Question 1

In macroeconomics,the long run is determined by:

Accepted Answer

A)  how long it takes for prices to adjust through the whole economy.
B)  how long it takes for firms to vary all input quantities.
C)  the longest contract length of a business.
D)  None of these is true.E) A) and C)
F) C) and D)

Question 2

In the long run,a year-long drought that destroys most of the summer's wheat crops causes:

Accepted Answer

A)  permanently higher prices.
B)  permanently lower output.
C)  permanently lower prices.
D)  None of these is true.E) A) and B)
F) None of the above

Question 3

Short-run decisions refer to the:

Accepted Answer

A)  hourly,daily,or weekly decisions that firms have to make.
B)  immediate decisions that firms have to make that affect production process,not level of output.
C)  immediate decisions that firms have to make that affect level of output,but not the production process.
D)  decisions a firm has to make immediately to prepare for either entering or exiting an industry.E) None of the above
F) C) and D)

Question 4

A rise in the overall price level means that:

Accepted Answer

A)  a given number of dollars won't buy as much in terms of real goods and services.
B)  dollar-denominated assets have lost their value.
C)  the cost of living has gone down.
D)  None of these is true.E) B) and C)
F) A) and D)

Question 5

The quantity measure in the aggregate demand relationship is the:

Accepted Answer

A)  total quantity of goods and services demanded in the economy.
B)  total quantity of goods and services supplied in the economy.
C)  market value of the total quantity of goods and services demanded in the economy.
D)  market value of the total quantity of goods and services supplied in the economy.E) A) and C)
F) A) and B)

Question 6

The aggregate supply curve shows the relationship between:

Accepted Answer

A)  the overall price level in the economy and total production by firms.
B)  the unemployment rate and total production by firms.
C)  the overall price level in the economy and the unemployment rate.
D)  the inflation rate and the overall price level in the economy.E) A) and D)
F) B) and D)

Question 7

The wealth effect:

Accepted Answer

A)  explains the downward-sloping aggregate demand curve.
B)  is the positive relationship between consumer spending and the overall price level.
C)  is not present when wages keep pace with inflation.
D)  All of these are true.E) All of the above
F) A) and B)

Question 8

Fluctuations around the long-run aggregate supply curve:

Accepted Answer

A)  are called the business cycle.
B)  are experienced as expansions,recessions,and recoveries.
C)  are normal for an economy.
D)  All of these are true.E) C) and D)
F) B) and D)

Question 9

When the U.S.price level decreases,we would expect:

Accepted Answer

A)  a movement down along the aggregate demand curve.
B)  a shift straight up of the aggregate demand curve.
C)  a shift to the right of the aggregate demand curve.
D)  None of these is true.E) A) and B)
F) A) and C)

Question 10

In the macroeconomic model of aggregate supply and aggregate demand,price is:

Accepted Answer

A)  the measure of the value of all goods and services produced by the economy.
B)  represented by GDP.
C)  calculated as a weighted average of the prices of all goods and services.
D)  None of these is true.E) B) and D)
F) A) and B)

Question 11

In general,it is easier to:

Accepted Answer

A)  adjust final prices rather than input prices.
B)  adjust input prices rather than final prices.
C)  change wage rates for employees than other input prices.
D)  change input prices than wage rates for employees.E) B) and D)
F) All of the above

Question 12

The aggregate supply and aggregate demand model is used to explain:

Accepted Answer

A)  how individual markets affect other markets.
B)  how entire markets operate,not just each individual seller within a market.
C)  the market price determined by all buyers and all sellers interacting in a market.
D)  None of these is true.E) A) and B)
F) A) and D)

Question 13

As the U.S.price level increases,expenditures by which of the following will remain unaffected?

Accepted Answer

A)  Consumers
B)  Businesses
C)  Government
D)  The rest of the worldE) A) and D)
F) C) and D)

Question 14

When the long-run aggregate supply curve shifts right,it represents:

Accepted Answer

A)  economic growth.
B)  pushing our economy beyond normal capacity.
C)  an unemployment rate of zero.
D)  negative inflation.E) B) and D)
F) None of the above

Question 15

When the economy is operating at a point where aggregate demand equals long-run aggregate supply,it must be true that:

Accepted Answer

A)  aggregate demand also equals short-run aggregate supply.
B)  the economy is in long-run equilibrium.
C)  prices and expected prices are the same.
D)  All of these are true.E) All of the above
F) A) and C)

Question 16

There is a general overall __________ relationship between the price level and ____________.

Accepted Answer

A)  negative;aggregate expenditures on GDP
B)  positive;aggregate expenditures from the government
C)  negative;nominal expenditures from the government
D)  positive;nominal expenditures from householdsE) B) and D)
F) B) and C)

Question 17

Which three macroeconomic variables together best describe the health of the economy?

Accepted Answer

A)  Output,GDP,and inflation
B)  Output,inflation,and prices
C)  GDP,unemployment,and employment
D)  Output,prices,and employmentE) A) and B)
F) A) and C)

Question 18

Economic growth is:

Accepted Answer

A)  an increase in our economy's potential output.
B)  represented by the long-run aggregate supply curve shifting to the right.
C)  a result of having more natural resources,land or capital.
D)  All of these are true.E) B) and C)
F) None of the above

Question 19

When the economy fluctuates around its long-run aggregate supply:

Accepted Answer

A)  it is called the business cycle.
B)  the economy is in a state of chaos.
C)  the value of currency becomes unstable.
D)  None of these is true.E) A) and D)
F) A) and C)

Question 20

The long run result of the government responding to a negative supply side shock with increased spending will be a:

Accepted Answer

A)  faster recovery,but it will cause even greater inflation.
B)  slower recovery,if they misjudge their own spending.
C)  faster recovery at a lower price level than allowing short-run aggregate supply to adjust on its own.
D)  slower recovery,but it will cause inflation to be lower than if they did nothing.E) A) and B)
F) All of the above

Exam 28: Aggregate Demand and Aggregate Supply

In the macroeconomic model of aggregate supply and aggregate demand,price is:

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In the long run,a year-long drought that destroys most of the summer's wheat crops causes:

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The quantity measure in the aggregate demand relationship is the:

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Fluctuations around the long-run aggregate supply curve:

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In general,it is easier to:

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The long run result of the government responding to a negative supply side shock with increased spending will be a:

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The wealth effect:

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Which three macroeconomic variables together best describe the health of the economy?

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When the U.S.price level decreases,we would expect:

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The aggregate supply and aggregate demand model is used to explain:

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When the economy fluctuates around its long-run aggregate supply:

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Short-run decisions refer to the:

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When the economy is operating at a point where aggregate demand equals long-run aggregate supply,it must be true that:

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In macroeconomics,the long run is determined by:

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When the long-run aggregate supply curve shifts right,it represents:

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Economic growth is:

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There is a general overall __________ relationship between the price level and ____________.

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The aggregate supply curve shows the relationship between:

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As the U.S.price level increases,expenditures by which of the following will remain unaffected?

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A rise in the overall price level means that:

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There is a general overall relationship between the price level and __.

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