Question 1

When all prices rise together,there is no change in the overall quantity of goods and services supplied.

Accepted Answer

A) True 
 B)False

Question 2

What are the effects of a decrease in Canadian interest rates?

Accepted Answer

A)   a depreciation of the dollar and greater net exports
B)   a depreciation of the dollar and smaller net exports
C)   an appreciation of the dollar and greater net exports
D)   an appreciation of the dollar and smaller net exportsE) All of the above
F) C) and D)

Question 3

Which statement best describes the effects of an increase in the price level?

Accepted Answer

A)   Real exchange rates and interest rates rise.
B)   Real exchange rates and interest rates fall.
C)   Real exchange rates fall,and interest rates rise.
D)   Real exchange rates rise,and interest rates fall.E) All of the above
F) None of the above

Question 4

Scenario 14-1
The economy is in long-run equilibrium.Suddenly,due to improved international relations,a boom experienced by a major trading partner,and the increased confidence of policymakers,citizens become more optimistic about the future and stay this way for a long time.
-Refer to the Scenario 14-1.What is predicted by the aggregate demand and aggregate supply theory?

Accepted Answer

A)   The expected inflation falls.Workers bargain for higher increases in wages.
B)   The expected inflation falls.Workers bargain for lower increases in wages.
C)   The expected inflation rises.Workers bargain for higher increases in wages.
D)   The expected inflation rises.Workers bargain for lower increases in wages.E) B) and C)
F) B) and D)

Question 5

In 1986,OPEC countries increased their production of oil.What was the result?

Accepted Answer

A)   The price level rose.
B)   Aggregate supply shifted right.
C)   Unemployment rose.
D)   Stagflation occurred.E) None of the above
F) C) and D)

Question 6

Suppose there is a decrease in the availability of an important major resource,such as oil.Which shift would most likely occur?

Accepted Answer

A)   The aggregate supply would shift right.
B)   The aggregate supply would shift left.
C)   The aggregate demand would shift right.
D)   The aggregate demand would shift left.E) None of the above
F) A) and C)

Question 7

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)   an increase in the price level
B)   The Bank of Canada sells bonds in the open market
C)   an increase in net exports
D)   an investment tax creditE) C) and D)
F) B) and C)

Question 8

Which of the following explains why production rises in most years?

Accepted Answer

A)   increases in prices of goods and services
B)   increases in stock prices
C)   aging population
D)   technological innovationE) All of the above
F) A) and B)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Pessimism about the future leads to falling prices and rising unemployment.

Accepted Answer

A) True 
 B)False

Question 11

In which situation does investment spending increase?

Accepted Answer

A)   when the price level rises,causing interest rates to rise
B)   when the price level rises,causing interest rates to fall
C)   when the price level falls,causing interest rates to rise
D)   when the price level falls,causing interest rates to fallE) A) and D)
F) B) and C)

Question 12

What did Keynes believe that economies experiencing high unemployment should do?

Accepted Answer

A)   adopt policies to reduce investment expenditures
B)   adopt policies to reduce government expenditures
C)   adopt policies to increase aggregate demand
D)   adopt policies to increase aggregate supplyE) A) and B)
F) A) and C)

Question 13

What are the implications of a depreciation of the dollar?

Accepted Answer

A)   The dollar buys more foreign currency,so it buys more foreign goods.
B)   The dollar buys more foreign currency,so it buys fewer foreign goods.
C)   The dollar buys less foreign currency,so it buys more foreign goods.
D)   The dollar buys less foreign currency,so it buys fewer foreign goods.E) All of the above
F) A) and B)

Question 14

How does the aggregate demand and aggregate supply model reflect a rise in wage rates?

Accepted Answer

A)   The short-run aggregate-supply curve shifts to the right.
B)   The short-run aggregate-supply curve shifts to the left.
C)   The aggregate-demand curve shifts to the right.
D)   The aggregate-demand curve shifts to the left.E) A) and B)
F) None of the above

Question 15

In which situation does investment spending decrease?

Accepted Answer

A)   when the price level rises,causing interest rates to rise
B)   when the price level rises,causing interest rates to fall
C)   when the price level falls,causing interest rates to rise
D)   when the price level falls,causing interest rates to fallE) B) and C)
F) B) and D)

Question 16

What does a fall in the economy's overall level of prices tend to do?

Accepted Answer

A)   It tends to raise both the quantity demanded and supplied of goods and services.
B)   It tends to raise the quantity demanded of goods and services,but lower the quantity supplied.
C)   It tends to lower the quantity demanded of goods and services,but raise the quantity supplied.
D)   It tends to lower both the quantity demanded and the quantity supplied of goods and services.E) A) and C)
F) B) and D)

Question 17

Increased uncertainty and pessimism about the future of the economy decreases investment spending,shifting aggregate demand to the left.

