Question 1

Other things equal, appreciation of the dollar

Accepted Answer

A)   increases aggregate demand in the United States and may increase aggregate supply by reducing the prices of imported resources.
B)   increases aggregate demand in the United States and may decrease aggregate supply by reducing the prices of imported resources.
C)   decreases aggregate demand in the United States and may increase aggregate supply by reducing the prices of imported resources.
D)   decreases aggregate demand in the United States and may reduce aggregate supply by increasing the prices of imported resources.E) A) and C)
F) A) and B)

Question 2

Accepted Answer

A)   World War II in the 1940s
B)   cost-push inﬂation in the early 1970s
C)   demand-pull inﬂation in the late 1960s
D)   the Great Recession of 2007-2009E) A) and B)
F) B) and C)

Question 3

The aggregate demand curve shows that when the price level rises, the quantity of real output
demanded decreases.

Accepted Answer

A) True 
 B)False

Question 4

When the dollar appreciates relative to foreign currencies, it means that

Accepted Answer

A)   we need more dollars to buy each unit of another currency.
B)   we can buy less foreign currency with a given amount of dollars.
C)   the value of foreign currencies decreased relative to our dollar.
D)   foreigners need less of their currency to buy one dollar.E) None of the above
F) A) and B)

Question 5

The aggregate supply curve (short run)

Accepted Answer

A)   slopes downward and to the right.
B)   graphs as a vertical line.
C)   slopes upward and to the right.
D)   graphs as a horizontal line.E) A) and B)
F) A) and C)

Question 6

The expenditure multiplier concept of the aggregate expenditures model

Accepted Answer

A)   is not at all relevant in the AD-AS model.
B)   magniﬁes the shifts of the aggregate demand curve.
C)   explains movement up or down the aggregate demand curve.
D)   reverses the shift of the aggregate demand curve.E) None of the above
F) A) and B)

Question 7

(Last Word)  In response to the Great Recession, the federal government engaged in signiﬁcant deﬁcit-funded spending, but it did not fully achieve the desired result. Which of the following best
Explains why the ﬁscal policy actions fell short of their objective?

Accepted Answer

A)   Monetary policy counteracted ﬁscal policy, keeping the unemployment rate from falling as much as intended.
B)   Consumers did not respond to the ﬁscal stimulus as well as hoped, as they put more income into saving and repaying debt.
C)   Although the ﬁscal stimulus increased consumer spending signiﬁcantly, it mostly went to purchase foreign-produced goods and services.
D)   The ﬁscal stimulus caused massive inﬂation that further disrupted economic activity.E) A) and B)
F) A) and C)

Question 8

What are two underlying factors affecting input prices? How does a change in input prices affect
aggregate supply?

Accepted Answer

The two underlying factors affecting inp...

Question 9

The real-balances effect on aggregate demand suggests that a

Accepted Answer

A)   lower price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending.
B)   lower price level will decrease the real value of many ﬁnancial assets and therefore cause an increase in spending.
C)   lower price level will increase the real value of many ﬁnancial assets and therefore cause an increase in spending.
D)   higher price level will increase the real value of many ﬁnancial assets and therefore cause an increase in spending.E) B) and C)
F) None of the above

Question 10

Which one of the following would increase per-unit production cost and therefore shift the aggregate supply curve to the left?

Accepted Answer

A)   a reduction in business taxes
B)   production bottlenecks occurring when producers near full plant capacity
C)   an increase in the price of imported resources
D)   deregulation of industryE) None of the above
F) A) and B)

Question 11

Inﬂation tends to

Accepted Answer

A)   increase productivity.
B)   decrease input prices.
C)   increase the strength of the multiplier.
D)   reduce the strength of the multiplier.E) All of the above
F) A) and B)

Question 12

An increase in net exports will shift the

Accepted Answer

A)   aggregate expenditures curve upward and the aggregate demand curve rightward.
B)   aggregate expenditures curve upward and the aggregate demand curve leftward.
C)   aggregate expenditures curve downward and the aggregate demand curve rightward.
D)   aggregate expenditures curve downward and the aggregate demand curve leftward.E) All of the above
F) A) and B)

Question 13

A decrease in business taxes will tend to

Accepted Answer

A)   increase aggregate demand but not change aggregate supply.
B)   increase aggregate supply but not change aggregate demand.
C)   increase aggregate demand and increase aggregate supply.
D)   decrease aggregate supply and decrease aggregate demand.E) A) and B)
F) All of the above

Question 14

If the dollar appreciates in value relative to foreign currencies,

Accepted Answer

A)   aggregate demand decreases because C decreases.
B)   aggregate demand increases because C increases.
C)   aggregate demand decreases because net exports decrease.
D)   aggregate demand increases because net exports increase.E) B) and C)
F) A) and C)

Question 15

Price Level CIgGXM Real GDP 128$18$2$3$1$51252043241222263331192483421162610351\begin{array} { | c | c | c | c | c | c | c | } \hline 	ext { Price Level } & C & I _ { g } & G & X & M & 	ext { Real GDP } \\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 1 & \$ 5 & \\hline 125 & 20 & 4 & 3 & 2 & 4 & \\hline 122 & 22 & 6 & 3 & 3 & 3 & \\hline 119 & 24 & 8 & 3 & 4 & 2 & \\hline 116 & 26 & 10 & 3 & 5 & 1 & \\hline\end{array} Price Level 128125122119116​C$1820222426​Ig​$246810​G$33333​X$12345​M$54321​ Real GDP ​​  In the accompanying table for a particular country, C is consumption expenditures,  IgI _ { g }Ig​  is gross
Investment expenditures, G is government expenditures, X is exports, and M is imports. All ?gures
Are in billions of dollars. A decrease in the interest rate not caused by a change in the price level
Would

Accepted Answer

A)   increase the values in column  IgI _ { g }Ig​  and increase aggregate demand.
B)   decrease the values in column  IgI _ { g }Ig​  and increase aggregate demand.
C)   increase the values in column C and decrease aggregate demand.
D)   decrease the values in column C and decrease aggregate demand. E) A) and B)
F) A) and C)

Question 16

The economy experiences an increase in the price level and a decrease in real domestic output. Which of the following is a likely explanation?

