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a.
interest rates fall and so aggregate demand shifts right.
b.
interest rates fall and so aggregate demand shifts left.
c.
interest rates rise and so aggregate demand shifts right.
d.
interest rates rise and so aggregate demand shifts left.
108. An increase in the money supply
a.
and an investment tax credit both cause aggregate demand to shift right.
b.
and an investment tax credit both cause aggregate demand to shift left.
c.
causes aggregate demand to shift right, while an investment tax credit causes aggregate demand to shift left.
d.
causes aggregate demand to shift left, while an investment tax credit causes aggregate demand to shift right.
109. Which of the following would cause investment spending to decrease and aggregate demand to shift left?
a.
a decrease in the money supply and an investment tax credit.
b.
the repeal of an investment tax credit and an increase in the money supply.
c.
a decrease in the money supply and the repeal of an investment tax credit.
d.
an investment tax credit and an increase in the money supply.
110. The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new
investment tax credit. Which of these policies shift aggregate demand to the right?
a.
both the money supply increase and the investment tax credit
b.
the money supply increase but not the investment tax credit
c.
the investment tax credit but not the money supply increase
d.
neither the investment tax credit nor the money supply increase
111. Which of the following shifts aggregate demand to the right?
a.
the Federal Reserve buys bonds.
b.
a decrease in net exports due to something other than a change in domestic prices.
c.
an increase in household saving.
d.
All of the above are correct.
112. Which of the following shifts aggregate demand to the right?
a.
a decrease in the money supply
b.
increases in the profitability of capital due perhaps to technological progress.
c.
the repeal of an investment tax credit
d.
a decrease in the price level
113. Which of the following shifts aggregate demand to the left?
a.
an increase in the price level.
b.
households decide to save a larger fraction of their income.
c.
an increase in net exports.
d.
Congress passes a new investment tax credit.
114. Which of the following shifts aggregate demand to the right?
a.
Congress reduces purchases of new weapons systems.
b.
The Fed buys bonds in the open market.
c.
The price level falls.
d.
Net exports fall.
115. Which of the following shifts aggregate demand to the left?
a.
The price level rises.
b.
Interest rates fall.
c.
The dollar depreciates for some reason other than a change in the price level.
d.
Stock prices fall for some reason other than a change in the price level.
116. Aggregate demand shifts right when the government
a.
decreases taxes.
b.
cuts military expenditures.
c.
repeals an investment tax credit.
d.
None of the above is correct.
117. 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?
a.
only the increased funding for states
b.
only the tax cuts
c.
both the increased funding for states and the tax cuts
d.
neither the increased funding for states nor the tax cuts
118. Which of the following shifts aggregate demand to the right?
a.
both an investment tax credit and a decrease in income tax rates
b.
an investment tax credit but not a decrease in income tax rates
c.
a decrease in income tax rates but not an investment tax credit
d.
neither an investment tax credit nor a decrease in income tax rates
119. Aggregate demand shifts right when the Federal Reserve
a.
raises personal income taxes.
b.
increases the money supply.
c.
institutes an investment tax credit.
d.
All of the above are correct.
120. Which of the following would both shift aggregate demand right?
a.
the price level decreases and government expenditures increase.
b.
the price level decreases and the government repeals an investment tax credit.
c.
taxes decrease and government expenditures increase.
d.
None of the above are correct.
121. Which of the following both shift aggregate demand right?
a.
net exports rise for some reason other than a price change and government purchases rise.
b.
net exports rise for some reason other than a price change and taxes increase.
c.
net exports fall for some reason other than a price change and government purchases fall.
d.
net exports fall for some reason other than a price change and taxes fall.
122. Aggregate demand shifts right if
a.
government purchases increase and shifts left if stock prices rise.
b.
government purchases increase and shifts left if stock prices fall.
c.
government purchases decrease and shifts left if stock prices rise.
d.
government purchases decrease and shifts left is stock prices fall.
123. Aggregate demand shifts left if
a.
government purchases increase and shifts left if stock prices rise.
b.
government purchases increase and shifts left if stock prices fall.
c.
government purchases decrease and shifts left if stock prices rise.
d.
government purchases decrease and shifts left is stock prices fall.
124. Aggregate demand shifts right if at a given price level
a.
taxes rise and shifts left if the money supply increases.
b.
taxes rise and shifts right if the money supply increases.
c.
taxes fall and shifts left if the money supply increases.
d.
taxes fall and shifts right if the money supply increases.
125. Which of the following lists includes only changes that shift aggregate demand to the right?
a.
repeal of an investment tax credit, an increase in the money supply
b.
repeal of an investment tax credit, a decrease in the money supply
c.
passing of an investment tax credit, an increase in the money supply
d.
passing of an investment tax credit, a decrease in the money supply
126. Which of the following shifts aggregate demand right?
a.
both a decrease in the price level and the implementation of an investment tax credit
b.
a decrease in the price level but not the implementation of an investment tax credit
c.
the implementation of an investment tax credit but not a decrease in the price level
d.
neither a decrease in the price level nor the implementation of an investment tax credit
127. If countries that imported goods and services from the United States went into recession, we would expect that U.S.
net exports would
a.
rise, making aggregate demand shift right.
b.
rise, making aggregate demand shift left.
c.
fall, making aggregate demand shift right.
d.
fall, making aggregate demand shift left.
128. In which case can we be sure aggregate demand shifts left overall?
a.
people want to save more for retirement and the Fed increases the money supply.
b.
people want to save more for retirement and the Fed decreases the money supply.
c.
people want to save less for retirement and the Fed increases the money supply.
d.
people want to save less for retirement and the Fed decreases the money supply.
