Question 1

Real GDP

Accepted Answer

A)   is the current dollar value of all goods produced by the citizens of an economy within a given time.
B)   measures economic activity and income.
C)   is used primarily to measure long-run changes rather than short-run fluctuations.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 2

Consider the exhibit below for the following questions.
Figure 33-1 
-Refer to Figure 33-1.An increase in the money supply would move the economy from C to

Accepted Answer

A)   B in the short run and the long run.
B)   D in the short run and the long run.
C)   B in the short run and A in the long run.
D)   D in the short run and C in the long run.E) C) and D)
F) B) and D)

Question 3

Other things the same,if the U.S.price level rises,then

Accepted Answer

A)   the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate rises.
B)   the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate falls.
C)   the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate rises.
D)   the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate falls.E) B) and C)
F) C) and D)

Question 4

Most economists believe that classical macroeconomic theory is a good description of the economy

Accepted Answer

A)   in neither the short nor long run.
B)   in the short run and in the long run.
C)   in the short run,but not in the long run.
D)   in the long run,but not in the short run.E) All of the above
F) C) and D)

Question 5

A decrease in the availability of an important major resource such as oil shifts

Accepted Answer

A)   aggregate supply right.
B)   aggregate supply left.
C)   aggregate demand right.
D)   aggregate demand left.E) A) and D)
F) B) and D)

Question 6

Which of the following is included in the aggregate demand for goods and services?

Accepted Answer

A)   consumption demand
B)   investment demand
C)   net exports
D)   All of the above are correct.E) B) and C)
F) B) and D)

Question 7

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

Accepted Answer

A)   real wealth falls.
B)   the interest rate rises.
C)   the dollar depreciates.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 8

According to the misperceptions theory of the short-run aggregate supply curve,if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent,then the firm would believe that the relative price of what it produces had

Accepted Answer

A)   increased,so it would increase production.
B)   increased,so it would decrease production.
C)   decreased,so it would increase production.
D)   decreased,so it would decrease production.E) B) and C)
F) B) and D)

Question 9

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 rightE) A) and C)
F) C) and D)

Question 10

Other things the same,if the price level rises,people

Accepted Answer

A)   increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases.
B)   increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases.
C)   decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases.
D)   decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases.E) A) and D)
F) None of the above

Question 11

As the price level falls,

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.E) A) and B)
F) C) and D)

Question 12

What,if anything,did policymakers do in response to the recession of 2001?

Accepted Answer

A)   tax cuts and expansionary monetary policy
B)   only tax cuts
C)   only expansionary monetary policy
D)   neither tax cuts nor expansionary monetary policyE) All of the above
F) None of the above

Question 13

In response to a decrease in output,the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 14

When taxes increase,consumption

Accepted Answer

A)   decreases as shown by a movement to the left along a given aggregate-demand curve.
B)   decreases as shown by a shift of the aggregate demand curve to the left.
C)   increases as shown by a movement to the right along a given aggregate-demand curve.
D)   increases as shown by a shift of the aggregate demand curve to the right.E) A) and B)
F) B) and C)

Question 15

Suppose the economy is in long-run equilibrium.Senator A succeeds in getting taxes raised.At the same time,Senator B succeeds in getting major new restrictions on logging enacted.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) B) and D)

Question 16

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

Accepted Answer

See graph. <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Over time,technological adva...

Question 17

According to the classical model,which of the following would double if the quantity of money doubled?

Accepted Answer

A)   prices but not nominal income
B)   nominal income but not prices
C)   both prices and nominal income
D)   neither prices nor nominal incomeE) A) and B)
F) A) and C)

Question 18

Because the price level does not affect the long-run determinants of real GDP,the long-run aggregate-supply is vertical.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not a determinant of the long-run level of real GDP?

Accepted Answer

A)   the price level
B)   the supply of labor
C)   available natural resources
D)   available technologyE) B) and C)
F) A) and C)

Question 20

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower 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) A) and B)
F) A) and C)

Exam 33: Aggregate Demand and Aggregate Supply

The price level rises in the short run if

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In response to a decrease in output,the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in aggregate supply.

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Most economists believe that classical macroeconomic theory is a good description of the economy

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Which of the following is included in the aggregate demand for goods and services?

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Real GDP

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When taxes increase,consumption

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Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

Correct AnswerverifiedSee graph. Over time,technological adva...View AnswerShow Answer

According to the misperceptions theory of the short-run aggregate supply curve,if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent,then the firm would believe that the relative price of what it produces had

Correct AnswerverifiedShow Answer

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

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Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.An increase in the money supply would move the economy from C to

Correct AnswerverifiedShow Answer

As the price level falls,

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According to the classical model,which of the following would double if the quantity of money doubled?

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Which of the following is not a determinant of the long-run level of real GDP?

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Other things the same,if the price level rises,people

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

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What,if anything,did policymakers do in response to the recession of 2001?

Correct AnswerverifiedShow Answer

A decrease in the availability of an important major resource such as oil shifts

Correct AnswerverifiedShow Answer

Because the price level does not affect the long-run determinants of real GDP,the long-run aggregate-supply is vertical.

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium.Senator A succeeds in getting taxes raised.At the same time,Senator B succeeds in getting major new restrictions on logging enacted.In the short run

Correct AnswerverifiedShow Answer

Other things the same,if the U.S.price level rises,then

Correct AnswerverifiedShow Answer

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See graph. Over time,technological adva...
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