Question 1

As the dollar depreciates, foreign goods become more expensive for Americans to purchase.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 8-4
 1 to SRAS2 could have been the result of A) a decrease in the price level. B) an increase in the price level. C) an adverse supply shock. D) a beneficial supply shock." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS1 to SRAS2 could have been the result of

Accepted Answer

A)  a decrease in the price level.
B)  an increase in the price level.
C)  an adverse supply shock.
D)  a beneficial supply shock.

Question 3

If investment changes because of a change in the price level, then the

Accepted Answer

A)  economy moves from one point on an AD curve to another point on the same curve.
B)  AD curve shifts.
C)  economy moves from one point on a SRAS curve to another point on the same curve.
D)  SRAS curve shifts.
E)  none of the above A

Question 4

The economy suffers an adverse supply shock. As a result, in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A)  rise; rise
B)  fall; fall
C)  fall; remain constant
D)  fall; rise
E)  rise; fall

Question 5

Only a change in the price level can cause a movement from one point to another point along a given aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 6

If investment changes because of a change in a factor other than the price level, then the

Accepted Answer

A)  economy moves from one point on an AD curve to another point on the same curve.
B)  AD curve shifts.
C)  economy moves from one point on a short-run aggregate supply (SRAS)  curve to another point on the same curve.
D)  SRAS curve shifts.
E)  none of the above

Question 7

If consumption increases,

Accepted Answer

A)  the SRAS curve will shift rightward, which will push the price level up.
B)  the SRAS curve will shift leftward, which will push the price level up.
C)  the AD curve will shift leftward, which will push the price level down.
D)  the AD curve will shift rightward, which will push the price level up.

Question 8

If businesses are optimistic about future sales, the short-run aggregate supply curve will shift leftward.

Accepted Answer

A) True 
 B)False

Question 9

After an adverse supply shock occurs, the ____________ curve shifts _____________ resulting in a(n)  _________________ in the price level and a(n)  ________________ in Real GDP.

Accepted Answer

A)  AD; leftward; decrease; decrease
B)  AD; rightward; increase; increase
C)  SRAS; rightward; decrease; increase
D)  SRAS; leftward; increase; decrease

Question 10

When foreign real national income rises, domestic Real GDP rises, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 8-2
 
-Refer to Exhibit 8-2. What word (rises or falls)  should go in blank (7)  and blank (8) , respectively, to summarize the resulting impact on short run equilibrium of the given change in the economy?

Accepted Answer

A)  rises; rises
B)  falls; falls
C)  rises; falls
D)  falls; rises

Question 12

Exhibit 8-3
 1 to AD2 could have been the result of A) a decrease in the price level. B) an increase in the price level. C) an increase in foreign real national income. D) a decrease in foreign real national income." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 8-3. A shift in aggregate demand from AD1 to AD2 could have been the result of

Accepted Answer

A)  a decrease in the price level.
B)  an increase in the price level.
C)  an increase in foreign real national income.
D)  a decrease in foreign real national income. C

Question 13

If velocity and the money supply are __________________, then when one component of spending rises another component of spending ________________.

Accepted Answer

A)  constant; must fall
B)  constant; must rise
C)  rising; may not necessarily fall
D)  rising; must rise

Question 14

A simultaneous rise in both aggregate demand and short-run aggregate supply will definitely

Accepted Answer

A)  raise the price level, but there is not enough information provided to know how Real GDP will change.
B)  lower Real GDP, but there is not enough information provided to know how the price level will change.
C)  raise the price level and Real GDP.
D)  raise Real GDP, but there is not enough information provided to know how the price level will change.
E)  raise the price level and lower Real GDP.

Question 15

Exhibit 8-1
 
-Refer to Exhibit 8-1. Assume that the economy is originally in equilibrium at point A. If businesses become more optimistic about future sales, at which point is the economy most likely to end up in the short run?

Accepted Answer

A)  A
B)  B
C)  C
D)  D

Question 16

If foreign input prices increase and the United States is a purchaser of those inputs, then the U.S.

Accepted Answer

A)  AD curve will shift leftward and U.S.prices will fall.
B)  AD curve will shift rightward and U.S.prices will rise.
C)  SRAS curve will shift leftward and U.S.prices will rise.
D)  SRAS curve will shift rightward and U.S.prices will fall

Question 17

Suppose the following: (1)  the wage rate rises, (2)  the interest rate rises, (3)  any change in AD is greater than any change in SRAS. Based on this information, in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A)  rise; rise
B)  fall; rise
C)  fall; fall
D)  rise; fall

Question 18

Personal income taxes rise. This lowers __________, which lowers __________ and the __________ curve shifts __________.

