Question 1

If velocity is rising,an increase in one spending component can occur without requiring other spending components to decline.

Accepted Answer

A) True 
 B)False

Question 2

List and describe the three reasons that help to explain why the aggregate demand (AD)curve slopes downward.

Accepted Answer

If the AD curve slopes downward,it meAns...

Question 3

If some of a person's wealth is in cash,it follows that

Accepted Answer

A)   this person's monetary wealth will change as the price level changes.
B)   this person's monetary wealth will not change as the price level changes.
C)   this person is wealthier than a person who holds all his wealth in nonmonetary form.
D)   a and c
E)   b and c

Question 4

Exhibit 8-3
 
-Refer to Exhibit 8-3. A shift in aggregate demand from AD? to AD? would have been the result of

Accepted Answer

A)   a decrease in the price level.
B)   an increase in the price level.
C)   an increase in foreign real national income.
D)   a decrease in foreign real national income.

Question 5

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A)   If consumption falls, total expenditures on goods and services rises, and the AD curve shifts leftward.
B)   If investment increases, total expenditures on goods and services falls, and the AD curve shifts leftward.
C)   If net exports rise, total expenditures on goods and services rises, and the AD curve shifts rightward.
D)   If consumption falls, total expenditures on goods and services falls, and the AD curve shifts leftward.
E)   c and d

Question 6

An increase in the price level

Accepted Answer

A)   shifts the AD curve to the right.
B)   shifts the AD curve to the left.
C)   causes an upward movement along the existing AD curve.
D)   causes a downward movement along the existing AD curve.
E)   a and c

Question 7

One of the reasons why the AD curve slopes downward is that as the

Accepted Answer

A)   price level rises, purchasing power rises.
B)   price level falls, purchasing power rises.
C)   nation's income level rises, purchasing power rises.
D)   nation's income level rises, purchasing power falls.
E)   This is a trick question, because the AD curve is upward sloping.

Question 8

The AD curve shows the various amounts of real output that people are willing and able to

Accepted Answer

A)   buy at different income levels.
B)   buy at different price levels.
C)   sell at different profit levels.
D)   sell at different price levels.
E)   none of the above

Question 9

The real balance effect helps to create "a change in

Accepted Answer

A)   aggregate demand."
B)   the quantity demanded of Real GDP."
C)   aggregate supply."
D)   the quantity supplied of Real GDP."

Question 10

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A)   The (U.S.)  dollar appreciates, net exports rise, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward.
B)   The interest rate falls, investment rises, total expenditures on goods and services rises, AD falls, and the AD curve shifts leftward.
C)   Wealth increases, consumption rises, total expenditures on goods and services rises, AD falls, and the AD curve shifts rightward.
D)   (Business)  expectations about future sales become more positive, investment rises, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward.
E)   Foreign real national income rises, net exports rise, total expenditures on goods and services falls, AD rises, and the AD curve shifts rightward.

Question 11

A change in the money supply can affect one or more of the components of spending and therefore shift the short-run aggregate supply (SRAS)curve.

Accepted Answer

A) True 
 B)False

Question 12

Only a change in the price level can cause a movement from one point to another point along a given aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 13

If wage rates rise at the same time that labor productivity increases,what is the effect on short-run aggregate supply (SRAS) ?

Accepted Answer

A)   SRAS rises.
B)   SRAS falls.
C)   SRAS remains constant.
D)   SRAS may rise, fall, or remain constant.

Question 14

Which of the following is consistent with the sticky-wage explanation of the upward-sloping SRAS curve?

Accepted Answer

A)   The price level rises, the real wage falls, and the quantity demanded of labor declines.
B)   The price level falls, the real wage rises, and the quantity demanded of labor falls.
C)   The price level rises, the real wage rises, and the quantity demanded of labor falls.
D)   The nominal wage rises, the real wage rises, and the quantity demanded and supplied of labor rise.
E)   a and b

Question 15

The short-run aggregate supply curve slopes upward as a result of the real balance effect,the interest rate effect,and the international trade effect.

Accepted Answer

A) True 
 B)False

Question 16

Suppose the price level is rising and it is widely forecast to rise even further.This forecast might cause __________ of some consumption plans,resulting in __________ the AD curve.

