Question 1

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs.Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)  6 percent, 0 percent
B)  3 percent, 10 percent
C)  -1 percent, 6 percent
D)  -3 percent, 2 percentE) All of the above
F) A) and D)

Question 2

Technological progress shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 3

The position of the long-run aggregate supply curve

Accepted Answer

A)  is determined by the things that determine output in the classical model.
B)  is at the point where unemployment is zero.
C)  shifts to the right when the price level increases.
D)  is at the point where the economy would cease to grow.E) None of the above
F) A) and B)

Question 4

When production costs rise,

Accepted Answer

A)  the short-run aggregate supply curve shifts to the right.
B)  the short-run aggregate supply curve shifts to the left.
C)  the aggregate demand curve shifts to the right.
D)  the aggregate demand curve shifts to the left.E) None of the above
F) A) and B)

Question 5

If there is bad weather for farming or some other temporary decrease in the availability of raw materials

Accepted Answer

A)  aggregate supply shifts right.
B)  output falls in the short run.
C)  prices fall in the short run.
D)  None of the above is correct.E) A) and C)
F) None of the above

Question 6

If countries that imported goods and services from the United States went into recession,we would expect that U.S.net exports would

Accepted Answer

A)  rise, making aggregate demand shift right.
B)  rise, making aggregate demand shift left.
C)  fall, making aggregate demand shift right.
D)  fall, making aggregate demand shift left.E) A) and C)
F) B) and D)

Question 7

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

Question 8

During recessions declines in investment account for about

Accepted Answer

A)  1/6 of the decline in real GDP.
B)  1/3 of the decline in real GDP.
C)  1/2 of the decline in real GDP.
D)  2/3 of the decline in real GDP.E) All of the above
F) B) and D)

Question 9

Which of the following shifts short-run aggregate supply right?

Accepted Answer

A)  an increase in the price level
B)  an increase in the minimum wage
C)  a decrease in the price of oil
D)  more people migrate abroad than immigrate from abroadE) A) and B)
F) None of the above

Question 10

The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% and people were expecting it to rise by 2%,then firms have

Accepted Answer

A)  higher than desired prices which increases their sales.
B)  higher than desired prices which depresses their sales.
C)  lower than desired prices which increases their sales.
D)  lower than desired prices which depresses their sales.E) All of the above
F) B) and C)

Question 11

If something caused resources to become more readily available,then

Accepted Answer

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

Question 12

Because the price level does not affect the long-run determinants of real GDP,the long-run aggregate-supply is vertical.

Accepted Answer

A) True 
 B)False

Question 13

Consider the exhibit below for the following questions.
Figure 33-1
 
-Refer to Figure 33-1.If the economy is in long-run equilibrium,then an adverse shift in aggregate supply would move the economy from

Accepted Answer

A)  A to B.
B)  C to D.
C)  B to A.
D)  D to C.E) A) and B)
F) All of the above

Question 14

In the first few years of the Great Depression,unemployment rose to about

Accepted Answer

A)  10 percent, and prices rose about 14 percent.
B)  15 percent, and prices rose about 22 percent.
C)  20 percent, and prices fell about 14 percent.
D)  25 percent, and prices fell about 22 percent.E) None of the above
F) A) and C)

Question 15

The Stock Market Boom of 2010
Imagine that in 2010 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
-Refer to Stock Market Boom 2010.How is the new long-run equilibrium different from the original one?

Accepted Answer

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

Question 16

During World War II,the economy's production increased about

Accepted Answer

A)  25 percent and prices rose about 5 percent.
B)  50 percent and prices rose about 10 percent.
C)  75 percent and prices rose about 15 percent.
D)  100 percent and prices rose about 20 percent.E) B) and C)
F) A) and C)

Question 17

The effects of a higher than expected price level are shown by

Accepted Answer

A)  shifting the short-run aggregate supply curve right.
B)  shifting the short-run aggregate supply curve left.
C)  moving to the right along a given aggregate supply curve.
D)  moving to the left along a given aggregate supply curve.E) All of the above
F) A) and B)

Question 18

Which of the following is included in the aggregate demand for goods and services?

Accepted Answer

A)  consumption demand
B)  investment demand
C)  net exports
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 19

The wealth effect,interest rate effect,and exchange rate effect are all explanations for

Accepted Answer

A)  the slope of short-run aggregate supply.
B)  the slope of long-run aggregate supply.
C)  the slope of the aggregate demand curve.
D)  everything that makes the aggregate demand curve shift.E) A) and B)
F) A) and C)

Question 20

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  immigration from abroad increases.
B)  the capital stock increases.
C)  technology advances.
D)  All of the above are correct.E) All of the above
F) A) and D)

Exam 33: Aggregate Demand and Aggregate Supply

Technological progress shifts the long-run aggregate supply curve to the right.

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The long-run aggregate supply curve shifts right if

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When production costs rise,

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Because the price level does not affect the long-run determinants of real GDP,the long-run aggregate-supply is vertical.

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The wealth effect,interest rate effect,and exchange rate effect are all explanations for

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Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy is in long-run equilibrium,then an adverse shift in aggregate supply would move the economy from

Correct AnswerverifiedShow Answer

In the first few years of the Great Depression,unemployment rose to about

Correct AnswerverifiedShow Answer

If countries that imported goods and services from the United States went into recession,we would expect that U.S.net exports would

Correct AnswerverifiedShow Answer

Which of the following is included in the aggregate demand for goods and services?

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During World War II,the economy's production increased about

Correct AnswerverifiedShow Answer

If there is bad weather for farming or some other temporary decrease in the availability of raw materials

Correct AnswerverifiedShow Answer

The position of the long-run aggregate supply curve

Correct AnswerverifiedShow Answer

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs.Which pair of GDP growth rates and unemployment rates is realistic?

Correct AnswerverifiedShow Answer

If something caused resources to become more readily available,then

Correct AnswerverifiedShow Answer

The Stock Market Boom of 2010 Imagine that in 2010 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2010.How is the new long-run equilibrium different from the original one?

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

Correct AnswerverifiedShow Answer

During recessions declines in investment account for about

Correct AnswerverifiedShow Answer

The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% and people were expecting it to rise by 2%,then firms have

Correct AnswerverifiedShow Answer

Which of the following shifts short-run aggregate supply right?

Correct AnswerverifiedShow Answer

The effects of a higher than expected price level are shown by

Correct AnswerverifiedShow Answer

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