedShow Answer

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium.Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2015.In the short run what happens to the price level and real GDP?

Correct AnswerverifiedShow Answer

Suppose that during World War II the long-run aggregate supply curve shifted right.In order for price and output to have changed in the direction they did,what would have to have happened to aggregate demand?

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve shifts right if

Correct AnswerverifiedShow Answer

During the 2008-2009 unemployment rose from about 4.4% to about

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium.In a short span of time,there is a decline in the money supply,a tax increase,a pessimistic revision of expectations about future business conditions,and a rise in the value of the dollar.In the short run,we would expect

Correct AnswerverifiedShow Answer

As the price level falls

Correct AnswerverifiedShow Answer

Economic expansions in Germany and Japan would cause

Correct AnswerverifiedShow Answer

The recessions of the 1970s are often attributed to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedB

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve shifts right if

Correct AnswerverifiedShow Answer

The model of aggregate demand and aggregate supply explains the relationship between

Correct AnswerverifiedShow Answer

The initial impact of the repeal of an investment tax credit is to shift

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Stagflation results from continued decreases in aggregate demand.

Correct AnswerverifiedShow Answer

Other things the same,as the price level falls,which of the following increases?

Correct AnswerverifiedA

If businesses in general decide that they have overbuilt and so now have too much capital,their response to this would initially shift

Correct AnswerverifiedShow Answer

The exchange-rate effect is the idea that a higher U.S.price level causes the value of the dollar to increase in foreign exchange markets,and this effect contributes to the downward slope of the aggregate-demand curve.

Correct AnswerverifiedShow Answer

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C

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B

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A

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