Question 1

The greater the upward slope of the AS curve, the larger is the realized multiplier effect of a change
in investment spending.

Accepted Answer

A) True 
 B)False

Question 2

An increase in real interest rates will increase investment and aggregate demand.

Accepted Answer

A) True 
 B)False

Question 3

Other things equal, if the U.S. dollar were to depreciate, the

Accepted Answer

A)   aggregate demand curve would remain ﬁxed in place.
B)   aggregate supply curve would shift to the left.
C)   aggregate supply curve would shift to the right.
D)   aggregate demand curve would shift to the left.E) None of the above
F) A) and C)

Question 4

A rightward shift of the AD curve in the very ﬂat part of the short-run AS curve will

Accepted Answer

A)   increase real output by more than the price level.
B)   increase the price level by more than real output.
C)   reduce real output by more than the price level.
D)   reduce the price level by more than real output.E) C) and D)
F) A) and C)

Question 5

Accepted Answer

A)   demand-pull inﬂation in the late 1960s
B)   cost-push inﬂation in the early 1970s
C)   full-employment in the late 1990s
D)   the Great Recession in 2007-2009E) B) and C)
F) A) and B)

Question 6

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   B and C.E) All of the above
F) None of the above

Question 7

Accepted Answer

A)   business taxes and government regulation.
B)   the prices of imported resources.
C)   the prices of domestic resources.
D)   productivity.E) None of the above
F) A) and D)

Question 8

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   B and C.E) B) and C)
F) A) and D)

Question 9

A fall in labor costs will cause aggregate

Accepted Answer

A)   supply to increase.
B)   demand to increase.
C)   supply to decrease.
D)   demand to decrease.E) B) and C)
F) None of the above

Question 10

Changes in which of the following would not shift the aggregate demand curve?

Accepted Answer

A)   productivity rates
B)   foreign-exchange rates
C)   real interest rates
D)   income tax ratesE) A) and D)
F) None of the above

Question 11

Which of the following would most likely reduce aggregate demand (shift the AD curve to the left) ?

Accepted Answer

A)   a reduced amount of excess capacity
B)   increased government spending on military equipment
C)   an appreciation of the U.S. dollar
D)   increased consumer optimism regarding future economic conditionsE) A) and D)
F) A) and B)

Question 12

In the diagram, the economy's relevant aggregate demand and immediate-short-run aggregate supply curves, respectively, are lines

Accepted Answer

A)   4 and 3.
B)   4 and 1.
C)   2 and 4.
D)   2 and 3.E) B) and C)
F) A) and D)

Question 13

Accepted Answer

A)   aggregate demand is AD  AD2\mathrm { AD } _ { 2 }AD2​ 
B)   the equilibrium output level is  Q3Q _ { 3 }Q3​ 
C)   the equilibrium output level is  Q2Q _ { 2 }Q2​ 
D)   producers will supply output level  Q1.Q _ { 1 } .Q1​.E) C) and D)
F) A) and B)

Question 14

Which of the following is not a reason why the stimulus package that the government implemented during the Great Recession of 2007-09 did not have as strong an impact on GDP and
Unemployment as expected?

Accepted Answer

A)   Households had very high debt levels.
B)   Consumers raised their saving rates.
C)   The stimulus package caused prices to fall in many sectors.
D)   The effects of the stimulus package were diffuse and spread thinly among many sectors.E) B) and D)
F) C) and D)

Question 15

The foreign purchases effect suggests that an increase in the U.S. price level relative to other countries will

Accepted Answer

A)   increase the amount of U.S. real output purchased.
B)   increase U.S. imports and decrease U.S. exports.
C)   increase both U.S. imports and U.S. exports.
D)   decrease both U.S. imports and U.S. exports.E) A) and D)
F) A) and C)

Question 16

The slope of the immediate-short-run aggregate supply curve is based on the assumption that

Accepted Answer

A)   both input and output prices are ﬁxed.
B)   neither input nor output prices are ﬁxed.
C)   input prices are ﬂexible but output prices are ﬁxed.
D)   input prices are ﬁxed but output prices are ﬂexible.E) None of the above
F) A) and B)

