Question 1

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has ________________,making Mexican goods __________ expensive for Americans.

Accepted Answer

A)   appreciated;less
B)   appreciated;more
C)   depreciated;less
D)   depreciated;more

Question 2

Exhibit 8-1 
-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If the price of oil rises,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 3

The expectation of lower future prices is a

Accepted Answer

A)   rightward shifter of the AD curve.
B)   leftward shifter of the AD curve.
C)   reason for moving up along a given AD curve.
D)   reason for moving down along a given AD curve.

Question 4

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 5

As interest rates drop,households tend to borrow more and businesses tend to borrow less.

Accepted Answer

A) True 
 B)False

Question 6

The aggregate demand (AD) curve shifts to the right.This is a result of

Accepted Answer

A)   total expenditures increasing at a given price level.
B)   total expenditures decreasing at a given price level.
C)   the real balance effect.
D)   the interest rate effect
E)   b and c

Question 7

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 8

Exhibit 8-1 
-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If foreign real national income rises,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
E)   A change in foreign real national income would have no impact on the domestic economy.

Question 9

A change in labor productivity affects __________ and a change in the exchange rate affects __________.

Accepted Answer

A)   SRAS;SRAS
B)   AD;AD
C)   SRAS;AD
D)   AD;SRAS
E)   none of the above

Question 10

Velocity is the average number of times a dollar is spent to buy

Accepted Answer

A)   final goods and services in a year.
B)   final and intermediate goods and services in a year.
C)   final goods,but not services,in a year.
D)   services in a year.

Question 11

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A)   If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts leftward.
B)   If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts rightward.
C)   If consumption rises,total expenditures on goods and services rises,and the AD curve shifts rightward.
D)   If consumption rises,total expenditures on goods and services rises,and the quantity demanded of Real GDP rises.
E)   b and c

Question 12

Which of the following would cause a rightward shift in the AD curve?

Accepted Answer

A)   an increase in the price level
B)   a decrease in the price level
C)   an increase in imports
D)   a decrease in the quantity of money available in the economy
E)   an increase in government purchases of goods and services

Question 13

If consumption 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

Question 14

The real balance effect describes the change in

Accepted Answer

A)   checking account balances that occur when the money supply increases or decreases.
B)   the value of physical assets (e.g. ,houses) that results from a change in the price level.
C)   the output producers produce as they attempt to balance their production in response to changes in consumers' demand.
D)   the value of cash holdings that results from a change in the price level.
E)   the balance of cash holdings that results from a change in the amount of income earned.

Question 15

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 16

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

Question 17

A subprime loan is a term for a loan that poses less risk than the average loan.

Accepted Answer

A) True 
 B)False

Question 18

A decrease in the price of electricity will cause

Accepted Answer

A)   a movement down the SRAS curve.
B)   a movement up the SRAS curve.
C)   a leftward shift in the SRAS curve.
D)   a rightward shift in the SRAS curve.
E)   no change regarding the SRAS curve.

Question 19

Suppose the following: (1) the wage rate falls, (2) business taxes decline, (3) any change in SRAS is greater than any change in AD.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
E)   none of the above

Question 20

The interest rate effect occurs because a change in interest rates causes a change in the price level.

Accepted Answer

A) True 
 B)False

Exam 8: Aggregate Demand and Aggregate Supply

The real balance effect describes the change in

Correct AnswerverifiedShow Answer

Which of the following statements represents a correct and sequentially accurate economic explanation?

Correct AnswerverifiedShow Answer

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

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

A change in labor productivity affects __________ and a change in the exchange rate affects __________.

Correct AnswerverifiedShow Answer

A decrease in the price of electricity will cause

Correct AnswerverifiedShow Answer

A subprime loan is a term for a loan that poses less risk than the average loan.

Correct AnswerverifiedShow Answer

The aggregate demand (AD) curve shifts to the right.This is a result of

Correct AnswerverifiedShow Answer

As interest rates drop,households tend to borrow more and businesses tend to borrow less.

Correct AnswerverifiedShow Answer

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has ________________,making Mexican goods __________ expensive for Americans.

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

Exhibit 8-1 -Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If foreign real national income rises,at which point is the economy most likely to end up in the short run?

Correct AnswerverifiedShow Answer

Exhibit 8-1 -Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If the price of oil rises,at which point is the economy most likely to end up in the short run?

Correct AnswerverifiedShow Answer

If consumption increases,

Correct AnswerverifiedShow Answer

The expectation of lower future prices is a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The interest rate effect occurs because a change in interest rates causes a change in the price level.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would cause a rightward shift in the AD curve?

Correct AnswerverifiedShow Answer

Velocity is the average number of times a dollar is spent to buy

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A change in labor productivity affects and a change in the exchange rate affects .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has ______,making Mexican goods expensive for Americans.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified