Question 1

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

Accepted Answer

A)   The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply.
B)   The price level and quantity of output adjust to bring aggregate demand and supply into balance.
C)   The aggregate supply curve shows the quantity of goods and services that households,firms,and the government want to buy at each price.
D)   All of the above are correct.

Question 2

The recessions associated with the business cycle come at regular intervals.

Accepted Answer

A) True 
 B)False

Question 3

Suppose a boom in stock market prices helps make people feel wealthier.Using the model of aggregate demand and aggregate supply,identify the curves that are affected,and which way these curves would shift.

Accepted Answer

The aggregate demand...

Question 4

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 5

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit.Which of these policies shift aggregate demand to the right?

Accepted Answer

A)   both the money supply increase and the investment tax credit
B)   the money supply increase but not the investment tax credit
C)   the investment tax credit but not the money supply increase
D)   neither the investment tax credit nor the money supply increase

Question 6

Figure 33-1. 
-Refer to Figure 33-1.If the economy starts at Y,then a recession occurs at

Accepted Answer

A)   V.
B)   W.
C)   X.
D)   Z.

Question 7

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

Accepted Answer

A)   U.S.residents want to buy more foreign bonds.The real exchange rate rises.
B)   U.S.residents want to buy more foreign bonds.The real exchange rate falls.
C)   U.S.residents want to buy fewer foreign bonds.The real exchange rate rises.
D)   U.S.residents want to buy fewer foreign bonds.The real exchange rate falls.

Question 8

According to classical macroeconomic theory,changes in the money supply change nominal but not real variables.

Accepted Answer

A) True 
 B)False

Question 9

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 10

The aggregate quantity of goods and services demanded changes as the price level rises because

Accepted Answer

A)   real wealth falls,interest rates rise,and the dollar appreciates.
B)   real wealth falls,interest rates rise,and the dollar depreciates.
C)   real wealth rises,interest rates fall,and the dollar appreciates.
D)   real wealth rises,interest rates fall,and the dollar depreciates.

Question 11

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

Question 12

Figure 20-2. 1. C)  indicates that Y1 is the natural rate of output. D)  All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 20-2.The appearance of the long-run aggregate-supply (LRAS) curve

Accepted Answer

A)   is inconsistent with the concept of monetary neutrality.
B)   is consistent with the idea that point A represents a long-run equilibrium but not a short-run equilibrium when the relevant short-run aggregate-supply curve is AS1.
C)   indicates that Y1 is the natural rate of output.
D)   All of the above are correct.

Question 13

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.

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.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 improvements

Question 17

Which of the following would cause stagflation?

Accepted Answer

A)   rising government expenditures
B)   rising oil prices
C)   a falling money supply
D)   technical progress

Question 18

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.

Question 19

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

Accepted Answer

A)   relative to prices wages are higher and employment rise.
B)   relative to prices wages are higher and employment falls.
C)   relative to prices wages are lower and employment rises.
D)   relative to prices wages are lower and employment falls.

Question 20

Figure 20-2. 
-Refer to Stock Market Boom 2015.In the short run what happens to the price level and real GDP?

Accepted Answer

A)   both the price level and real GDP rise.
B)   both the price level and real GDP fall.
C)   the price level rises and real GDP falls.
D)   the price level falls and real GDP rises.

Exam 33: Aggregate Demand and Aggregate Supply

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

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

Correct AnswerverifiedShow Answer

According to classical macroeconomic theory,changes in the money supply change nominal but not real variables.

Correct AnswerverifiedShow Answer

Changes in the price of oil

Correct AnswerverifiedShow Answer

The recessions associated with the business cycle come at regular intervals.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following rises during recessions?

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Which of the following would cause stagflation?

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The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Correct AnswerverifiedShow Answer

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

Correct AnswerverifiedShow Answer

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

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Figure 20-2. -Refer to Stock Market Boom 2015.In the short run what happens to the price level and real GDP?

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The aggregate quantity of goods and services demanded changes as the price level rises because

Correct AnswerverifiedShow Answer

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit.Which of these policies shift aggregate demand to the right?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the price level falls the quantity of

Correct AnswerverifiedShow Answer

Suppose a boom in stock market prices helps make people feel wealthier.Using the model of aggregate demand and aggregate supply,identify the curves that are affected,and which way these curves would shift.

Correct AnswerverifiedThe aggregate demand...View AnswerShow Answer

Figure 33-1. -Refer to Figure 33-1.If the economy starts at Y,then a recession occurs at

Correct AnswerverifiedShow Answer

Figure 20-2. -Refer to Figure 20-2.The appearance of the long-run aggregate-supply (LRAS) curve

Correct AnswerverifiedShow Answer

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The aggregate demand...
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