Question 1

As the price level rises, the exchange rate

Accepted Answer

A)   falls, so exports rise and imports fall.
B)   falls, so exports fall and imports rise.
C)   rises, so exports rise and imports fall.
D)   rises, so exports fall and imports rise.E) A) and B)
F) B) and D)

Question 2

Which of the following rises when the U.S. price level falls?

Accepted Answer

A)   interest rates
B)   the value of the dollar in the market for foreign-currency exchange
C)   real wealth
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 3

Other things the same, as the price level falls,

Accepted Answer

A)   the dollar depreciates.
B)   the interest rate rises.
C)   people feel less wealthy.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 4

Name two macroeconomic variables that decline when an economy goes into recession, and name one macroeconomic variable that rises.

Accepted Answer

Real GDP and investm...

Question 5

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

Accepted Answer

A) True 
 B)False

Question 6

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

Accepted Answer

A)   only by technological progress.
B)   only by money supply growth.
C)   by technological progress and money supply growth.
D)   None of the above is correct.E) C) and D)
F) A) and B)

Question 7

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Accepted Answer

A)   both investment and consumption
B)   consumption but not investment
C)   investment but not consumption
D)   neither investment nor consumptionE) B) and C)
F) A) and D)

Question 8

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Accepted Answer

A)   only the increased funding for states
B)   only the tax cuts
C)   both the increased funding for states and the tax cuts
D)   neither the increased funding for states nor the tax cutsE) C) and D)
F) None of the above

Question 9

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) B) and C)
F) A) and D)

Question 10

The discovery of a large amount of previously-undiscovered oil in the U.S. would shift

Accepted Answer

A)   the long-run aggregate-supply curve to the right.
B)   the long-run aggregate-supply curve to the left.
C)   the aggregate-demand curve to the left.
D)   None of the above is correct.E) C) and D)
F) All of the above

Question 11

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.
-Refer to Pessimism. How is the new long-run equilibrium different from the original one?

Accepted Answer

A)   both price and real GDP are higher.
B)   both price and real GDP are lower.
C)   the price level is the same and GDP is lower.
D)   the price level is lower and real GDP is the same.E) A) and D)
F) None of the above

Question 12

If the dollar depreciates because of speculation or government policy, U.S.

Accepted Answer

A)   aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in real GDP.
B)   aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP.
C)   aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP.
D)   aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP.E) A) and B)
F) B) and D)

Question 13

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.
-Refer to Financial Crisis. How is the new long-run equilibrium different from the original one?

Accepted Answer

A)   both price and real GDP are higher.
B)   both price and real GDP are lower.
C)   the price level is the same and GDP is lower.
D)   the price level is lower and real GDP is the same.E) A) and B)
F) A) and C)

Question 14

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 15

Other things the same, a decrease in the price level causes the interest rate to

Accepted Answer

A)   increase, the dollar to appreciate, and net exports to increase.
B)   increase, the dollar to depreciate, and net exports to decrease.
C)   decrease, the dollar to depreciate, and net exports to increase.
D)   decrease, the dollar to appreciate, and net exports to decrease.E) A) and B)
F) B) and C)

Question 16

Aggregate demand shifts right when the government

Accepted Answer

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

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) A) and B)
F) B) and D)

Question 18

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Accepted Answer

the price level decreases when...

Question 19

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

why the short run ag...

Question 20

"Money is a veil" best describes the

Accepted Answer

A)   new-Keynesian view.
B)   Keynesian view.
C)   classical view.
D)   economy in the short run but not the long run.E) B) and D)
F) None of the above

Exam 23: Aggregate Demand and Aggregate Supply

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Correct Answer
verified

If the dollar depreciates because of speculation or government policy, U.S.

Correct Answer
verified

"Money is a veil" best describes the

Correct Answer
verified

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

Correct Answer
verified

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

Correct Answer
verified

As the price level rises, the exchange rate

Correct Answer
verified

Other things the same, a decrease in the price level causes the interest rate to

Correct Answer
verified

Other things the same, as the price level falls,

Correct Answer
verified

Name two macroeconomic variables that decline when an economy goes into recession, and name one macroeconomic variable that rises.

Correct Answer
verified
Real GDP and investm...
View Answer

Correct Answer
verified

Correct Answer
verified

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Correct Answer
verified

Aggregate demand shifts right when the government

Correct Answer
verified

The discovery of a large amount of previously-undiscovered oil in the U.S. would shift

Correct Answer
verified

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Correct Answer
verified
the price level decreases when...
View Answer

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Correct Answer
verified
why the short run ag...
View Answer

The economic boom of the early 1940s resulted mostly from

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

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Correct Answer
verified

Which of the following rises when the U.S. price level falls?

Correct Answer
verified

Exam 23: Aggregate Demand and Aggregate Supply

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Correct AnswerverifiedShow Answer

If the dollar depreciates because of speculation or government policy, U.S.

Correct AnswerverifiedShow Answer

"Money is a veil" best describes the

Correct AnswerverifiedShow Answer

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

Correct AnswerverifiedShow Answer

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

Correct AnswerverifiedShow Answer

As the price level rises, the exchange rate

Correct AnswerverifiedShow Answer

Other things the same, a decrease in the price level causes the interest rate to

Correct AnswerverifiedShow Answer

Other things the same, as the price level falls,

Correct AnswerverifiedShow Answer

Name two macroeconomic variables that decline when an economy goes into recession, and name one macroeconomic variable that rises.

Correct AnswerverifiedReal GDP and investm...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Correct AnswerverifiedShow Answer

Aggregate demand shifts right when the government

Correct AnswerverifiedShow Answer

The discovery of a large amount of previously-undiscovered oil in the U.S. would shift

Correct AnswerverifiedShow Answer

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Correct Answerverifiedthe price level decreases when...View AnswerShow Answer

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Correct Answerverifiedwhy the short run ag...View AnswerShow Answer

The economic boom of the early 1940s resulted mostly from

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

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Correct AnswerverifiedShow Answer

Which of the following rises when the U.S. price level falls?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Real GDP and investm...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
the price level decreases when...
View Answer

Correct Answer
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why the short run ag...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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