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When the dollar depreciates, each dollar buys


A) more foreign currency, and so buys more foreign goods.
B) more foreign currency, and so buys fewer foreign goods.
C) less foreign currency, and so buys more foreign goods.
D) less foreign currency, and so buys fewer foreign goods.

E) B) and C)
F) All of the above

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When taxes decrease, consumption


A) decreases as shown by a movement to the left along a given aggregate-demand curve.
B) decreases as shown by a shift of the aggregate demand curve to the left.
C) increases as shown by a movement to the right along a given aggregate-demand curve.
D) increases as shown by a shift of the aggregate demand curve to the right.

E) A) and C)
F) A) and B)

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Which of the following shifts short-run aggregate supply right?


A) an increase in the price level
B) an increase in the minimum wage
C) a decrease in the price of oil
D) more people migrate abroad than immigrate from abroad

E) All of the above
F) C) and D)

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Which of the following would not be included in aggregate demand?


A) additions of newly produced goods to inventory
B) purchases of U.S. services by foreigners
C) the purchase of newly produced capital goods
D) government transfer payments such as Social Security payments

E) A) and B)
F) None of the above

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Suppose the economy is in long-run equilibrium. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers, then in the short run,


A) real GDP will rise and the price level might rise, fall, or stay the same. In the long-run, real GDP will rise and the price level might rise, fall, or stay the same.
B) the price level will fall, and real GDP might rise, fall, or stay the same. In the long-run, real GDP and the price level will be unaffected.
C) the price level will rise, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall.
D) the price level will fall, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall.

E) A) and D)
F) A) and C)

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Other things the same, if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, then


A) employment and production rise.
B) employment rises and production falls.
C) employment falls and production rises.
D) employment and production fall.

E) None of the above
F) A) and B)

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During the last half of 1980, the U.S. unemployment rate was about 7.5 percent. Historical experience suggests that this is


A) above the natural rate, so real GDP growth was likely low.
B) above the natural rate, so real GDP growth was likely high.
C) below the natural rate, so real GDP growth was likely low.
D) below the natural rate, so real GDP growth was likely high.

E) B) and C)
F) None of the above

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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.

E) A) and D)
F) None of the above

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Optimism Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time. -Refer to Optimism. Which curve shifts and in which direction?


A) aggregate demand shifts right
B) aggregate demand shifts left
C) aggregate supply shifts right.
D) aggregate supply shifts left.

E) A) and D)
F) B) and C)

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Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have


A) higher than desired prices which increases their sales.
B) higher than desired prices which depresses their sales.
C) lower than desired prices which increases their sales.
D) lower than desired prices which depresses their sales.

E) A) and B)
F) None of the above

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The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have


A) higher than desired prices which leads to an increase in the aggregate quantity of goods and services supplied.
B) higher than desired prices which leads to a decrease in the aggregate quantity of goods and service supplied.
C) lower than desired prices which leads to an increase in the aggregate quantity of goods and services supplied.
D) lower than desired prices which leads to a decrease in the aggregate quantity of goods and services supplied

E) A) and D)
F) B) and C)

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Suppose the economy is in long-run equilibrium. In a short span of time, there is a decline in the money supply, a tax increase, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, we would expect


A) the price level and real GDP both to rise.
B) the price level and real GDP both to fall.
C) the price level and real GDP both to stay the same.
D) All of the above are possible.

E) All of the above
F) B) and D)

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In which case can we be sure aggregate demand shifts left overall?


A) people want to save more for retirement and the government raises taxes
B) people want to save more for retirement and the government cuts taxes
C) people want to save less for retirement and the government raises taxes
D) people want to save less for retirement and the government cuts taxes

E) C) and D)
F) B) and C)

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If output is above its natural rate, then according to sticky-wage theory


A) workers and firms will strike bargains for lower wages. In response to the lower wages firms will produce less at any given price level.
B) workers and firms will strike bargains for lower wages. In response to the lower wages firms will produce more at any given price level.
C) will strike bargains for higher wages. In response to the higher wages firms will produce less at any given price level.
D) workers and firms will strike bargains for higher wages. In response to the higher wages firms will produce more at any given price level.

E) B) and D)
F) All of the above

Correct Answer

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The aggregate-demand curve shows that a decrease in the price level


A) decreases the dollar value of goods and services demanded in the economy.
B) decreases the real value of goods and services demanded in the economy.
C) increases the dollar value of goods and services demanded in the economy.
D) increases the real value of goods and services demanded in the economy.

E) B) and C)
F) All of the above

Correct Answer

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Suppose that the economy is at long-run equilibrium. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers, then in the short run


A) real GDP will rise and the price level might rise, fall, or stay the same.
B) real GDP will fall and the price level might rise, fall, or stay the same.
C) the price level will rise, and real GDP might rise, fall, or stay the same.
D) the price level will fall, and real GDP might rise, fall, or stay the same.

E) All of the above
F) A) and B)

Correct Answer

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A change in the money supply changes only nominal variables in the long run.

A) True
B) False

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During recessions declines in investment account for about


A) 1/6 of the decline in real GDP.
B) 1/3 of the decline in real GDP.
C) 1/2 of the decline in real GDP.
D) 2/3 of the decline in real GDP.

E) B) and C)
F) A) and C)

Correct Answer

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The recessions of the 1970s are often attributed to


A) declining inflation expectations.
B) an increase in oil prices.
C) declines in the price of stock.
D) decreases in the money supply.

E) B) and D)
F) None of the above

Correct Answer

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Other things the same, continued increases in technology lead to


A) continued increases in the price level and real GDP.
B) continued increases in the price level but not continued increases in real GDP.
C) continued increases in real GDP but not continued increases in the price level.
D) None of the above are correct.

E) B) and D)
F) B) and C)

Correct Answer

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Showing 441 - 460 of 471

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