Accepted Answer

A)   Productivity has increased.
B)   Input prices have increased.
C)   There has been an increase in government spending.
D)   Government regulations have been reduced.E) B) and C)
F) A) and C)

Question 17

The shape of the short-run aggregate supply curve indicates that as the general price level rises,
output will expand but not by much when the economy reaches full employment.

Accepted Answer

A) True 
 B)False

Question 18

A decrease in aggregate demand in the short run will reduce

Accepted Answer

A)   both real output and the price level.
B)   the price level and increase the real domestic output.
C)   the real domestic output and have no effect on the price level.
D)   the price level and have no effect on real domestic output.E) A) and D)
F) B) and C)

Question 19

The economy experiences a decrease in the price level and an increase in real domestic output. Which is a likely explanation?

Accepted Answer

A)   Consumer incomes and the quantity of labor have decreased.
B)   Business costs and wage rates have decreased.
C)   The prices of imported resources have increased.
D)   National income abroad has increased.E) B) and D)
F) A) and D)

Question 20

The accompanying graph depicts an economy in the

Accepted Answer

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

Exam 12: Aggregate Demand and Aggregate Supply

The shape of the short-run aggregate supply curve indicates that as the general price level rises, output will expand but not by much when the economy reaches full employment.

Correct Answer
verified

The real-balances effect on aggregate demand suggests that a

Correct Answer
verified

The economy experiences a decrease in the price level and an increase in real domestic output. Which is a likely explanation?

Correct Answer
verified

A decrease in aggregate demand in the short run will reduce

Correct Answer
verified

A decrease in business taxes will tend to

Correct Answer
verified

Which one of the following would increase per-unit production cost and therefore shift the aggregate supply curve to the left?

Correct Answer
verified

The expenditure multiplier concept of the aggregate expenditures model

Correct Answer
verified

The economy experiences an increase in the price level and a decrease in real domestic output. Which of the following is a likely explanation?

Correct Answer
verified

What are two underlying factors affecting input prices? How does a change in input prices affect aggregate supply?

Correct Answer
verified
The two underlying factors affecting inp...
View Answer

Inﬂation tends to

Correct Answer
verified

Correct Answer
verified

(Last Word) In response to the Great Recession, the federal government engaged in signiﬁcant deﬁcit-funded spending, but it did not fully achieve the desired result. Which of the following best Explains why the ﬁscal policy actions fell short of their objective?

Correct Answer
verified

The accompanying graph depicts an economy in the

Correct Answer
verified

Correct Answer
verified

When the dollar appreciates relative to foreign currencies, it means that

Correct Answer
verified

Other things equal, appreciation of the dollar

Correct Answer
verified

If the dollar appreciates in value relative to foreign currencies,

Correct Answer
verified

The aggregate supply curve (short run)

Correct Answer
verified

The aggregate demand curve shows that when the price level rises, the quantity of real output demanded decreases.

Correct Answer
verified

An increase in net exports will shift the

Correct Answer
verified

Exam 12: Aggregate Demand and Aggregate Supply

The shape of the short-run aggregate supply curve indicates that as the general price level rises, output will expand but not by much when the economy reaches full employment.

Correct AnswerverifiedShow Answer

The real-balances effect on aggregate demand suggests that a

Correct AnswerverifiedShow Answer

The economy experiences a decrease in the price level and an increase in real domestic output. Which is a likely explanation?

Correct AnswerverifiedShow Answer

A decrease in aggregate demand in the short run will reduce

Correct AnswerverifiedShow Answer

A decrease in business taxes will tend to

Correct AnswerverifiedShow Answer

Which one of the following would increase per-unit production cost and therefore shift the aggregate supply curve to the left?

Correct AnswerverifiedShow Answer

The expenditure multiplier concept of the aggregate expenditures model

Correct AnswerverifiedShow Answer

The economy experiences an increase in the price level and a decrease in real domestic output. Which of the following is a likely explanation?

Correct AnswerverifiedShow Answer

What are two underlying factors affecting input prices? How does a change in input prices affect aggregate supply?

Correct AnswerverifiedThe two underlying factors affecting inp...View AnswerShow Answer

Inﬂation tends to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

(Last Word) In response to the Great Recession, the federal government engaged in signiﬁcant deﬁcit-funded spending, but it did not fully achieve the desired result. Which of the following best Explains why the ﬁscal policy actions fell short of their objective?

Correct AnswerverifiedShow Answer

The accompanying graph depicts an economy in the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the dollar appreciates relative to foreign currencies, it means that

Correct AnswerverifiedShow Answer

Other things equal, appreciation of the dollar

Correct AnswerverifiedShow Answer

If the dollar appreciates in value relative to foreign currencies,

Correct AnswerverifiedShow Answer

The aggregate supply curve (short run)

Correct AnswerverifiedShow Answer

The aggregate demand curve shows that when the price level rises, the quantity of real output demanded decreases.

Correct AnswerverifiedShow Answer

An increase in net exports will shift the

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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The two underlying factors affecting inp...
View 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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Correct Answer
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Correct Answer
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