ECO201 Chapter 8 Exam Solution
• Question 1
1 out of 1 points
If velocity is rising, an increase in one spending component can occur
... [Show More] without requiring other spending components to decline.
Selected Answer: True
Answers: True
False
• Question 2
1 out of 1 points
Wage rates fall. This increases __________ and the __________ curve shifts rightward.
Selected Answer: c.
short-run aggregate supply (SRAS); SRAS
Answers: a.
aggregate demand (AD); AD
b.
short-run aggregate supply (SRAS); AD
c.
short-run aggregate supply (SRAS); SRAS
d.
employment; AD
e.
none of the above
• Question 3
1 out of 1 points
Which of the following statements is false?
Selected Answer: e.
none of the above
Answers: a.
The exchange rate is the price of one (country's) currency in terms of another (country's) currency.
b.
A currency has appreciated in value if more of a foreign currency is needed to buy it.
c.
A change in the money supply can change aggregate demand.
d.
A change in business taxes can change investment, which can change aggregate demand.
e.
none of the above
• Question 4
1 out of 1 points
The real balance effect describes the change in
Selected Answer: d.
the value of cash holdings that results from a change in the price level.
Answers: a.
checking account balances that occur when the money supply increases or decreases.
b.
the balance of cash holdings that results from a change in the amount of income earned.
c.
the value of physical assets (e.g., houses) that results from a change in the price level.
d.
the value of cash holdings that results from a change in the price level.
e.
the output producers produce as they attempt to balance their production in response to changes in consumers' demand.
• Question 5
1 out of 1 points
When the dollar appreciates, U.S. net exports fall and aggregate demand decreases.
Selected Answer: True
Answers: True
False
• Question 6
1 out of 1 points
Which of the following will not lead to a leftward shift in the SRAS curve?
Selected Answer: a.
an increase in productivity
Answers: a.
an increase in productivity
b.
an increase in the prices of nonlabor inputs
c.
an adverse supply shock
d.
an increase in wage rates
• Question 7
1 out of 1 points
In the short run, a decrease in wage rates, ceteris paribus, shifts the
Selected Answer: b.
SRAS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase.
Answers: a.
AD curve to the left, causing equilibrium price level to fall and equilibrium Real GDP to decrease.
b.
SRAS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase.
c.
SRAS curve to the left, causing equilibrium price level to rise and equilibrium Real GDP to decrease.
d.
AD curve to the right, causing equilibrium price level to rise and equilibrium Real GDP to increase.
• Question 8
1 out of 1 points
When foreign real national income rises, domestic Real GDP falls, ceteris paribus.
Selected Answer: False
Answers: True
False
• Question 9
1 out of 1 points
Which of the following statements is false?
Selected Answer: e.
none of the above
Answers: a.
Some prices in an economy adjust faster than other prices.
b.
Aggregate demand curves slope downward.
c.
Firms may not adjust their prices immediately because they may be unable to figure out whether a decline in demand is temporary or permanent.
d.
The absolute price of a good is the dollar or money price of the good.
e.
none of the above
• Question 10
0 out of 1 points
A rise in wage rates
Selected Answer: c.
causes the AD curve to shift rightward.
Answers: a.
does not affect the present position of the SRAS curve.
b.
causes the AD curve to shift leftward.
c.
causes the AD curve to shift rightward.
d.
causes the SRAS curve to shift leftward.
e.
causes the short-run aggregate supply (SRAS) curve to shift rightward.
• Question 11
1 out of 1 points
As the U.S. dollar appreciates and the Japanese yen depreciates,
Selected Answer: a.
U.S.-produced goods become more expensive for the Japanese and Japanese-produced goods become cheaper for Americans.
Answers: a.
U.S.-produced goods become more expensive for the Japanese and Japanese-produced goods become cheaper for Americans.
b.
U.S.-produced goods become cheaper for the Japanese and Japanese-produced goods become more expensive for Americans.
c.
U.S.-produced goods become cheaper for both the Japanese and Americans.
d.
Japanese-produced goods become more expensive for both the Japanese and Americans.
e.
none of the above
• Question 12
1 out of 1 points
A change in labor productivity shifts the __________ curve and a change in the exchange rate shifts the __________ curve.
Selected Answer: c.
SRAS; AD
Answers: a.
SRAS; SRAS
b.
AD; AD
c.
SRAS; AD
d.
AD; SRAS
e.
none of the above
• Question 13
1 out of 1 points
Which of the following would cause a rightward shift in the AD curve?
