Question 1

How does an increase in the foreign exchange value of the dollar affect aggregate demand?

Accepted Answer

The answer of How does an increase in the foreign...

Question 2

How are the price level and the level of real output affected if aggregate demand increases?

Accepted Answer

The price level incr...

Question 3

An improvement in consumer confidence causes aggregate demand to _________.

Accepted Answer

The answer of An improvement in consumer confidence causes aggregate...

Question 4

In moving from point to point up along the aggregate supply curve, we are looking at changes in which the firm increases the selling price of its good with wages remaining stable.

Accepted Answer

A) True 
 B)False

Question 5

The slope of the aggregate demand curve reflects the fact that

Accepted Answer

A)   consumers buy more at higher prices.
B)   businesses supply more at higher prices.
C)   an increase in the price level reduces the amount of real output consumers plan to buy.
D)   the only thing that changes the spending plans of consumers is changes in their income.

Question 6

Suppose that, over time, an economy has experienced decreases in real income and decreases in the price level as well. What would account for this?

Accepted Answer

A)   A decrease in aggregate demand
B)   An increase in aggregate demand
C)   A decrease in aggregate supply
D)   An increase in aggregate supply

Question 7

The real balance effect involves the way that

Accepted Answer

A)   banks change their lending policies when interest rates rise.
B)   banks change their lending polices when the price level rises.
C)   firms change their investment plans when the price level rises.
D)   consumers change their planned purchases when the price level rises.

Question 8

The model of aggregate supply and aggregate demand is based on the assumption that consumers reduce the amount of real goods and services produced when the price level rises.

Accepted Answer

A) True 
 B)False

Question 9

An increase in the level of prices of goods and services will

Accepted Answer

A)   shift aggregate supply to the right.
B)   shift aggregate supply to the left.
C)   leave the aggregate supply curve unchanged.
D)   cause firms to reduce the quantity of goods produced.

Question 10

The effect of a decrease in aggregate supply is to increase the price level and to decrease unemployment.

Accepted Answer

A) True 
 B)False

Question 11

The intersection of aggregate supply and aggregate demand determines the equilibrium price level and the equilibrium level of _________ _________ .

Accepted Answer

The answer of The intersection of aggregate supply and aggregate...

Question 12

The intersection of aggregate supply and aggregate demand indicates

Accepted Answer

A)   the level of full employment.
B)   the optimal rate of investment.
C)   the equilibrium level of real output.
D)   the equilibrium level of nominal output.

Question 13

The circular flow model of the economy depicts the exchange of resources between the household sector and the business sector.

Accepted Answer

A) True 
 B)False

Question 14

The real balance effect asserts that the quantities consumers purchase are independent of prices.

Accepted Answer

A) True 
 B)False

Question 15

The circular flow model asserts that government generates wealth and parcels it out to consumers.

Accepted Answer

A) True 
 B)False

Question 16

The circular flow model represents the

Accepted Answer

A)   flow of immigration.
B)   flow of imports and exports.
C)   microeconomy.
D)   macroeconomy.

Question 17

Increases in aggregate supply

Accepted Answer

A)   increase real output.
B)   will leave the price level unchanged.
C)   lead to increases in aggregate demand.
D)   lead to decreases in aggregate demand.

Question 18

A decline in consumer confidence will increase aggregate demand.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following changes when aggregate demand changes?

Accepted Answer

A)   The equilibrium price level
B)   The position of the aggregate supply curve
C)   The slope of the aggregate supply curve
D)   All of the above

Question 20

Decreases in aggregate supply result in

Accepted Answer

A)   an increase in the price level and a reduction in real output.
B)   an increase in the price level and an increase in real output.
C)   a decrease in the price level and a reduction in real output.
D)   a decrease in the price level and an increase in real output.

Exam 11: Aggregate Demand and Supply

Suppose that, over time, an economy has experienced decreases in real income and decreases in the price level as well. What would account for this?

Correct AnswerverifiedShow Answer

In moving from point to point up along the aggregate supply curve, we are looking at changes in which the firm increases the selling price of its good with wages remaining stable.

Correct AnswerverifiedShow Answer

How does an increase in the foreign exchange value of the dollar affect aggregate demand?

Correct AnswerverifiedShow Answer

The intersection of aggregate supply and aggregate demand determines the equilibrium price level and the equilibrium level of _________ _________ .

Correct AnswerverifiedShow Answer

An improvement in consumer confidence causes aggregate demand to _________.

Correct AnswerverifiedShow Answer

Which one of the following changes when aggregate demand changes?

Correct AnswerverifiedShow Answer

A decline in consumer confidence will increase aggregate demand.

Correct AnswerverifiedShow Answer

The intersection of aggregate supply and aggregate demand indicates

Correct AnswerverifiedShow Answer

Decreases in aggregate supply result in

Correct AnswerverifiedShow Answer

An increase in the level of prices of goods and services will

Correct AnswerverifiedShow Answer

The slope of the aggregate demand curve reflects the fact that

Correct AnswerverifiedShow Answer

The circular flow model of the economy depicts the exchange of resources between the household sector and the business sector.

Correct AnswerverifiedShow Answer

The effect of a decrease in aggregate supply is to increase the price level and to decrease unemployment.

Correct AnswerverifiedShow Answer

The model of aggregate supply and aggregate demand is based on the assumption that consumers reduce the amount of real goods and services produced when the price level rises.

Correct AnswerverifiedShow Answer

The real balance effect asserts that the quantities consumers purchase are independent of prices.

Correct AnswerverifiedShow Answer

How are the price level and the level of real output affected if aggregate demand increases?

Correct AnswerverifiedThe price level incr...View AnswerShow Answer

The real balance effect involves the way that

Correct AnswerverifiedShow Answer

Increases in aggregate supply

Correct AnswerverifiedShow Answer

The circular flow model asserts that government generates wealth and parcels it out to consumers.

Correct AnswerverifiedShow Answer

The circular flow model represents the

Correct AnswerverifiedShow Answer

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The intersection of aggregate supply and aggregate demand determines the equilibrium price level and the equilibrium level of _ _ .

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The price level incr...
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