Question 1

If the actual price level is 165,but people had been expecting it to be 160,then

Accepted Answer

A)   the quantity of output supplied rises,but only in the short run.
B)   the quantity of output supplied rises in the short run and the long run.
C)   the quantity of output supplied falls,but only in the short run.
D)   the quantity of output supplied falls in the short run and the long run.E) A) and C)
F) A) and B)

Question 2

Which of the following would cause prices to fall and output to rise in the short run?

Accepted Answer

A)   Short-run aggregate supply shifts right.
B)   Short-run aggregate supply shifts left.
C)   Aggregate demand shifts right.
D)   Aggregate demand shifts left.E) B) and C)
F) All of the above

Question 3

Optimism
Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time.
-Refer to Pessimism.What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

A)   The expected price level rises.Bargains are struck for higher wages.
B)   The expected price level rises.Bargains are struck for lower wages.
C)   The expected price level falls.Bargains are struck for higher wages.
D)   The expected price level falls.Bargains are struck for lower wages.E) None of the above
F) B) and D)

Question 4

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Accepted Answer

A)   production is more profitable and employment rises.
B)   production is more profitable and employment falls.
C)   production is less profitable and employment rises.
D)   production is less profitable and employment falls.E) B) and D)
F) C) and D)

Question 5

If the price level rises above what was expected and nominal wages are fixed,then

Accepted Answer

A)   production becomes less profitable so firms will hire fewer workers.
B)   production becomes less profitable so firms will hire more workers.
C)   production becomes more profitable so firms will hire fewer workers.
D)   production become more profitable so firms will hire more workers.E) C) and D)
F) A) and D)

Question 6

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

Question 7

The economic boom of the early 1940s resulted mostly from

Accepted Answer

A)   increased government expenditures.
B)   falling prices of oil and other natural resources.
C)   an increase in the growth rate of the money supply.
D)   rapid developments in transportation,electronics,and communication.E) A) and D)
F) B) and C)

Question 8

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Accepted Answer

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

Question 9

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Accepted Answer

A)   nominal wages are slow to adjust to changing economic conditions
B)   as the price level falls,the exchange rate falls
C)   an increase in the money supply lowers the interest rate
D)   an increase in the interest rate increases investment spendingE) None of the above
F) C) and D)

Question 10

Which of the following would shift long-run aggregate supply to the right?

Accepted Answer

A)   increased immigration from abroad
B)   a decrease in the price of an imported natural resource
C)   opening the economy to international trade
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 11

Other things the same,if the long-run aggregate supply curve shifts right,prices

Accepted Answer

A)   and output both increase.
B)   and output both decrease.
C)   increase and output decreases.
D)   decrease and output increases.E) B) and C)
F) A) and D)

Question 12

Which of the following is a lesson concerning shifts in aggregate demand?

Accepted Answer

A)   they contribute to fluctuations in output.
B)   in the long-run they change real output,but not the price level.
C)   policymakers are unable to mitigate the severity of economic fluctuations.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 13

Which of the following would increase output in the short run?

Accepted Answer

A)   an increase in stock prices makes people feel wealthier
B)   government spending increases
C)   firms chose to purchase more investment goods
D)   All of the above are correct.E) B) and C)
F) B) and D)

Question 14

Changes in the price of oil

Accepted Answer

A)   can only lead to recessions.
B)   have not contributed much to output fluctuations in the United States.
C)   change the economy principally by changing aggregate demand.
D)   created both inflation and recession in the United States in the 1970s.E) C) and D)
F) B) and D)

Question 15

As the price level rises

Accepted Answer

A)   people are more willing to lend,so interest rates rise.
B)   people are more willing to lend,so interest rates fall.
C)   people are less willing to lend,so interest rates fall.
D)   people are less willing to lend,so interest rates rise.E) A) and C)
F) None of the above

Question 16

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

Accepted Answer

A)   increased consumption,which shifts the aggregate-demand curve right.
B)   increased consumption,which shifts the aggregate-demand curve left.
C)   decreased consumption,which shifts the aggregate-demand curve right.
D)   decreased consumption,which shifts the aggregate-demand curve left.E) B) and C)
F) A) and B)

Question 17

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Accepted Answer

A)   continuing technological progress alone.
B)   continuing increases in the money supply alone.
C)   continued technological progress and continuing increases in the money supply.
D)   None of the above can explain continuing real GDP growth and inflation.E) B) and C)
F) A) and D)

Question 18

Which of the following shifts the long-run aggregate supply curve to the right?