Accepted Answer

A)   postponement; a rightward shift of
B)   postponement; a leftward shift of
C)   acceleration; a rightward shift of
D)   acceleration; movement down along

Question 17

If aggregate quantity supplied is greater than aggregate quantity demanded at a particular price level,then a

Accepted Answer

A)   shortage exists and consumers will bid the price level up.
B)   surplus exists and consumers will bid the price level up.
C)   surplus exists and the price level will decline.
D)   shortage exists and the price level will decline.
E)   c and d

Question 18

Which of the following will not lead to a leftward shift in the SRAS curve?

Accepted Answer

A)   an increase in wage rates
B)   an increase in the prices of nonlabor inputs
C)   an increase in productivity
D)   an adverse supply shock

Question 19

The aggregate demand (AD) curve shifts to the right.This is a result of

Accepted Answer

A)   total expenditures increasing at a given price level.
B)   total expenditures decreasing at a given price level.
C)   the real balance effect.
D)   the interest rate effect
E)   b and c

Question 20

Assume that the economy is currently in short-run equilibrium,then the U.S.dollar appreciates.Describe the correct sequence of events that happens as the economy adjusts to a new short-run equilibrium.

Accepted Answer

As the dollar appreciates,foreign goods ...

Exam 8: Aggregate Demand and Aggregate Supply

The real balance effect helps to create "a change in

Correct AnswerverifiedShow Answer

Which of the following statements represents a correct and sequentially accurate economic explanation?

Correct AnswerverifiedShow Answer

Only a change in the price level can cause a movement from one point to another point along a given aggregate demand curve.

Correct AnswerverifiedShow Answer

List and describe the three reasons that help to explain why the aggregate demand (AD)curve slopes downward.

Correct AnswerverifiedIf the AD curve slopes downward,it meAns...View AnswerShow Answer

A change in the money supply can affect one or more of the components of spending and therefore shift the short-run aggregate supply (SRAS)curve.

Correct AnswerverifiedShow Answer

Which of the following will not lead to a leftward shift in the SRAS curve?

Correct AnswerverifiedShow Answer

The AD curve shows the various amounts of real output that people are willing and able to

Correct AnswerverifiedShow Answer

Which of the following statements represents a correct and sequentially accurate economic explanation?

Correct AnswerverifiedShow Answer

If velocity is rising,an increase in one spending component can occur without requiring other spending components to decline.

Correct AnswerverifiedShow Answer

One of the reasons why the AD curve slopes downward is that as the

Correct AnswerverifiedShow Answer

An increase in the price level

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Exhibit 8-3 -Refer to Exhibit 8-3. A shift in aggregate demand from AD? to AD? would have been the result of

Correct AnswerverifiedShow Answer

If some of a person's wealth is in cash,it follows that

Correct AnswerverifiedShow Answer

If aggregate quantity supplied is greater than aggregate quantity demanded at a particular price level,then a

Correct AnswerverifiedShow Answer

Which of the following is consistent with the sticky-wage explanation of the upward-sloping SRAS curve?

Correct AnswerverifiedShow Answer

The aggregate demand (AD) curve shifts to the right.This is a result of

Correct AnswerverifiedShow Answer

Assume that the economy is currently in short-run equilibrium,then the U.S.dollar appreciates.Describe the correct sequence of events that happens as the economy adjusts to a new short-run equilibrium.

Correct AnswerverifiedAs the dollar appreciates,foreign goods ...View AnswerShow Answer

If wage rates rise at the same time that labor productivity increases,what is the effect on short-run aggregate supply (SRAS) ?

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve slopes upward as a result of the real balance effect,the interest rate effect,and the international trade effect.

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Suppose the price level is rising and it is widely forecast to rise even further.This forecast might cause __________ of some consumption plans,resulting in __________ the AD curve.

Correct AnswerverifiedShow Answer

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If the AD curve slopes downward,it meAns...
View Answer

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As the dollar appreciates,foreign goods ...
View Answer

Correct Answer
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Correct Answer
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Suppose the price level is rising and it is widely forecast to rise even further.This forecast might cause of some consumption plans,resulting in the AD curve.

Correct Answer
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