Question 1

Which of the following is correct concerning recessions?

Accepted Answer

A)   They come at fairly regular and predictable intervals.
B)   They are associated with comparatively large increases in investment spending.
C)   They are any period when real GDP growth is less than average.
D)   They tend to be associated with rising unemployment rates.E) A) and C)
F) B) and C)

Question 2

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) None of the above
F) All of the above

Question 3

The average price level is measured by

Accepted Answer

A)   the price of oil.
B)   the rate of inflation.
C)   the nominal interest rate.
D)   the GDP deflator.E) A) and B)
F) B) and C)

Question 4

Aggregate demand shifts right if at a given price level

Accepted Answer

A)   taxes rise and shifts left if the money supply increases.
B)   taxes rise and shifts right if the money supply increases.
C)   taxes fall and shifts left if the money supply increases.
D)   taxes fall and shifts right if the money supply increases.E) All of the above
F) A) and C)

Question 5

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 6

Figure 33-7. 
-Refer to Optimism. 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.E) B) and C)
F) B) and D)

Question 7

If aggregate demand shifts left, then in the short run

Accepted Answer

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

Question 8

An unexpected increase in the price level that temporarily lowers real wages and induces more employment and output in an economy, occurs in

Accepted Answer

A)   nominal-supply theory.
B)   stagflation.
C)   misperceptions theory.
D)   sticky-wage theory.E) A) and B)
F) None of the above

Question 9

Which of the following would both shift aggregate demand right?

Accepted Answer

A)   the price level decreases and government expenditures increase.
B)   the price level decreases and the government repeals an investment tax credit.
C)   taxes decrease and government expenditures increase.
D)   None of the above are correct.E) A) and B)
F) A) and C)

Question 10

Which of the following did not happen during the onset of the Great Depression?

Accepted Answer

A)   The money supply fell as households took money out of bank deposits.
B)   The Fed conducted expansionary monetary policy.
C)   Stock prices fell about 90 percent.
D)   Disruption of the banking system made it difficult for some firms to obtain funds for investment.E) None of the above
F) C) and D)

Question 11

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.E) None of the above
F) A) and C)

Question 12

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Accepted Answer

A) True 
 B)False

Question 13

Other things the same, as the price level rises, exchange rates

Accepted Answer

A)   and interest rates rise.
B)   and interest rates fall.
C)   fall and interest rates rise.
D)   rise and interest rates fall.E) All of the above
F) A) and D)

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) B) and D)
F) None of the above

Question 15

At the end of World War II many European countries were rebuilding and so were eager to buy capital goods and had rising incomes. We would expect that the rebuilding increased aggregate demand in

Accepted Answer

A)   both the United States and Europe.
B)   the United States but not Europe.
C)   Europe, but not the United States.
D)   neither the United States, nor Europe.E) A) and D)
F) B) and C)

Question 16

Which of the following would cause stagflation?

Accepted Answer

A)   aggregate demand shifts right
B)   aggregate demand shifts left
C)   aggregate supply shifts right
D)   aggregate supply shifts leftE) C) and D)
F) A) and D)

Question 17

Suppose the economy is in long-run equilibrium. If there is an increase in the supply of labor as well as an increase in the money supply, then we would expect that 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) All of the above
F) C) and D)

Question 18

Aggregate demand shifts left if

Accepted Answer

A)   government purchases increase and shifts left if stock prices rise.
B)   government purchases increase and shifts left if stock prices fall.
C)   government purchases decrease and shifts left if stock prices rise.
D)   government purchases decrease and shifts left is stock prices fall.E) A) and B)
F) B) and D)

Question 19

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Accepted Answer

A)   It refused to provide banks funding and made no significant changes in government spending.
B)   It refused to provide banks funding but made a large increase in government spending.
C)   It became part owner of some banks but made no significant change in government spending
D)   It became part owner of some banks and made a large increase in government spending.E) A) and B)
F) A) and C)

Question 20

The aggregate-demand curve shows the quantity of domestic goods and services that households, firms, the government, and customers abroad want to buy at each price level.

Accepted Answer

A) True 
 B)False

Exam 20: Aggregate Demand and Aggregate Supply

When taxes increase, consumption

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Aggregate demand shifts left if

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Which of the following would cause stagflation?

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The average price level is measured by

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Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

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Which of the following is correct concerning recessions?

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The aggregate-demand curve shows the quantity of domestic goods and services that households, firms, the government, and customers abroad want to buy at each price level.

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At the end of World War II many European countries were rebuilding and so were eager to buy capital goods and had rising incomes. We would expect that the rebuilding increased aggregate demand in

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The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

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Aggregate demand shifts right if at a given price level

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If aggregate demand shifts left, then in the short run

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Which of the following would both shift aggregate demand right?

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Suppose the economy is in long-run equilibrium. If there is an increase in the supply of labor as well as an increase in the money supply, then we would expect that in the short-run,

Correct AnswerverifiedShow Answer

An unexpected increase in the price level that temporarily lowers real wages and induces more employment and output in an economy, occurs in

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

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Other things the same, as the price level rises, exchange rates

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The economic boom of the early 1940s resulted mostly from

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Figure 33-7. -Refer to Optimism. In the short run what happens to the price level and real GDP?

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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

Which of the following did not happen during the onset of the Great Depression?

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Real GDP and investm...
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