Accepted Answer

A)   both an increase in the capital stock and technological improvements.
B)   an increase in the capital stock but not technological improvements
C)   an increase in the capital stock but not technological improvements .
D)   neither an increase in the capital stock nor an technological  improvementsE) A) and C)
F) None of the above

Question 19

During recessions

Accepted Answer

A)   sales and profits fall.
B)   sales and profits rise.
C)   sales rise,profits fall.
D)   profits fall,sales rise.E) None of the above
F) A) and D)

Question 20

Other things the same,a decrease in the price level makes the dollars people hold worth

Accepted Answer

A)   more,so they can buy more.
B)   more,so they can buy less.
C)   less,so they can buy more.
D)   less,so they can buy less.E) A) and B)
F) All of the above

Exam 33: Aggregate Demand and Aggregate Supply

Changes in the price of oil

Correct Answer
verified

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Correct Answer
verified

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Correct Answer
verified

Correct Answer
verified

Other things the same,a decrease in the price level makes the dollars people hold worth

Correct Answer
verified

As the price level rises

Correct Answer
verified

Which of the following shifts the long-run aggregate supply curve to the right?

Correct Answer
verified

Which of the following would increase output in the short run?

Correct Answer
verified

The economic boom of the early 1940s resulted mostly from

Correct Answer
verified

Other things the same,if the long-run aggregate supply curve shifts right,prices

Correct Answer
verified

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Correct Answer
verified

Which of the following would cause prices to fall and output to rise in the short run?

Correct Answer
verified

Which of the following is a lesson concerning shifts in aggregate demand?

Correct Answer
verified

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

Correct Answer
verified

During recessions

Correct Answer
verified

If the price level rises above what was expected and nominal wages are fixed,then

Correct Answer
verified

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Correct Answer
verified

If the actual price level is 165,but people had been expecting it to be 160,then

Correct Answer
verified

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

Correct Answer
verified

Which of the following would shift long-run aggregate supply to the right?

Correct Answer
verified

Exam 33: Aggregate Demand and Aggregate Supply

Changes in the price of oil

Correct AnswerverifiedShow Answer

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Correct AnswerverifiedShow Answer

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Other things the same,a decrease in the price level makes the dollars people hold worth

Correct AnswerverifiedShow Answer

As the price level rises

Correct AnswerverifiedShow Answer

Which of the following shifts the long-run aggregate supply curve to the right?

Correct AnswerverifiedShow Answer

Which of the following would increase output in the short run?

Correct AnswerverifiedShow Answer

The economic boom of the early 1940s resulted mostly from

Correct AnswerverifiedShow Answer

Other things the same,if the long-run aggregate supply curve shifts right,prices

Correct AnswerverifiedShow Answer

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Correct AnswerverifiedShow Answer

Which of the following would cause prices to fall and output to rise in the short run?

Correct AnswerverifiedShow Answer

Which of the following is a lesson concerning shifts in aggregate demand?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

During recessions

Correct AnswerverifiedShow Answer

If the price level rises above what was expected and nominal wages are fixed,then

Correct AnswerverifiedShow Answer

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Correct AnswerverifiedShow Answer

If the actual price level is 165,but people had been expecting it to be 160,then

Correct AnswerverifiedShow Answer

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

Correct AnswerverifiedShow Answer

Which of the following would shift long-run aggregate supply to the right?

Correct AnswerverifiedShow Answer

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