Question 17

When the price level decreases,

Accepted Answer

A)   the demand for money falls and the interest rate falls.
B)   holders of ﬁnancial assets with ﬁxed money values decrease their spending.
C)   holders of ﬁnancial assets with ﬁxed money values have less purchasing power.
D)   there is a decrease in consumer spending that is sensitive to changes in interest rates.E) A) and B)
F) B) and C)

Question 18

The aggregate demand curve

Accepted Answer

A)   is upsloping because a higher price level is necessary to make production proﬁtable as production costs rise.
B)   is downsloping because production costs decline as real output increases.
C)   shows the amount of expenditures required to induce the production of each possible level of real output.
D)   shows the amount of real output that will be purchased at each possible price level.E) C) and D)
F) All of the above

Question 19

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   A and B.E) B) and C)
F) A) and D)

Question 20

Input Quantity  Real Domestic Output 100200150300200400\begin{array} { | c | c | } \hline 	ext { Input Quantity } & 	ext { Real Domestic Output } \\hline 100 & 200 \\hline 150 & 300 \\hline 200 & 400 \\hline\end{array} Input Quantity 100150200​ Real Domestic Output 200300400​​  The table gives information about the relationship between input quantities and real domestic output in a hypothetical economy. The level of productivity in the economy is

Accepted Answer

A)   2.
B)   0.5.
C)   4.
D)   200. E) B) and D)
F) All of the above

Exam 12: Aggregate Demand and Aggregate Supply

Correct Answer
verified

The slope of the immediate-short-run aggregate supply curve is based on the assumption that

Correct Answer
verified

The foreign purchases effect suggests that an increase in the U.S. price level relative to other countries will

Correct Answer
verified

Correct Answer
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Correct Answer
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The aggregate demand curve

Correct Answer
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$A) aggregate demand is AD \mathrm { AD } _ { 2 } B) the equilibrium output level is Q _ { 3 } C) the equilibrium output level is Q _ { 2 } D) producers will supply output level Q _ { 1 } .$

Correct Answer
verified

Which of the following would most likely reduce aggregate demand (shift the AD curve to the left) ?

Correct Answer
verified

An increase in real interest rates will increase investment and aggregate demand.

Correct Answer
verified

When the price level decreases,

Correct Answer
verified

Other things equal, if the U.S. dollar were to depreciate, the

Correct Answer
verified

Which of the following is not a reason why the stimulus package that the government implemented during the Great Recession of 2007-09 did not have as strong an impact on GDP and Unemployment as expected?

Correct Answer
verified

A rightward shift of the AD curve in the very ﬂat part of the short-run AS curve will

Correct Answer
verified

Correct Answer
verified

In the diagram, the economy's relevant aggregate demand and immediate-short-run aggregate supply curves, respectively, are lines

Correct Answer
verified

Changes in which of the following would not shift the aggregate demand curve?

Correct Answer
verified

A fall in labor costs will cause aggregate

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The greater the upward slope of the AS curve, the larger is the realized multiplier effect of a change in investment spending.

Correct Answer
verified

Exam 12: Aggregate Demand and Aggregate Supply

Correct AnswerverifiedShow Answer

The slope of the immediate-short-run aggregate supply curve is based on the assumption that

Correct AnswerverifiedShow Answer

The foreign purchases effect suggests that an increase in the U.S. price level relative to other countries will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The aggregate demand curve

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would most likely reduce aggregate demand (shift the AD curve to the left) ?

Correct AnswerverifiedShow Answer

An increase in real interest rates will increase investment and aggregate demand.

Correct AnswerverifiedShow Answer

When the price level decreases,

Correct AnswerverifiedShow Answer

Other things equal, if the U.S. dollar were to depreciate, the

Correct AnswerverifiedShow Answer

Which of the following is not a reason why the stimulus package that the government implemented during the Great Recession of 2007-09 did not have as strong an impact on GDP and Unemployment as expected?

Correct AnswerverifiedShow Answer

A rightward shift of the AD curve in the very ﬂat part of the short-run AS curve will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the diagram, the economy's relevant aggregate demand and immediate-short-run aggregate supply curves, respectively, are lines

Correct AnswerverifiedShow Answer

Changes in which of the following would not shift the aggregate demand curve?

Correct AnswerverifiedShow Answer

A fall in labor costs will cause aggregate

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The greater the upward slope of the AS curve, the larger is the realized multiplier effect of a change in investment spending.

Correct AnswerverifiedShow Answer

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