Question 1

Which of the following is correct?

Accepted Answer

A)  Short run fluctuations in economic activity happen only in developing countries.
B)  During economic contractions most firms experience rising profits.
C)  Recessions come at irregular intervals and are easy to predict.
D)  When real GDP falls, the rate of unemployment generally rises.

Question 2

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)  10 percent, 1 percent
B)  2 percent, 12 percent
C)  -1 percent, 8 percent
D)  -2 percent, 2 percent

Question 3

Which of the following both shift aggregate demand right?

Accepted Answer

A)  net exports rise for some reason other than a price change and government purchases rise.
B)  net exports rise for some reason other than a price change and taxes increase.
C)  net exports fall for some reason other than a price change and government purchases fall.
D)  net exports fall for some reason other than a price change and taxes fall.

Question 4

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 level

Question 5

The position of the long-run aggregate supply curve

Accepted Answer

A)  is determined by resource usage and technology.
B)  is at the point where the unemployment rate is zero.
C)  shifts to the right when the money supply increases.
D)  is at the point where the economy would cease to grow.

Question 6

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.

Question 7

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  both an investment tax credit and a decrease in income tax rates
B)  an investment tax credit but not a decrease in income tax rates
C)  a decrease in income tax rates but not an investment tax credit
D)  neither an investment tax credit nor a decrease in income tax rates

Question 8

Other things the same, as the price level falls, the real value of a dollar

Accepted Answer

A)  rises, and interest rates rise.
B)  rises, and interest rates fall.
C)  falls, and interest rates rise.
D)  falls, and interest rates fall.

Question 9

Other things the same, what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Accepted Answer

Price leve...

Question 10

The price level rises in the short run if

Accepted Answer

A)  aggregate demand or aggregate supply shifts right.
B)  aggregate demand shifts right or aggregate supply shifts left.
C)  aggregate demand shifts left or aggregate supply shifts right.
D)  Aggregate demand or aggregate supply shifts right.

Question 11

Other things the same, a decrease in the price level makes the interest rate decrease, which leads to a depreciation of the dollar in the market for foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 12

​Which of the following shifts long-run aggregate supply left?

Accepted Answer

A)  ​a decrease in either natural resources or the human capital stock.
B)  ​a decrease in the human capital stock, but not natural resources.
C)  ​a decrease in natural resources, but not the human capital stock.
D)  ​neither a decrease in natural resources nor the human capital stock.

Question 13

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 14

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

Accepted Answer

A)  increases by less than expected so that firms believe the relative price of their output has increased.
B)  increases by less than expected so that firms believe the relative price of their output has decreased.
C)  increases by more than expected so that firms believe the relative price of their output has increased.
D)  increases by more than expected so that firms believe the relative price of their output has decreased.

Question 15

Suppose that there is an increase in the costs of production that shifts the short-run aggregate supply curve left. If there is no policy response, then eventually

Accepted Answer

A)  because unemployment is low, wages will be bid up and short-run aggregate supply will shift right.
B)  because unemployment is low, wages will be bid down and short-run aggregate supply will shift right.
C)  because unemployment is high, wages will be bid up and short-run aggregate supply will shift right.
D)  because unemployment is high, wages will be bid down and short-run aggregate supply will shift right.

Question 16

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 17

In the short-run an increase in the costs of production makes

Accepted Answer

A)  output and prices rise.
B)  output rise and prices fall.
C)  output fall and prices rise.
D)  output and prices fall.

Question 18

According to classical macroeconomic theory, changes in the money supply affect

Accepted Answer

A)  unemployment and the price level.
B)  unemployment but not the price level.
C)  the price level, but not unemployment.
D)  neither the price level nor unemployment.

Question 19

If aggregate demand shifts right then in the short run

Accepted Answer

A)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the right.
B)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the left.
C)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the right.
D)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the left.

Question 20

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Accepted Answer

labor, cap...

Exam 33: Aggregate Demand and Aggregate Supply

If aggregate demand shifts right then in the short run

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The price level rises in the short run if

Correct AnswerverifiedShow Answer

​Which of the following shifts long-run aggregate supply left?

Correct AnswerverifiedShow Answer

Which of the following is correct?

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The position of the long-run aggregate supply curve

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Suppose that there is an increase in the costs of production that shifts the short-run aggregate supply curve left. If there is no policy response, then eventually

Correct AnswerverifiedShow Answer

According to classical macroeconomic theory, changes in the money supply affect

Correct AnswerverifiedShow Answer

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Correct AnswerverifiedShow Answer

A change in the money supply changes only nominal variables in the long run.

Correct AnswerverifiedShow Answer

Other things the same, what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Correct AnswerverifiedPrice leve...View AnswerShow Answer

Which of the following both shift aggregate demand right?

Correct AnswerverifiedShow Answer

Other things the same, a decrease in the price level makes the interest rate decrease, which leads to a depreciation of the dollar in the market for foreign-currency exchange.

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

Other things the same, as the price level falls, the real value of a dollar

Correct AnswerverifiedShow Answer

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

Correct AnswerverifiedShow Answer

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Correct Answerverifiedlabor, cap...View AnswerShow Answer

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

Correct AnswerverifiedShow Answer

In the short-run an increase in the costs of production makes

Correct AnswerverifiedShow Answer

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

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Price leve...
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labor, cap...
View Answer

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Correct Answer
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