Accepted Answer

A) True 
 B)False

Question 18

What is the effect of a temporary decrease in the availability of raw materials?

Accepted Answer

A)   Aggregate supply shifts right.
B)   Output falls in the short run.
C)   Prices fall in the short run.
D)   Long-run aggregate supply shifts to the left.E) None of the above
F) A) and B)

Question 19

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption,investme...

Question 20

Which statement is consistent with an increase in the quantity of output supplied,according to the misperceptions theory?

Accepted Answer

A)   The price level increases less than expected so that firms believe the relative price of their output has increased.
B)   The price level increases less than expected so that firms believe the relative price of their output has decreased.
C)   The price level increases more than expected so that firms believe the relative price of their output has increased.
D)   The price level increases more than expected so that firms believe the relative price of their output has decreased.E) C) and D)
F) A) and B)

Exam 14: Aggregate Demand and Aggregate Supply

When all prices rise together,there is no change in the overall quantity of goods and services supplied.

Correct Answer
verified

Which of the following explains why production rises in most years?

Correct Answer
verified

Correct Answer
verified

What are the implications of a depreciation of the dollar?

Correct Answer
verified

In 1986,OPEC countries increased their production of oil.What was the result?

Correct Answer
verified

What does a fall in the economy's overall level of prices tend to do?

Correct Answer
verified

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

Correct Answer
verified

Which statement best describes the effects of an increase in the price level?

Correct Answer
verified

What are the effects of a decrease in Canadian interest rates?

Correct Answer
verified

Make a list of expenditures whose sum equals GDP.

Correct Answer
verified
consumption,investme...
View Answer

Which of the following shifts aggregate demand to the left?

Correct Answer
verified

Which statement is consistent with an increase in the quantity of output supplied,according to the misperceptions theory?

Correct Answer
verified

In which situation does investment spending increase?

Correct Answer
verified

In which situation does investment spending decrease?

Correct Answer
verified

What is the effect of a temporary decrease in the availability of raw materials?

Correct Answer
verified

Pessimism about the future leads to falling prices and rising unemployment.

Correct Answer
verified

How does the aggregate demand and aggregate supply model reflect a rise in wage rates?

Correct Answer
verified

What did Keynes believe that economies experiencing high unemployment should do?

Correct Answer
verified

Increased uncertainty and pessimism about the future of the economy decreases investment spending,shifting aggregate demand to the left.

Correct Answer
verified

Suppose there is a decrease in the availability of an important major resource,such as oil.Which shift would most likely occur?

Correct Answer
verified

Exam 14: Aggregate Demand and Aggregate Supply

When all prices rise together,there is no change in the overall quantity of goods and services supplied.

Correct AnswerverifiedShow Answer

Which of the following explains why production rises in most years?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What are the implications of a depreciation of the dollar?

Correct AnswerverifiedShow Answer

In 1986,OPEC countries increased their production of oil.What was the result?

Correct AnswerverifiedShow Answer

What does a fall in the economy's overall level of prices tend to do?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which statement best describes the effects of an increase in the price level?

Correct AnswerverifiedShow Answer

What are the effects of a decrease in Canadian interest rates?

Correct AnswerverifiedShow Answer

Make a list of expenditures whose sum equals GDP.

Correct Answerverifiedconsumption,investme...View AnswerShow Answer

Which of the following shifts aggregate demand to the left?

Correct AnswerverifiedShow Answer

Which statement is consistent with an increase in the quantity of output supplied,according to the misperceptions theory?

Correct AnswerverifiedShow Answer

In which situation does investment spending increase?

Correct AnswerverifiedShow Answer

In which situation does investment spending decrease?

Correct AnswerverifiedShow Answer

What is the effect of a temporary decrease in the availability of raw materials?

Correct AnswerverifiedShow Answer

Pessimism about the future leads to falling prices and rising unemployment.

Correct AnswerverifiedShow Answer

How does the aggregate demand and aggregate supply model reflect a rise in wage rates?

Correct AnswerverifiedShow Answer

What did Keynes believe that economies experiencing high unemployment should do?

Correct AnswerverifiedShow Answer

Increased uncertainty and pessimism about the future of the economy decreases investment spending,shifting aggregate demand to the left.

Correct AnswerverifiedShow Answer

Suppose there is a decrease in the availability of an important major resource,such as oil.Which shift would most likely occur?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
consumption,investme...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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