Question 1

Which of the following shifts both the short-run and long-run aggregate supply right?

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.

Question 2

The recession of 2008-2009 was preceded by

Accepted Answer

A)   a sharp decline in housing prices.
B)   large losses among financial institutions that owned mortgage-backed securities.
C)   rises in mortgage defaults and home foreclosures.
D)   all of the above

Question 3

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 4

Figure 33-7. 
-Refer to Pessimism. Which curve shifts and in which direction?

Accepted Answer

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

Question 5

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 6

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

Accepted Answer

A)   above the natural rate, so real GDP growth was likely low.
B)   above the natural rate, so real GDP growth was likely high.
C)   below the natural rate, so real GDP growth was likely low.
D)   below the natural rate, so real GDP growth was likely high.

Question 7

What do most economists believe concerning the relation between the price level and real output?

Accepted Answer

Most economists believe that in the long...

Question 8

As the price level rises,

Accepted Answer

A)   the exchange rate falls, so net exports fall.
B)   the exchange rate falls, so net exports rise.
C)   the exchange rate rises, so net exports fall.
D)   the exchange rate rises, so net exports rise.

Question 9

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 10

Other things the same, an increase in the expected price level shifts

Accepted Answer

A)   short-run aggregate supply right.
B)   short-run aggregate supply left.
C)   aggregate-demand right.
D)   aggregated-demand left.

Question 11

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.

Question 12

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 13

Which of the following is correct?

Accepted Answer

A)   The short-run, but not the long-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.
B)   The long-run, but not the short-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.
C)   The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables.
D)   Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables.

Question 14

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Accepted Answer

A) True 
 B)False

Question 15

Other things the same, as the price level falls,

Accepted Answer

A)   the dollar depreciates.
B)   the interest rate rises.
C)   people feel less wealthy.
D)   All of the above are correct.

Question 16

Which of the following rises during recessions?

Accepted Answer

A)   layoffs and consumer spending
B)   layoffs but not consumer spending
C)   consumer spending but not layoffs
D)   neither layoffs nor consumer spending

Question 17

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following explains why production rises in most years?

Accepted Answer

A)   increases in the labor force
B)   increases in the capital stock
C)   advances in technological knowledge
D)   All of the above are correct.

Question 19

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.

Question 20

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

Exam 20: Aggregate Demand and Aggregate Supply

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

Correct AnswerverifiedShow Answer

What do most economists believe concerning the relation between the price level and real output?

Correct AnswerverifiedMost economists believe that in the long...View AnswerShow Answer

Other things the same, an increase in the expected price level shifts

Correct AnswerverifiedShow Answer

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

As the price level rises,

Correct AnswerverifiedShow Answer

Which of the following explains why production rises in most years?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following rises during recessions?

Correct AnswerverifiedShow Answer

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Correct AnswerverifiedShow Answer

The aggregate demand and aggregate supply graph has the

Correct AnswerverifiedShow Answer

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Correct AnswerverifiedShow Answer

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

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

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Correct AnswerverifiedShow Answer

Which of the following shifts both the short-run and long-run aggregate supply right?

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Correct AnswerverifiedShow Answer

The recession of 2008-2009 was preceded by

Correct AnswerverifiedShow Answer

Figure 33-7. -Refer to Pessimism. Which curve shifts and in which direction?

Correct AnswerverifiedShow Answer

Other things the same, as the price level falls,

Correct AnswerverifiedShow Answer

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Most economists believe that in the long...
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