Accepted Answer

A)  net exports; aggregate demand (A
D)  ; AD; leftward
B)  consumption; short-run aggregate supply (SRAS) ; SRAS; rightward
C)  government revenue; net exports; AD; rightward
D)  consumption; aggregate demand (A
D)  ; AD; leftward
E)  none of the above

Question 19

The wage rate rises. As a result, in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A)  rise; rise
B)  fall; fall
C)  remain constant; fall
D)  fall; rise
E)  rise; fall D

Question 20

If wage rates fall at the same time that labor productivity increases, what is the effect on short-run aggregate supply (SRAS) ?

Accepted Answer

A)  SRAS falls.
B)  SRAS remains constant.
C)  SRAS rises.
D)  SRAS may rise, fall, or remain constant.

Exam 8: Aggregate Demand and Aggregate Supply

As the dollar depreciates, foreign goods become more expensive for Americans to purchase.

Correct AnswerverifiedShow Answer

Exhibit 8-4 -Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS1 to SRAS2 could have been the result of

Correct AnswerverifiedShow Answer

If investment changes because of a change in the price level, then the

Correct AnswerverifiedA

The economy suffers an adverse supply shock. As a result, in the short run Real GDP will __________ and the price level will __________.

Correct AnswerverifiedShow Answer

Only a change in the price level can cause a movement from one point to another point along a given aggregate demand curve.

Correct AnswerverifiedShow Answer

If investment changes because of a change in a factor other than the price level, then the

Correct AnswerverifiedShow Answer

If consumption increases,

Correct AnswerverifiedShow Answer

If businesses are optimistic about future sales, the short-run aggregate supply curve will shift leftward.

Correct AnswerverifiedShow Answer

After an adverse supply shock occurs, the ____________ curve shifts _____________ resulting in a(n) _________________ in the price level and a(n) ________________ in Real GDP.

Correct AnswerverifiedShow Answer

When foreign real national income rises, domestic Real GDP rises, ceteris paribus.

Correct AnswerverifiedShow Answer

Exhibit 8-2 -Refer to Exhibit 8-2. What word (rises or falls) should go in blank (7) and blank (8) , respectively, to summarize the resulting impact on short run equilibrium of the given change in the economy?

Correct AnswerverifiedShow Answer

Exhibit 8-3 -Refer to Exhibit 8-3. A shift in aggregate demand from AD1 to AD2 could have been the result of

Correct AnswerverifiedC

If velocity and the money supply are __________________, then when one component of spending rises another component of spending ________________.

Correct AnswerverifiedShow Answer

A simultaneous rise in both aggregate demand and short-run aggregate supply will definitely

Correct AnswerverifiedShow Answer

Exhibit 8-1 -Refer to Exhibit 8-1. Assume that the economy is originally in equilibrium at point A. If businesses become more optimistic about future sales, at which point is the economy most likely to end up in the short run?

Correct AnswerverifiedShow Answer

If foreign input prices increase and the United States is a purchaser of those inputs, then the U.S.

Correct AnswerverifiedShow Answer

Suppose the following: (1) the wage rate rises, (2) the interest rate rises, (3) any change in AD is greater than any change in SRAS. Based on this information, in the short run Real GDP will __________ and the price level will __________.

Correct AnswerverifiedShow Answer

Personal income taxes rise. This lowers __________, which lowers __________ and the __________ curve shifts __________.

Correct AnswerverifiedShow Answer

The wage rate rises. As a result, in the short run Real GDP will __________ and the price level will __________.

Correct AnswerverifiedD

If wage rates fall at the same time that labor productivity increases, what is the effect on short-run aggregate supply (SRAS) ?

Correct AnswerverifiedShow Answer

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Exhibit 8-4 -Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS₁ to SRAS₂ could have been the result of

Correct Answer
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A

The economy suffers an adverse supply shock. As a result, in the short run Real GDP will and the price level will .

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After an adverse supply shock occurs, the ______ curve shifts _ resulting in a(n) _ in the price level and a(n) ______ in Real GDP.

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Exhibit 8-3 -Refer to Exhibit 8-3. A shift in aggregate demand from AD₁ to AD₂ could have been the result of

Correct Answer
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C

If velocity and the money supply are __, then when one component of spending rises another component of spending .

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Suppose the following: (1) the wage rate rises, (2) the interest rate rises, (3) any change in AD is greater than any change in SRAS. Based on this information, in the short run Real GDP will and the price level will .

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Personal income taxes rise. This lowers , which lowers and the curve shifts .

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The wage rate rises. As a result, in the short run Real GDP will and the price level will .

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D

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