Question 1
1 / 1 pts
According to classical macroeconomic theory, changes in the money supply change real GDP but not the
price level.
True
False
Question 2
1 / 1 pts
A change in the money supply changes only nominal variables in the long run.
True
False
Question 3
1 / 1 pts
A decrease in the money supply causes the interest rate to rise so that investment falls.
True
False
Question 4
1 / 1 pts
Aggregate demand shifts to the left if the money supply increases.
True
False
Question 5
1 / 1 pts
All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of
output supplied increases when the actual price level exceeds the expected price level.
True
False
Question 6
1 / 1 pts
An increase in the money supply causes output to rise in the long run.
True
False
Question 7
1 / 1 pts
An increase in the money supply causes the interest rate to fall, investment spending to rise, and
aggregate demand to shift right.
True
False
Question 8
1 / 1 pts
Because economists understand what things change GDP, they can predict recessions with a fair amount
of accuracy.
True
False
Question 9
1 / 1 pts
Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in
aggregate supply.
True
False
Question 10
1 / 1 pts
If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in
the short run.
True
False
Question 11
1 / 1 pts
If aggregate demand shifts right, then eventually price level expectations rise. The increase in price level
expectations causes the short-run aggregate-supply curve to shift to the left.
True
False
Question 12
1 / 1 pts
Increased optimism about the future leads to rising prices and falling unemployment in the short run.
True
False
Question 13
1 / 1 pts
Increased output and prices in the United States in the early 1940s were mostly the result of increased
government expenditures.
True
False
Question 14
1 / 1 pts
John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease
unemployment caused by recessions.
True
False
Question 15
1 / 1 pts
Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.
True
False
Question 16
1 / 1 pts
Most economist agree that money changes real GDP in both the short and long run.
True
False
Question 17
1 / 1 pts
Most macroeconomic variables that measure some type of income, spending, or production fluctuate
closely together.
True
False
Question 18
1 / 1 pts
Stagflation results from continued decreases in aggregate demand.
True
False
Question 19
1 / 1 pts
Technological progress shifts the long-run aggregate supply curve to the right.
True
False
Question 20
1 / 1 pts
The effect of a change in the value of the dollar in the foreign exchange market due to a change in the
price level helps explain the slope of aggregate demand, but does not shift it. The effects of a change in
the value of the dollar in the foreign exchange market due to speculation is shown by shifting the
aggregate demand curve.
True
False
Question 21
1 / 1 pts
The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the
same as the explanations for the slopes of demand and supply curves for specific goods and services.
True
False
Question 22
1 / 1 pts
The only way to rationalize an upward slope for the short-run aggregate-supply curve is to argue that
wages are sticky in the short run.
True
False
Question 23
1 / 1 pts
The recessions associated with the business cycle come at regular intervals.
True
False
Question 24
1 / 1 pts
We can explain continued increases in both output and the price level by supposing that only aggregate
demand shifted right over time.
True
False
IncorrectQuestion 25
0 / 1 pts
When output rises, unemployment falls.
True
False
IncorrectQuestion 26
0 / 1 pts
According to the misperceptions theory of short-run aggregate supply, if a firm thought that inflation was
going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price
of what it produce had
decreased, so it would decrease production.
Incorrect
increased, so it would increase production.
decreased, so it would increase production.
increased, so it would decrease production.
Question 27
1 / 1 pts
Aggregate demand includes
neither the quantity of goods and services the government, households, nor firms want to buy nor the
quantity of goods and services customers abroad want to buy.
the quantity of goods and services households and firms want to buy, but not the quantity of goods and
services the government wants to buy.
the quantity of goods and service the government wants to buy, but not the quantity of goods and services
households, firms, or customers abroad want to buy.
the quantity of goods and services the government, households, firms, and customers abroad want to buy.
Correct
Question 28
1 / 1 pts
Economic expansions in Europe and China would cause the U.S. price level
to rise and real GDP to fall.
and real GDP to rise.
Correct
and real GDP to fall.
to fall and real GDP to rise.
Question 29
1 / 1 pts
Figure 33-1
Refer to Figure 33-1. The natural level of output occurs at
Y3.
both Y1 and Y3.
Y2.
Correct
Y1.
Question 30
1 / 1 pts
Figure 33-2
Refer to Figure 33-2. If the economy starts at O, a decrease in the money supply moves the economy
back to O in the long run.
to Q in the long run.
Correct
to R in the long run.
to P in the long run.
Question 31
1 / 1 pts
Figure 33-2
Refer to Figure 33-2. If the economy starts at O and moves to R in the short run, the economy
moves to Q in the long run.
Correct
moves to O in the long run.
moves to P in the long run.
stays at R in the long run.
Question 32
1 / 1 pts
Figure 33-3
Refer to Figure 33-3. The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2
causes the economy to experience stagflation.
could be caused by an outbreak of war in the Middle East.
causes the economy to experience an increase in the unemployment rate.
could be caused by a decrease in the expected price level.
Correct
IncorrectQuestion 33
0 / 1 pts
Figure 33-5
Refer to Figure 33-5. Suppose the economy starts at Point R. If there is a reduction in aggregate demand,
then in the long run the economy moves to
Point Q.