129. At the end of World War II many European countries were rebuilding and so were eager to buy capital goods and
had rising incomes. We would expect that the rebuilding increased aggregate demand in
a.
both the United States and Europe.
b.
the United States but not Europe.
c.
Europe, but not the United States.
d.
neither the United States, nor Europe.
130. If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports
a.
increase which shifts aggregate demand right.
b.
increase which shifts aggregate demand left.
c.
decrease which shifts aggregate demand right.
d.
decrease which shifts aggregate demand left.
131. If the dollar depreciates because of speculation or government policy, U.S.
a.
aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in
real GDP.
b.
aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in
real GDP.
c.
aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease
in real GDP.
d.
aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in
real GDP.
132. Other things the same, which of the following is correct?
a.
A decrease in the price level causes the dollar to appreciate. Aggregate demand shifts right.
b.
A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts right.
c.
If speculators lose confidence in the American economy, the dollar appreciates. Aggregate demand shifts
right.
d.
If speculators lose confidence in the American economy, the dollar depreciates. Aggregate demand shifts
right.
133. At a given price level, an increase in which of the following shifts aggregate demand to the right?
a.
consumption
b.
investment
c.
government expenditures
d.
All of the above are correct.
134. Which of the following is correct?
a.
An increase in the money supply causes the interest rate to decrease so that aggregate demand shifts left.
b.
An increase in stock prices reduces consumption spending so that aggregate demand shifts left.
c.
An increase in the price level causes the exchange rate to rise so that aggregate demand shifts left.
d.
A recession in other countries reduces U.S. net exports so that U.S. aggregate demand shifts left.
135. If speculators lost confidence in foreign economies and so wanted to buy more U.S. bonds
a.
the dollar would appreciate which would cause aggregate demand to shift right.
b.
the dollar would appreciate which would cause aggregate demand to shift left.
c.
the dollar would depreciate which would cause aggregate demand to shift right.
d.
the dollar would depreciate which would cause aggregate demand to shift left.
136. If speculators gained greater confidence in foreign economies so that they wanted to buy more assets of foreign
countries and fewer U.S. bonds,
a.
the dollar would appreciate which would cause aggregate demand to shift right.
b.
the dollar would appreciate which would cause aggregate demand to shift left.
c.
the dollar would depreciate which would cause aggregate demand to shift right.
d.
the dollar would depreciate which would cause aggregate demand to shift left.
137. If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then
a.
U.S. goods become more expensive relative to foreign goods so aggregate demand shifts right.
b.
U.S. goods become less expensive relative to foreign goods so aggregate demand shifts right.
c.
U.S. goods become more expensive relative to foreign goods so aggregate demand shifts left.
d.
U.S. goods become less expensive relative to foreign goods so aggregate demand shifts left.
138. If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign currencies of other countries,
but foreigners do not desire to increase their holdings of U.S. dollars, then U.S. net exports would
a.
rise and aggregate demand would shift left.
b.
rise and aggregate demand would shift right.
c.
fall and aggregate demand would shift left.
d.
fall and aggregate demand would shift right.
139. The aggregate demand curve shifts left if either
a.
speculators gain confidence in U.S. assets or foreign countries enter into recession.
b.
speculators gain confidence in U.S. assets or recessions in foreign countries end.
c.
speculators lose confidence in U.S. assets or foreign countries enter into recession.
d.
speculators lose confidence in U.S. assets or recessions in foreign countries end.
Political Instability Abroad
Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that
they desire to purchase more U.S assets.
140. Refer to Political Instability Abroad. What would happen to the dollar?
a.
It would appreciate in foreign exchange markets making U.S goods more expensive compared to foreign
goods.
b.
It would appreciate in foreign exchange markets making U.S. goods less expensive compared to foreign
goods.
c.
It would depreciate in foreign exchange markets making U.S. goods more expensive compared to foreign
goods.
d.
It would depreciate in foreign exchange markets making U.S. goods less expensive compared to foreign
goods.
141. Refer to Political Instability Abroad. What would the change in the exchange rate make happen to U.S. net exports
and U.S. aggregate demand?
a.
Net exports would rise which by itself would increase U.S. aggregate demand.
b.
Net exports would rise which by itself would decrease U.S. aggregate demand.
c.
Net exports would fall which by itself would increase U.S. aggregate demand.
d.
Net exports would fall which by itself would decrease U.S. aggregate demand.
142. Refer to Political Instability Abroad. What would the change in the interest rate created by foreigners wanting to
buy more U.S. assets do to investment spending in the U.S.?
a.
make it rise which by itself would increase U.S. aggregate demand.
b.
make it rise which by itself would decrease U.S. aggregate demand.
c.
make it fall which by itself would increase U.S. aggregate demand.
d.
make it fall which by itself would decrease U.S. aggregate demand.
U.S. Financial Crisis
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.
143. Refer to U.S. Financial Crisis. What would happen in the market for foreign-currency exchange?
a.
the supply of dollars would shift right and the exchange rate would rise.
b.
the supply of dollars would shift right and the exchange rate would fall.
c.
the supply of dollars would shift left and the exchange rate would rise.
d.
None of the above is correct.
144. Refer to U.S. Financial Crisis. U.S. net exports would
a.
rise which by itself would increase aggregate demand.
b.
rise which by itself would decrease aggregate demand.
c.
fall which by itself would increase aggregate demand.
d.
fall which by itself would decrease aggregate demand.
145. Other things the same, an increase in the price level induces less spending on
a.
investment and net exports.
b.
investment, but not net exports.
c.
net exports, but not investment.
d.
neither net exports nor investment.
146. Other things the same, an increase in the price level induces less spending on
a.
household consumption and investment.
b.
household consumption, but not investment.
c.
investment, but not household consumption.
d.
neither investment nor household consumption.