Selected Answer: d.
an increase in government purchases of goods and services
Answers: a.
an increase in imports
b.
a decrease in the quantity of money available in the economy
c.
a decrease in the price level
d.
an increase in government purchases of goods and services
e.
an increase in the price level
• Question 14
1 out of 1 points
The AD curve shows that, as the price level falls the quantity of
Selected Answer: c.
Real GDP demanded increases.
Answers: a.
GDP demanded increases.
b.
GDP demand decreases.
c.
Real GDP demanded increases.
d.
Real GDP demanded decreases.
e.
none of the above
• Question 15
0 out of 1 points
Exhibit 8-1
Refer to Exhibit 8-1. Assume the economy is originally in equilibrium at point A. If the price of oil rises, at which point is the economy most likely to end up in the short run?
Selected Answer: c.
C
Answers: a.
A
b.
B
c.
C
d.
D
• Question 16
0 out of 1 points
Suppose that C = $700, I = $200, G = $200, NX = $100, and that the money supply is equal to $400. Based upon these assumptions, velocity is equal to ________________. If consumption and velocity both rise beyond their initial levels, then it follows that another component of spending ___________ necessarily fall.
Selected Answer: a.
3; must
Answers: a.
3; must
b.
3; does not
c.
4; must
d.
4; does not
• Question 17
1 out of 1 points
As interest rates rise, the ____________ curve shifts _____________ resulting in a(n) _________________ in the price level and a(n) ________________ in Real GDP.
Selected Answer: a.
AD; leftward; decrease; decrease
Answers: a.
AD; leftward; decrease; decrease
b.
AD; rightward; increase; increase
c.
SRAS; rightward; decrease; increase
d.
SRAS; leftward; increase; decrease
• Question 18
1 out of 1 points
When the government lowers income taxes, consumption is ______________, causing a __________ the AD curve.
Selected Answer: d.
stimulated; rightward shift of
Answers: a.
reduced; leftward shift of
b.
stimulated; movement down along
c.
reduced; movement up along
d.
stimulated; rightward shift of
• Question 19
1 out of 1 points
The wage rate rises. As a result, in the short run Real GDP will __________ and the price level will __________.
Selected Answer: c.
fall; rise
Answers: a.
rise; fall
b.
rise; rise
c.
fall; rise
d.
remain constant; fall
e.
fall; fall
• Question 20
1 out of 1 points
Exhibit 8-1
Refer to Exhibit 8-1. Assume the economy is originally in equilibrium at point A. If unusually bad weather leads to decreased production of wheat, corn, and other crops, at which point is the economy most likely to end up in the short run?
Selected Answer: d.
D
Answers: a.
A
b.
B
c.
C
d.
D
• Question 21
1 out of 1 points
Which of the following statements is false?
Selected Answer: d.
A change in the quantity demanded of Real GDP is directly brought about by a change in interest rates.
Answers: a.
The aggregate demand curve slopes downward because of the real balance, interest rate, and international trade effects.
b.
The real balance effect refers to the change in the purchasing power of dollar-denominated assets as a result of a change in the price level.
c.
Purchasing power and the price level are inversely related.
d.
A change in the quantity demanded of Real GDP is directly brought about by a change in interest rates.
• Question 22
1 out of 1 points
Foreign real national income rises. This raises U.S. ___________ which ________ aggregate demand (AD). The AD curve shifts ___________ as a result.
Selected Answer: a.
net exports; raises; rightward
Answers: a.
net exports; raises; rightward
b.
imports; raises; rightward
c.
prices; reduces; leftward
d.
investment; reduces; leftward
e.
none of the above
• Question 23
1 out of 1 points
Personal income taxes rise. This lowers __________, which lowers __________ and the __________ curve shifts __________.
Selected Answer: d.
consumption; aggregate demand (AD); AD; leftward
Answers: a.
net exports; aggregate demand (AD); AD; leftward
b.
consumption; short-run aggregate supply (SRAS); SRAS; rightward
c.
government revenue; net exports; AD; rightward
d.
consumption; aggregate demand (AD); AD; leftward
e.
none of the above
• Question 24
1 out of 1 points
A change in the money supply can affect one or more of the components of spending and therefore shift the short-run aggregate supply (SRAS) curve.
Selected Answer: False
Answers: True
False
• Question 25
1 out of 1 points
In short-run equilibrium, it is always true that
Selected Answer: c.
quantity demanded of Real GDP = quantity supplied of Real GDP.
Answers: a.
quantity demanded of Real GDP = quantity supplied of Real GDP = Natural Real GDP.
b.
quantity demanded of Real GDP > quantity supplied of Real GDP.
c.
quantity demanded of Real GDP = quantity supplied of Real GDP.
d.
a and b
e.
There is not enough information to answer the question. [Show Less]