Incorrect
Point S.
Point P.
Point O.
IncorrectQuestion 34
0 / 1 pts
Figure 33-5
Refer to Figure 33-5. Suppose the economy starts at Point R. If aggregate demand increases from AD 2 to
AD3, then in the short run the economy moves to
Point P.
Point Q.
Incorrect
Point S.
Point O.
Question 35
1 / 1 pts
Figure 33-7
Refer to Figure 33-7. If the economy starts at point O, a short-run fall in output would be consistent with
a movement to point
O.
P.
R.
Correct
Q.
Question 36
1 / 1 pts
In 2009, Congress passed legislation providing states with funds to build roads and bridges. It also
instituted tax cuts. Which of these shifts aggregate demand right?
Only the increased funding for states
Both the increased funding for states and the tax cuts
Correct
Neither the increased funding for states nor the tax cuts
Only the tax cuts
Question 37
1 / 1 pts
"Money is a veil" best describes
the historical view of the economy.
economy in the short run but not the long run.
the general view of the economy.
classical view of the economy.
Correct
Question 38
1 / 1 pts
Other things the same, if the U.S. price level falls, then U.S. residents want to buy
more foreign bonds. The real exchange rate rises.
fewer foreign bonds. The real exchange rate rises.
more foreign bonds. The real exchange rate falls.
Correct
fewer foreign bonds. The real exchange rate falls.
Question 39
1 / 1 pts
Policymakers who control monetary and fiscal policy and want to offset the effects on output of an
economic contraction caused by a shift in aggregate supply could use policy to shift
aggregate demand to the right.
Correct
aggregate demand to the left.
aggregate supply to the right.
aggregate supply to the left.
Question 40
1 / 1 pts
Scenario 33-2
Imagine that in the current year the economy is in long-run
equilibrium. Then the federal government reduces its purchases of goods by 50%.
Refer to Scenario 33-2. Which curve shifts and in which direction?
Aggregate demand shifts left.
Correct
Aggregate demand shifts right.
Aggregate supply shifts right.
Aggregate supply shifts left.
Question 41
1 / 1 pts
Scenario 33-2
Imagine that in the current year the economy is in long-run
equilibrium. Then the federal government reduces its purchases of goods by 50%.
Refer to Scenario 33-2. How is the new long-run equilibrium different from the original one?
The price level is the same and real GDP is lower.
The price level is lower and real GDP is the same.
Correct
The price level and real GDP are lower.
The price level and real GDP are higher.
IncorrectQuestion 42
0 / 1 pts
Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that privately
issued U.S. bonds were more likely to be defaulted on. U.S. net exports would
fall which by itself would decrease aggregate demand.
rise which by itself would decrease aggregate demand.
Incorrect
rise which by itself would increase aggregate demand.
fall which by itself would increase aggregate demand.
Question 43
1 / 1 pts
Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually
the increase in aggregate demand causes price expectations to
rise. This rise in price expectations shifts the short-run aggregate supply curve to the right.
rise. This rise in price expectations shifts the short-run aggregate supply curve to the left.
Correct
fall. This fall in price expectations shifts the short-run aggregate supply curve to the right.
fall. This fall in price expectations shifts the short-run aggregate supply curve to the left.
IncorrectQuestion 44
0 / 1 pts
Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they
consume have fallen by the same percentage. They may infer that the reward to working is temporarily
high and so supply a larger quantity of labor.
low and so supply a smaller quantity of labor.
low and so supply a larger quantity of labor.
Incorrect
high and so supply a smaller quantity of labor.
IncorrectQuestion 45
0 / 1 pts
The effect of an increase in the price level on the aggregate-demand curve is represented by a
shift to the left of the aggregate-demand curve.
Incorrect
shift to the right of the aggregate-demand curve.
movement to the right along a given aggregate-demand curve.
movement to the left along a given aggregate-demand curve.
Question 46
1 / 1 pts
The price level rises in the short run if
aggregate demand or aggregate supply shifts right.
aggregate demand shifts right or aggregate supply shifts left.
Correct
aggregate demand shifts left or aggregate supply shifts right.
aggregate demand or aggregate supply shifts left.
Question 47
1 / 1 pts
The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for
shifts in the aggregate-demand curve.
the slope of short-run aggregate supply.
the slope of the aggregate-demand curve.
Correct
the slope of long-run aggregate supply.
Question 48
1 / 1 pts
Which of the following is most commonly used to monitor short-run changes in economic activity?
Real GDP
Correct
Interest rates
Value of the U.S. dollar in the foreign exchange market
The inflation rate
Question 49
1 / 1 pts
Which of the following is not a determinant of the long-run level of real GDP?
The price level
Correct
Available technology
Available stock of human capital
The amount of capital used by firms
IncorrectQuestion 50
0 / 1 pts
Which of the following would cause stagflation?
Aggregate demand shifts right.
Incorrect
Aggregate supply shifts right.
Aggregate demand shifts left.
Aggregate supply shifts left.
