Question 1

U.S.goods will become relatively less expensive than goods from other countries if:

Accepted Answer

A)  prices were to increase in the United States only.
B)  prices were to decrease in the United States only.
C)  prices were to increase in the United States and foreign countries at the same rate.
D)  prices were to decrease in the United States and foreign countries at the same rate.E) B) and D)
F) All of the above

Question 2

A situation in which output decreases while prices increase is often referred to as:

Accepted Answer

A)  stagflation.
B)  inflation.
C)  negative economic growth.
D)  a recession.E) A) and B)
F) All of the above

Question 3

The aggregate demand curve:

Accepted Answer

A)  shows the relationship between the overall price level and the level of total demand.
B)  shows the price level on the horizontal axis and output on the vertical axis.
C)  is upward-sloping,which is counter to the individual demand curve.
D)  All of these are true.E) B) and D)
F) A) and D)

Question 4

A positive temporary supply side shock will:

Accepted Answer

A)  increase the price level in the long run.
B)  decrease the price level in the long run.
C)  increase the level of potential output in the long run.
D)  have no effect in the long run.E) A) and B)
F) A) and C)

Question 5

The equilibrium of aggregate supply and aggregate demand represents:

Accepted Answer

A)  the overall state of the national economy.
B)  the total of all goods and services produced.
C)  the general price level of the economy.
D)  All of these are true.E) None of the above
F) A) and B)

Question 6

An increase in the price level causes government spending to:

Accepted Answer

A)  increase.
B)  decrease.
C)  remain unaffected.
D)  increase in social welfare spending only.E) A) and C)
F) A) and B)

Question 7

If a hurricane were to wipe out the majority of the eastern seaboard in the United States,it would likely be a:

Accepted Answer

A)  short-run supply shock.
B)  long-run supply shock.
C)  short-run demand shock.
D)  long-run demand shock.E) B) and C)
F) A) and D)

Question 8

There is no relationship between the price level and which component of GDP?

Accepted Answer

A)  C
B)  I
C)  G
D)  NXE) A) and B)
F) B) and C)

Question 9

One way the government can boost the economy out of a recession is:

Accepted Answer

A)  by increasing government spending.
B)  with public announcements telling the public to save their money.
C)  by setting price ceilings on most goods so people can afford them.
D)  None of these will help an economy in recession.E) A) and C)
F) B) and C)

Question 10

A decrease in consumer confidence will cause:

Accepted Answer

A)  a downward movement along the aggregate demand curve.
B)  a shift in aggregate demand to the right.
C)  a shift in aggregate demand to the left.
D)  an upward movement along the aggregate demand curve.E) A) and B)
F) A) and C)

Question 11

During the period that many call the Great Recession:

Accepted Answer

A)  GDP fell.
B)  unemployment rose.
C)  there was a sharp decrease in consumer spending.
D)  All of these are true.E) None of the above
F) C) and D)

Question 12

The introduction of the power loom during the Industrial Revolution caused:

Accepted Answer

A)  economic growth.
B)  the long-run aggregate supply curve to shift to the right.
C)  an increase in the potential output of the economy.
D)  All of these are true.E) B) and D)
F) C) and D)

Question 13

Which of the following is a component of aggregate demand?

Accepted Answer

A)  Net exports
B)  Income
C)  Government revenues
D)  All of these are components of aggregate demand.E) A) and B)
F) A) and C)

Question 14

In the long run:

Accepted Answer

A)  aggregate demand is fixed.
B)  aggregate supply is fixed.
C)  aggregate demand tends to shift to the right.
D)  aggregate supply tends to shift to the left.E) A) and C)
F) A) and B)

Question 15

When the economy is operating at a point where aggregate demand equals short-run aggregate supply,it must be true that:

Accepted Answer

A)  aggregate demand also equals long-run aggregate supply.
B)  the short-run level of output is not the same as long-run potential output.
C)  prices are higher than expected prices.
D)  None of these must be true.E) C) and D)
F) B) and D)

Question 16

The downward sloping aggregated demand curve can be explained in part through:

Accepted Answer

A)  the wealth effect.
B)  the negative relationship between the price level and net exports.
C)  the negative relationship between the price level and investment spending.
D)  All of these are true.E) A) and D)
F) A) and C)

Question 17

The long-run aggregate supply curve represents the level of output possible if the economy:

Accepted Answer

A)  is operating at full capacity.
B)  is operating at an unemployment rate of zero.
C)  has a zero inflation rate.
D)  All of these are true.E) B) and C)
F) None of the above

Question 18

When people buy assets simply because they believe the assets will appreciate and can be sold for a profit,it may cause:

Accepted Answer

A)  a recession.
B)  unemployment.
C)  inflation.
D)  an asset-price bubble.E) A) and B)
F) C) and D)

Question 19

Temporary supply shocks:

Accepted Answer

A)  are significant events that directly affect production.
B)  shift the aggregate-supply curve in the short run.
C)  would affect the short-run equilibrium.
D)  All of these are true.E) A) and B)
F) A) and C)

Question 20

The wealth effect says that if there is an increase in the price level,you will:

Accepted Answer

A)  experience some reduction in your level of wealth as a result.
B)  experience some increase in your level of wealth as a result.
C)  typically spend more on all goods and services as a result.
D)  typically shift your spending to assets from consumption goods.E) A) and B)
F) A) and C)

Exam 28: Aggregate Demand and Aggregate Supply

One way the government can boost the economy out of a recession is:

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A positive temporary supply side shock will:

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When people buy assets simply because they believe the assets will appreciate and can be sold for a profit,it may cause:

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The aggregate demand curve:

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The wealth effect says that if there is an increase in the price level,you will:

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The long-run aggregate supply curve represents the level of output possible if the economy:

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Temporary supply shocks:

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Which of the following is a component of aggregate demand?

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An increase in the price level causes government spending to:

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When the economy is operating at a point where aggregate demand equals short-run aggregate supply,it must be true that:

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During the period that many call the Great Recession:

Correct AnswerverifiedShow Answer

The introduction of the power loom during the Industrial Revolution caused:

Correct AnswerverifiedShow Answer

U.S.goods will become relatively less expensive than goods from other countries if:

Correct AnswerverifiedShow Answer

There is no relationship between the price level and which component of GDP?

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The equilibrium of aggregate supply and aggregate demand represents:

Correct AnswerverifiedShow Answer

In the long run:

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A situation in which output decreases while prices increase is often referred to as:

Correct AnswerverifiedShow Answer

If a hurricane were to wipe out the majority of the eastern seaboard in the United States,it would likely be a:

Correct AnswerverifiedShow Answer

The downward sloping aggregated demand curve can be explained in part through:

Correct AnswerverifiedShow Answer

A decrease in consumer confidence will cause:

Correct AnswerverifiedShow Answer

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