Question 1

Firms are willing to change the aggregate quantity of output supplied based on price:

Accepted Answer

A)  in the short run only.
B)  in the long run only.
C)  in both the short and long run.
D)  Price does not affect the quantity that firms supply.

Question 2

The long-run aggregate supply curve represents:

Accepted Answer

A)  potential output in the economy.
B)  the level of output possible if the economy is operating at full capacity.
C)  a production function for the entire economy.
D)  All of these are true.

Question 3

In the macroeconomy,demand-side shifts change:

Accepted Answer

A)  only the price level in the long run,while output eventually returns to its long-run potential level.
B)  only the output level in the long run,while prices eventually return to its long-run potential level.
C)  aggregate demand only,which eventually shifts back in the long run.
D)  aggregate demand only,which is why the price level remains unaffected in the long run.

Question 4

In macroeconomics,the long run refers to:

Accepted Answer

A)  one year.
B)  two years.
C)  ten years.
D)  None of these is true.

Question 5

In general,changes in the price level will change:

Accepted Answer

A)  the real value of people's wealth and income.
B)  the nominal value of cash balances.
C)  the real value of consumption goods only.
D)  the nominal value of consumption goods and the real value of durable goods.

Question 6

Increases in the overall price level:

Accepted Answer

A)  reduce people's dollar-denominated wealth.
B)  mean that a given number of dollars won't buy as much in terms of real goods and services.
C)  mean people will reduce their consumption.
D)  All of these are true.

Question 7

When the U.S.price level increases,we would expect:

Accepted Answer

A)  a movement downward along the aggregate demand curve.
B)  a movement up along the aggregate demand curve.
C)  a shift to the right of the aggregate demand curve.
D)  a shift to the left of the aggregate demand curve.

Question 8

In the short run,the aggregate supply curve:

Accepted Answer

A)  slopes upward.
B)  slopes downward.
C)  is perfectly elastic.
D)  is perfectly inelastic.

Question 9

The introduction of the Internet over the last 20 years has caused:

Accepted Answer

A)  the long-run aggregate supply curve to shift to the right.
B)  the long-run aggregate supply curve to shift to the left.
C)  the short-run aggregate supply curve to shift to the left.
D)  The long-run aggregate supply is fixed and does not move.

Question 10

If a change in the U.S.price level caused U.S.imports to increase,it must be true that the price level:

Accepted Answer

A)  increased.
B)  decreased.
C)  became elastic.
D)  became negative.

Question 11

Which of the following would likely cause aggregate demand to shift to the left?

Accepted Answer

A)  Decreased income taxes
B)  Decreased consumer confidence
C)  Decreased government spending
D)  These would all cause aggregate demand to shift to the left.

Question 12

In the long run,changes in prices of goods and services paid by consumers:

Accepted Answer

A)  have no effect on the macroeconomy.
B)  have no effect on aggregate supply.
C)  have no effect on aggregate demand.
D)  All of these are true.

Question 13

The effect of a shift in the aggregate demand curve due to an increase in consumer confidence will be:

Accepted Answer

A)  an increase in both prices and output in the short run.
B)  a decrease in prices only in the long run;output will remain the same.
C)  a decrease in both prices and output in the short run.
D)  an increase in output only in the long run;prices will remain the same.

Question 14

A temporary decrease in the price of oil would be considered a:

Accepted Answer

A)  short-run supply shock.
B)  long-run supply shock.
C)  demand shock.
D)  The changing price of oil would not affect any of these.

Question 15

When a nonprice change affects any of the four components of GDP:

Accepted Answer

A)  the aggregate demand curve will shift left or right.
B)  the economy will move up or down along the aggregate demand curve.
C)  the aggregate demand curve will remain unaffected.
D)  None of these is true.

Question 16

The aggregate supply curve is:

Accepted Answer

A)  the relationship between the overall price level and total production by firms.
B)  downward-sloping.
C)  the sum total of the production of all the firms in the economy for every given price level.
D)  All of these are true.

Question 17

There is a negative relationship between the price level and which components of GDP?

Accepted Answer

A)  C,I,and G
B)  I,G,and NX
C)  C,G,and NX
D)  C,I,and NX

Question 18

An economy in which output has decreased and prices have increased would suggest that there has been a:

Accepted Answer

A)  positive supply side shock.
B)  negative supply side shock.
C)  positive demand side shock.
D)  negative demand side shock.

Question 19

In the macroeconomic model of aggregate supply and aggregate demand,quantity is:

Accepted Answer

A)  represented by GDP.
B)  the measure of the value of all goods and services produced by the economy.
C)  a measure of total output.
D)  All of these are true.

Question 20

If the government does not react to a recession:

Accepted Answer

A)  the economy will remain out of its long-run equilibrium indefinitely.
B)  the economy will recover,but much more slowly.
C)  voters and consumers are likely to be happy with less government interference.
D)  None of these is true.

Exam 28: Aggregate Demand and Aggregate Supply

When a nonprice change affects any of the four components of GDP:

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In the long run,changes in prices of goods and services paid by consumers:

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In macroeconomics,the long run refers to:

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Increases in the overall price level:

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In the macroeconomy,demand-side shifts change:

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The long-run aggregate supply curve represents:

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When the U.S.price level increases,we would expect:

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The introduction of the Internet over the last 20 years has caused:

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Which of the following would likely cause aggregate demand to shift to the left?

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The effect of a shift in the aggregate demand curve due to an increase in consumer confidence will be:

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In the macroeconomic model of aggregate supply and aggregate demand,quantity is:

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There is a negative relationship between the price level and which components of GDP?

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Firms are willing to change the aggregate quantity of output supplied based on price:

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If a change in the U.S.price level caused U.S.imports to increase,it must be true that the price level:

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An economy in which output has decreased and prices have increased would suggest that there has been a:

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A temporary decrease in the price of oil would be considered a:

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In general,changes in the price level will change:

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If the government does not react to a recession:

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The aggregate supply curve is:

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In the short run,the aggregate supply curve:

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