Macro Final Exam

1

Most economists believe that classical theory describes the world in the long run but not in the short run.

1

In the model of aggregate demand and aggregate supply, the GDP deflator measures the

1

Suppose the economy is in long-run equilibrium. If the government decreases its expenditures, eventually the decrease in aggregate demand causes price expectations to

1

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

1

Other things the same, a government regulation that prevents using a current technology raises the price level.

1

Unemployment

1

If aggregate demand and aggregate supply both shift left, we can be sure that the price level is higher in the short run.

1

If the price level rises, the real value of a dollar

1

Refer to the figure. The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

1

According to the classical macroeconomic theory, the price level, but not real GDP, are affected by changes in the

1

The quantity of goods and services that firms produce and sell at each price level is shown on the

1

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate-demand curve

1

Tax increases shift aggregate-demand curve to:

1

Most economists believe that money neutrality holds in

1

Recessions occur at intervals and are_ to predict with much accuracy

1

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

1

An increase in natural resources would ____

1

Real GDP is most commonly used to monitor short-run changes in

1

Suppose a change in the stock market makes people feel wealthier, increases consumption, and shifts the aggregate-demand curve right. The change in the stock market must have been

1

Because the price level does not affect the long-run determinants of real GDP, the long-run aggregate-supply curve is upward-sloping

1

Suppose that there is a decrease in the costs of production that shifts the short-run aggregate-supply curve right. If there is no policy response, then eventually

1

A vertical long-run aggregate-supply curve represents

1

People will want to buy fewer bonds and the interest rate will rise, as the price level

1

The long-run effect of a decrease in household consumption is to lower

1

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will decrease if the price level

1

According to the classical model, both prices and nominal income would double if the quantity of money

1

People hold less money and lend more and the interest rate falls when the price level

1

How does the aggregate-demand curve shift when increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left?

1

The recessions associated with the business cycle come at irregular intervals

1

If the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts left, then the price must have

1

When output rises, unemployment also rises

1

An upward-sloping short-run aggregate-supply curve is represented by which of the following equations?

1

Because some economists do not understand what things change GDP, they cannot predict recessions with a fair amount of accuracy

1

Imagine a hypothetical world in which, over the last fifty years, both real GDP and prices have trended downward in most countries. Continuing falls in the level of real GDP and the price level can be explained by

1

During a recession, unemployment typically

1

A change in weather could ____

1

An increase in the availability of an importat major resource such as oil shifts the:

1

Most macroeconomic variables measure some type of income, spending or production fluxuation very separately from each other

1

Below are pairs of GDP growth rates and unemployment rates. Economists would not be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is not realistic?

1

Suppose a change in the stock market makes people feel wealthier, increases consumption, and shifts the aggregate-demand curve right. The change in the stock market must have been

1

What causes the economy to move from its short-run equilibrium to its long-run equilibrium?

1

Which of the following is true according to the sticky-wage theory of aggregate supply as a result of the decrease in the money supply? Check all that apply.

1

Judging by the impact of the money supply on nominal and real wages, this analysis ( is, is not ) consistent with the proposition that money has real effects in the short run but is neutral in the long run.

1

If firms adjusted their prices every day, then the short-run aggregate-supply curve would be horizontal.

1

According to the sticky-wage theory, the economy is in a recession because the price level has declined so that real wages are too ( high., low. )

1

According to the sticky-price theory, the economy is in a recession because not all prices adjust quickly.

1

According to the misperceptions theory, the economy is in a recession when suppliers mistakenly believe that the relative price of their goods has ( fallen., risen. )

1

The economy begins in long-run equilibrium. Then one day, the president appoints a new chair of the Federal Reserve. This new chair is well known for her view that inflation is not a major problem for an economy.

Which of the following statements accurately describes what would happen as a result of the news?

1

If there is a decline in short-run aggregate supply

If aggregate demand is held constant, the shift in the aggregate-supply curve will cause the price level to ( rise, fall ) and the quantity of output produced to ( fall., rise. )

Chapters 20-

Macro Final Exam

Macro Final Exam

Most economists believe that classical theory describes the world in the long run but not in the short run.

In the model of aggregate demand and aggregate supply, the GDP deflator measures the

Suppose the economy is in long-run equilibrium. If the government decreases its expenditures, eventually the decrease in aggregate demand causes price expectations to

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

Other things the same, a government regulation that prevents using a current technology raises the price level.

Unemployment

If aggregate demand and aggregate supply both shift left, we can be sure that the price level is higher in the short run.

If the price level rises, the real value of a dollar

Refer to the figure. The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

According to the classical macroeconomic theory, the price level, but not real GDP, are affected by changes in the

The quantity of goods and services that firms produce and sell at each price level is shown on the

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate-demand curve

Tax increases shift aggregate-demand curve to:

Most economists believe that money neutrality holds in

Recessions occur at ____intervals and are_____ to predict with much accuracy

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

An increase in natural resources would ____

Real GDP is most commonly used to monitor short-run changes in

Suppose a change in the stock market makes people feel wealthier, increases consumption, and shifts the aggregate-demand curve right. The change in the stock market must have been

Recessions occur at intervals and are_ to predict with much accuracy