Question 1

Which of the following is not a determinant of the long-run level of real GDP?

Accepted Answer

A)   the price level
B)   the supply of labor
C)   available natural resources
D)   available technologyE) A) and D)
F) B) and C)

Question 2

Which of the following would cause prices and real GDP to rise in the short run?

Accepted Answer

A)   an increase in the expected price level
B)   an increase in the money supply
C)   a decrease in the capital stock
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 3

Which of the following would raise the price level in both the short and long run?

Accepted Answer

A)   an increase in taxes
B)   an increase in government expenditures
C)   a decrease in the minimum wage
D)   an increase in the capital stockE) C) and D)
F) A) and B)

Question 4

When the price level falls

Accepted Answer

A)   households want to lend less.
B)   the interest rate rises.
C)   firms want to spend less on investment goods.
D)   None of the above are correct.E) C) and D)
F) B) and D)

Question 5

Figure 15-2.
 
-Refer to Pessimism. How is the new long-run equilibrium different from the original one?

Accepted Answer

A)   both price and real GDP are higher.
B)   both price and real GDP are lower.
C)   the price level is the same and GDP is lower.
D)   the price level is lower and real GDP is the same.E) All of the above
F) None of the above

Question 6

Wages tend to be sticky

Accepted Answer

A)   because of contracts, social norms, and notions of fairness.
B)   because of contracts, but not social norms or notions of fairness.
C)   because of social norms and notions of fairness, but not contracts.
D)   None of the above are correct.E) A) and B)
F) B) and D)

Question 7

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)   5 percent, 1 percent
B)   3 percent, 5 percent
C)   -1 percent, 3 percent
D)   -2 percent, 4 percentE) B) and D)
F) B) and C)

Question 8

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Accepted Answer

A) True 
 B)False

Question 9

Other things the same, a decrease in the price level makes the dollars people hold worth

Accepted Answer

A)   more, so they can buy more.
B)   more, so they can buy less.
C)   less, so they can buy more.
D)   less, so they can buy less.E) A) and B)
F) C) and D)

Question 10

During World War II, the economy's production increased about

Accepted Answer

A)   25 percent and prices rose about 5 percent.
B)   50 percent and prices rose about 10 percent.
C)   75 percent and prices rose about 15 percent.
D)   100 percent and prices rose about 20 percent.E) C) and D)
F) A) and C)

Question 11

Other things the same, as the price level falls, which of the following increases?

Accepted Answer

A)   lending and investment spending
B)   lending, but not investment spending
C)   investment spending, but not lending
D)   neither investment spending nor lendingE) A) and D)
F) A) and C)

Question 12

During recessions

Accepted Answer

A)   sales and profits fall.
B)   sales and profits rise.
C)   sales rise, profits fall.
D)   profits fall, sales rise.E) A) and B)
F) All of the above

Question 13

Other things the same, if the capital stock increases, then in the long run

Accepted Answer

A)   both output and prices are higher.
B)   output is higher and prices are lower.
C)   output is lower and prices are higher.
D)   both output and prices are lower.E) A) and C)
F) None of the above

Question 14

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   technology improves.
B)   the price level decreases.
C)   the money supply increases.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 15

When the price level falls, people want to

Accepted Answer

A)   hold more money and the quantity of aggregate goods and services demanded increases.
B)   hold more money and the quantity of aggregate goods and services demanded decreases.
C)   hold less money and the quantity of aggregate goods and services demanded increases.
D)   hold less money and the quantity of aggregate goods and services demanded decreases.E) A) and B)
F) A) and C)

Question 16

An increase in the price level and a reduction in output would result from

Accepted Answer

A)   a fall in stock prices.
B)   natural disasters such as hurricanes, floods, and droughts.
C)   declining government expenditures.
D)   tax rebates.E) C) and D)
F) A) and B)

Question 17

The initial impact of the repeal of an investment tax credit is to shift

Accepted Answer

A)   aggregate demand right.
B)   aggregate demand left.
C)   aggregate supply right.
D)   aggregate supply left.E) A) and B)
F) B) and D)

Question 18

Real and nominal variables are highly intertwined, and changes in the money supply change real GDP. Most economists would agree that this statement accurately describes

Accepted Answer

A)   both the short run and the long run.
B)   the short run, but not the long run.
C)   the long run, but not the short run.
D)   neither the long run nor the short run.E) B) and C)
F) A) and D)

Question 19

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption, investm...

Question 20

If the government provides an investment tax credit and increases income taxes,

Accepted Answer

A)   real GDP rises, and the price level could rise, fall, or stay the same.
B)   real GDP falls, and the price level could rise, fall, or stay the same.
C)   the price level rises and real GDP could rise, fall or stay the same
D)   None of the above are necessarily correct.E) A) and B)
F) A) and D)

Exam 15: Aggregate Demand and Aggregate Supply

The initial impact of the repeal of an investment tax credit is to shift

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Figure 15-2. -Refer to Pessimism. How is the new long-run equilibrium different from the original one?

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When the price level falls, people want to

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When the price level falls

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During World War II, the economy's production increased about

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Other things the same, as the price level falls, which of the following increases?

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Which of the following is not a determinant of the long-run level of real GDP?

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If the government provides an investment tax credit and increases income taxes,

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Which of the following would raise the price level in both the short and long run?

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During recessions

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Wages tend to be sticky

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Other things the same, a decrease in the price level makes the dollars people hold worth

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Make a list of expenditures whose sum equals GDP.

Correct Answerverifiedconsumption, investm...View AnswerShow Answer

Real and nominal variables are highly intertwined, and changes in the money supply change real GDP. Most economists would agree that this statement accurately describes

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Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

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Which of the following would cause prices and real GDP to rise in the short run?

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Other things the same, if the capital stock increases, then in the long run

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An increase in the price level and a reduction in output would result from

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The long-run aggregate supply curve shifts right if

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Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?

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consumption, investm...
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