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169. Refer to Exhibit 8-3. A movement from point A to point B on AD1 would have been the result of
a.
a decrease in the price level.
b.
an increase in the price level.
c.
an increase in income taxes.
d.
a decrease in income taxes.
170. Refer to Exhibit 8-3. A movement from point B to point A on AD1 would have been the result of
a.
a decrease in the price level.
b.
an increase in the price level.
c.
an increase in foreign real national income.
d.
a decrease in foreign real national income.
171. Refer to Exhibit 8-3. A shift in aggregate demand from AD1 to AD2 could have been the result of
a.
a decrease in the price level.
b.
an increase in the price level.
c.
an increase in foreign real national income.
d.
a decrease in foreign real national income.
172. Refer to Exhibit 8-3. A shift in aggregate demand from AD1 to AD2 could have been the result of
a.
a decrease in the price level.
b.
an increase in the price level.
c.
a decrease in interest rates (which was not prompted by a change in the price level).
d.
an increase in interest rates (which was not prompted by a change in the price level).
173. Refer to Exhibit 8-3. A shift in aggregate demand from AD2 to AD1 could have been the result of
a.
a decrease in the price level.
b.
an increase in the price level.
c.
businesses become more optimistic about future sales.
d.
businesses become more pessimistic about future sales.
174. Refer to Exhibit 8-3. Which of the following could not have caused a shift in aggregate demand from AD1 to AD2?
a.
a change in the price level
b.
an increase in wealth
c.
an increase in foreign real national income
d.
a decrease in personal income taxes
e.
a decrease in business taxes
Exhibit 8-4
175. Refer to Exhibit 8-4. Which of the following could not have caused a shift in aggregate supply from SRAS1 to
SRAS2?
a.
an increase in productivity
b.
a beneficial supply shock
c.
a decrease in the price of a nonlabor input
d.
a change in the price level
e.
a decrease in wage rates
176. Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS2 to SRAS1 could have been the result of
a.
a decrease in the price level.
b.
an increase in the price level.
c.
an increase in wage rates.
d.
a decrease in wage rates.
177. Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS1 to SRAS2 could have been the result of
a.
a decrease in the price level.
b.
an increase in the price level.
c.
an adverse supply shock.
d.
a beneficial supply shock.
178. Refer to Exhibit 8-4. A movement from point A to point B on SRAS1 could have been the result of
a.
a decrease in the price level.
b.
an increase in the price level.
c.
an adverse supply shock.
d.
a beneficial supply shock.
179. When foreign real national income rises, domestic Real GDP falls, ceteris paribus.
a.
True
b.
False
180. The short-run aggregate supply curve slopes upward as a result of the real balance effect, the interest rate effect, and
the international trade effect.
a.
True
b.
False
181. Unusually good weather that improves crop production and a major oil discovery are both examples of a beneficial
supply shock.
a.
True
b.
False
182. The level of Real GDP that the economy produces in long-run equilibrium is Natural Real GDP.
a.
True
b.
False
183. Some of the factors that can shift the short-run aggregate supply curve can also cause a shift in the long-run
aggregate supply curve.
a.
True
b.
False
184. When wage rates rise the short-run aggregate supply curve shifts to the right.
a.
True
b.
False
185. As interest rates drop, households tend to borrow more and businesses tend to borrow less.
a.
True
b.
False
186. Only a change in the price level can cause a movement from one point to another point along a given aggregate
demand curve.
a.
True
b.
False
187. A change in the money supply can affect one or more of the components of spending and therefore shift the short-run
aggregate supply (SRAS) curve.
a.
True
b.
False
188. The level of Real GDP and the price level always have a direct relationship.
a.
True
b.
False
189. An adverse supply shock results in an increase in the price level and an increase in Real GDP.
a.
True
b.
False
190. If businesses are optimistic about future sales, the short-run aggregate supply curve will shift leftward.
a.
True
b.
False
191. As the dollar depreciates, foreign goods become more expensive for Americans to purchase.
a.
True
b.
False
192. When the dollar appreciates, U.S. net exports fall and aggregate demand decreases.
a.
True
b.
False
193. The interest rate effect, the real balance effect, and the international trade effect all begin with a change in the price
level.
a.
True
b.
False
194. The interest rate effect occurs because a change in interest rates causes a change in the price level.
a.
True
b.
False
195. The aggregate demand (AD) curve is the graphical representation of production in the short run.
a.
True
b.
False
196. If velocity is rising, an increase in one spending component can occur without requiring other spending components
to decline.
a.
True
b.
False
197. In short-run equilibrium, the quantities supplied and demanded of Real GDP can be less than or greater than Natural
Real GDP.
a.
True
b.
False
198. Assume that the economy is currently in short-run equilibrium, then the U.S. dollar appreciates in the foreign
exchange market. Describe the correct sequence of events that happens as the economy adjusts to a new short-run
equilibrium.
199. List and describe the three effects that help to explain why the aggregate demand (AD) curve slopes downward.
200. Explain why the short-run aggregate supply curve (SRAS) is upward sloping, while the long-run aggregate supply
(LRAS) curve is a vertical line.
201. Assume that the economy is currently in short-run equilibrium, then personal income taxes decline. Describe the
correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the
impact would be on the price level and Real GDP).
202. Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college. Support
your answer with an appropriate example.
203. Assume that the economy is currently in short-run equilibrium, then the dollar appreciates in the foreign exchange
market. Describe the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be
sure to state what the impact would be on the price level and Real GDP).
204. Suppose that a worker has the option of being paid in euros or dollars. It would be to the workers advantage if his
employer pays him in ____________ rather than ______________ if the worker believes that the value of the dollar is
about to ____________ relative to the value of the euro.
a.
euros; dollars; fall
b.
dollars; euros; rise
c.
euros; dollars; rise
d.
dollars; euros; fall
e.
a and b
