Econ chapter 23 example #54313

Recessions occur at ________ intervals and are ________ to predict with much accuracy. A- regular; almost impossible B- irregular; quite possible C- irregular; almost impossible D- regular; quite possible

During a recession, unemployment typically A- falls substantially. B- does not change. C- falls slightly. D- rises.

When output rises, unemployment A- rises by a large amount. B- remains unchanged. C- rises by a small amount. D- falls.

During recessions, changes in investment spending are the biggest contributor to changes in A- consumer spending. B- retail sales. C- personal income. D- real GDP.

Because some economists do not understand what things change GDP, they cannot predict recessions with a fair amount of accuracy. A- true B- false

When analyzing the economy as a whole, ________ substitution from one market to another is impossible. A- microeconomic B- aggregate C- macroeconomic D- externality

Which classical economist observed that, when the money supply expanded after gold discoveries, it took some time for prices to rise, and in the meantime, the economy enjoyed higher employment and production? A- David Ricardo B- David Hume C- Adam Smith D- Joan Robinson

We need to study a model in which real and nominal variables interact in order to understand how the economy works A- in both the short run and the long run. B- without regards to any time period, whether the short run or the long run. C- In the long run but not the short run. D- in the short run but not the long run.

The separation of real and nominal variables is referred to as the classical A- discount. B- dichotomy. C- determinant. D- diseconomy.

Most economists believe that money neutrality holds in A- both the short run and the long run. B- neither the short run nor the long run. C- the short run. D- the long run.

If the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts left, then the price must have A- dropped by less than 10 percent. B- risen. C-remained constant. D- dropped by more than 90 percent.

Which of the following will both make people buy less? A- wealth falls and interest rates rise B- wealth rises and interest rates fall C- wealth falls and interest rates fall D- wealth and interest rates rise

If the price level rises, the real value of a dollar A- rises, so people will want to buy more. B- rises, so people will want to buy less. C- falls, so people will want to buy more. D- falls, so people will want to buy less.

Tax increases shift aggregate-demand curve to: A- right as do increases in government spending. B- left while increases in government spending shift aggregate demand right. C- right while increases in government spending shift aggregate demand left. D- left as do increases in government spending.

Which of the following both shift aggregate-demand curve to the right? A- an increase in taxes and at a given price level consumers feel more wealthy B- an increase in taxes and at a given price level consumers feel less wealthy C- a decrease in taxes and at a given price level consumers feel less wealthy D- a decrease in taxes and at a given price level consumers feel more wealthy

Real wealth falls, interest rates rise, and the dollar appreciates as the price level A- remains constant. B- falls slightly. C- falls substantially. D- rises.

From 2001 to 2005 there was a dramatic change in the price of houses. This change made people feel wealthier and shifted aggregate demand curve to the right. The price of houses must have A- remained constant. B- risen. C- fallen. D- the price of houses has no effect on wealth and aggregate demand.

Aggregate-demand curve shifts to the left if the money supply decreases. A- true B- false

People hold less money and lend more and the interest rate falls when the price level A- increases by less than 30 percent. B- increases by more than 30 percent. C- decreases. D- remains constant.

Other things the same, continued losses in technological ability and continued decreases in the money supply would unambiguously lead to A- declining real GDP only. B- neither declining prices nor declining real GDP. C- declining prices and declining real GDP. D- declining prices only.

An improvement in technology would cause the long-run aggregate-supply curve to shift A- left. B- right. C- not at all but instead to remain constant. D- downward.

A change in weather patterns that makes farming more difficult would ____ A- have no impact on long-run aggregate supply. B- increase aggregate demand. C- increase long-run aggregate supply. D- decrease long-run aggregate supply.

Other things the same, a government regulation that prevents using a current technology raises the price level. A- true B- false

A change in weather could ____ A- cause a right to left movement along the long-run aggregate-supply curve. B- not change the long-run aggregate-supply curve. C- shift the long-run aggregate-supply curve. D- cause a left to right movement along the long-run aggregate-supply curve.

Imagine two economies that are identical except that, for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $1,500 billion. It follows that A- neither the price level or real GDP is higher in country B. B- real GDP and the price level are higher in country B. C- the price level, but not real GDP is higher in country B. D- real GDP, but not the price level, is higher in country B.

If there is a natural disaster, the long-run aggregate-supply curve shifts A- not at all but instead remains constant. B- right. C- left. D- upward.

An upward-sloping short-run aggregate-supply curve is represented by which of the following equations? A- Quantity of output supplied = a(Natural level of output) + (Actual price level - Expected price level) B- Quantity of output supplied = Natural level of output - a(Actual price level - Expected price level) C- Quantity of output supplied = Natural level of output + a(Actual price level - Expected price level) D- Quantity of output supplied = Natural level of output + a(Actual price level + Expected price level)

Other things the same, if the price level is higher than expected, then some firms believe that the relative price of what they produce has A- increased, so they increase production. B- decreased, so they decrease production. C- increased, so they decrease production. D- decreased, so they increase production.

The sticky-wage theory of the short-run aggregate-supply curve says that when the price level is higher than expected, A- relative to prices wages are lower and employment falls. B- relative to prices wages are higher and employment falls. C- relative to prices wages are lower and employment rises. D- relative to prices wages are higher and employment rises.

The idea that nominal wages are slow to adjust to changing economic conditions can explain the ________ slope of the short-run aggregate-supply curve. A- upward B-vertical C-horizontal D- downward

If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to ________ the quantity of goods and services they produce. A- make no changes to B- Increase substantially C- reduce D- increase slightly

Which of the following shifts the short-run but not the long-run aggregate-supply curve left? A- an appreciation of the dollar B- a decrease in the expected price level C- an increase in the expected price level D- a decrease in how much people want to consume

Which of the following shifts short-run aggregate-supply curve to the right? A- an increase in the price of oil B- an increase in the minimum wage C- an decrease in immigration from abroad D- a decrease in the expected price level

Other things the same, if the money supply rises by 5% and people were expecting it to rise by 2%, then some firms have A-lower than desired prices, which depresses their sales. B- higher than desired prices, which increases their sales. C- higher than desired prices, which depresses their sales. D- lower than desired prices, which increases their sales.

If the government institutes an investment tax credit and decreases income taxes, A- real GDP falls, and the price level could rise, fall, or stay the same. B- real GDP and the price level fall. C- real GDP rises, and the price level could rise, fall, or stay the same. D- real GDP and the price level rise.

An increase in the availability of an important major resource such as oil shifts the: A- aggregate-demand curve to the right. B-aggregate-supply curve to the right. C- aggregate-supply curve to the left. D- aggregate-demand curve to the left.

When prices and unemployment rise, such an event is sometimes called A- inflation. B- depreciation. C- expansion. D- stagflation.

When production costs fall, A- the aggregate-demand curve shifts to the right. B- the short-run aggregate-supply curve shifts to the right. C- the aggregate-demand curve shifts to the left. D- the short-run aggregate-supply curve shifts to the left.

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large emigration of skilled workers, a major depletion of oil fields, and a major new regulation limiting electricity production. In the short run, we would expect A- the price level and real GDP both to rise. B- the price level to rise and real GDP to fall. C- the price level to fall and real GDP to rise. D- the price level and real GDP both to stay the same.

Which of the following would decrease the price level? A- an increase in the natural rate of unemployment. B- an increase in the expected price level. C- a decrease in the money supply. D- a decrease in taxes.

In the short run a decrease in the costs of production makes A- output fall and prices rise. B- output and prices rise. C- output rise and prices fall. D- output and prices fall.