Question 1

Refer to Political Instability Abroad.What would happen to the dollar?

Accepted Answer

A)   It would appreciate in foreign exchange markets making U.S goods more expensive compared to foreign goods.
B)   It would appreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods.
C)   It would depreciate in foreign exchange markets making U.S.goods more expensive compared to foreign goods.
D)   It would depreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods.E) None of the above
F) A) and B)

Question 2

During World War II,

Accepted Answer

A)   government purchases of goods and services increased fivefold.
B)   the economy's production increased about 25 percent.
C)   unemployment fell to about 5%.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 3

During recessions declines in investment account for about

Accepted Answer

A)   1/6 of the decline in real GDP.
B)   1/3 of the decline in real GDP.
C)   1/2 of the decline in real GDP.
D)   2/3 of the decline in real GDP.E) A) and C)
F) A) and B)

Question 4

The recession of 2001 appears to have been mostly the result of decreased

Accepted Answer

A)   aggregate demand due to decreases in the money supply.
B)   aggregate demand due to falling stock prices and increased uncertainty.
C)   aggregate supply due to early retirements.
D)   aggregate supply due to changes in labor laws and decreased availability of natural resources.E) B) and C)
F) All of the above

Question 5

Which of the following both shift aggregate demand right?

Accepted Answer

A)   net exports rise for some reason other than a price change and the money supply rises.
B)   net exports rise for some reason other than a price change and the price level rises.
C)   net exports fall for some reason other than a price change and the money supply rises.
D)   net exports fall for some reason other than a price change and the price level rises.E) A) and D)
F) B) and C)

Question 6

Other things the same,as the price level falls,a country's exchange rate

Accepted Answer

A)   and interest rates rise.
B)   and interest rates fall.
C)   falls and interest rates rise.
D)   rises and interest rates fall.E) All of the above
F) B) and C)

Question 7

Suppose that the economy is at long-run equilibrium.If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers,then in the short run

Accepted Answer

A)   real GDP will rise and the price level might rise,fall,or stay the same.
B)   real GDP will fall and the price level might rise,fall,or stay the same.
C)   the price level will rise,and real GDP might rise,fall,or stay the same.
D)   the price level will fall,and real GDP might rise,fall,or stay the same.E) C) and D)
F) A) and B)

Question 8

Suppose the economy is in long-run equilibrium.If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions,then we would expect that in the short-run,

Accepted Answer

A)   real GDP will rise and the price level might rise,fall,or stay the same.
B)   real GDP will fall and the price level might rise,fall,or stay the same.
C)   the price level will rise,and real GDP might rise,fall,or stay the same.
D)   the price level will fall,and real GDP might rise,fall,or stay the same.E) A) and B)
F) A) and C)

Question 9

During World War II,the economy's production increased about

Accepted Answer

A)   25 percent and prices rose about 5 percent.
B)   50 percent and prices rose about 10 percent.
C)   75 percent and prices rose about 15 percent.
D)   100 percent and prices rose about 20 percent.E) A) and D)
F) All of the above

Question 10

Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

Accepted Answer

A)   real wealth rises.
B)   the interest rate rises.
C)   the dollar appreciates.
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 11

Other things the same,an increase in the price level induces people to hold

Accepted Answer

A)   less money,so they lend less,and the interest rate rises.
B)   less money,so they lend more,and the interest rate falls.
C)   more money,so they lend more,and the interest rate falls.
D)   more money,so they lend less,and the interest rate rises.E) C) and D)
F) B) and C)

Question 12

An increase in the money supply causes output to rise in the long run.

Accepted Answer

A) True 
 B)False

Question 13

When the price level falls the quantity of

Accepted Answer

A)   consumption goods demanded rises,while the quantity of net exports demanded falls.
B)   consumption goods demanded and the quantity of net exports demanded both rise.
C)   consumption goods demanded and the quantity of net exports demanded both fall.
D)   consumption goods demanded falls,while the quantity of net exports demand rises.E) C) and D)
F) A) and B)

Question 14

Figure 33-2. 1 to AS2 A)  could be caused by an outbreak of war in the Middle East. B)  could be caused by a decrease in the expected price level. C)  causes the economy to experience an increase in the unemployment rate. D)  causes the economy to experience stagflation." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 33-2.The shift of the short-run aggregate-supply curve from AS1 to AS2

Accepted Answer

A)   could be caused by an outbreak of war in the Middle East.
B)   could be caused by a decrease in the expected price level.
C)   causes the economy to experience an increase in the unemployment rate.
D)   causes the economy to experience stagflation.E) None of the above
F) A) and C)

Question 15

In 2001,the United States was in recession.Which of the following things would you expect not to have happened?

Accepted Answer

A)   increased layoffs and firings
B)   a higher rate of bankruptcy
C)   increased claims for unemployment insurance
D)   increased investment spendingE) B) and D)
F) C) and D)

Question 16

Aggregate demand shifts left when the government

Accepted Answer

A)   decreases taxes.
B)   cuts military expenditures.
C)   creates a new investment tax credit
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 17

Which of the following shifts short-run,but not long-run aggregate supply right?

Accepted Answer

A)   a decrease in the actual price level
B)   a decrease in the expected price level
C)   a decrease in the capital stock
D)   an increase in the money supplyE) B) and D)
F) A) and D)

Question 18

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp decline in the stock market,a tax cut,an increase in the money supply and a decline in the value of the dollar.In the short run

Accepted Answer

A)   the price level and real GDP will both rise.
B)   the price level and real GDP will both fall.
C)   neither the price leave nor real GDP will change.
D)   All of the above are possible.E) All of the above
F) A) and B)

Question 19

An increase in the expected price level shifts the

Accepted Answer

A)   short-run and long-run aggregate supply curves left.
B)   the short-run but not the long-run aggregate supply curve left.
C)   the long-run but not the short-run aggregate supply curve left.
D)   neither the long-run nor the short-run aggregate supply curve left.E) A) and B)
F) B) and C)

Question 20

When we say that economic fluctuations are "irregular and unpredictable," we mean that

Accepted Answer

A)   the relationship between output and unemployment is erratic and difficult to characterize.
B)   when one macroeconomic variable that measures income or spending is falling,other macroeconomic variables that measure income or spending are likely to be rising.
C)   recessions do not occur at regular intervals.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Exam 33: Aggregate Demand and Aggregate Supply

Other things the same,an increase in the price level induces people to hold

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During World War II,

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An increase in the money supply causes output to rise in the long run.

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During World War II,the economy's production increased about

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Figure 33-2. -Refer to Figure 33-2.The shift of the short-run aggregate-supply curve from AS1 to AS2

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Aggregate demand shifts left when the government

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The recession of 2001 appears to have been mostly the result of decreased

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Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp decline in the stock market,a tax cut,an increase in the money supply and a decline in the value of the dollar.In the short run

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In 2001,the United States was in recession.Which of the following things would you expect not to have happened?

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During recessions declines in investment account for about

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Other things the same,as the price level falls,a country's exchange rate

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Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

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An increase in the expected price level shifts the

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Which of the following shifts short-run,but not long-run aggregate supply right?

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When we say that economic fluctuations are "irregular and unpredictable," we mean that

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Suppose that the economy is at long-run equilibrium.If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers,then in the short run

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Which of the following both shift aggregate demand right?

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Suppose the economy is in long-run equilibrium.If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions,then we would expect that in the short-run,

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When the price level falls the quantity of

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Refer to Political Instability Abroad.What would happen to the dollar?

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Figure 33-2. -Refer to Figure 33-2.The shift of the short-run aggregate-supply curve from AS₁ to AS₂

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