Question 13 As the price level

Question 13

As the price level rises,

Answer

the exchange rate falls, so net exports fall.

the exchange rate falls, so net exports rise.

the exchange rate rises, so net exports fall.

the exchange rate rises, so net exports rise.

 

Question 14

Other things the same, as the price level rises, the real value of a dollar

Answer

rises, and interest rates rise.

rises, and interest rates fall.

falls, and interest rates rise.

falls, and interest rates fall.

 

Question 15

Other things the same, as the price level falls, a country’s exchange rate

Answer

and interest rates rise.

and interest rates fall.

falls and interest rates rise.

rises and interest rates fall.

 

Question 16

Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to desire

Answer

decreased consumption, shown as a movement to the left along a given aggregate-demand curve.

increase consumption, shown as a movement to the right along a given aggregate-demand curve.

decreased consumption, shifting the aggregate-demand curve to the left.

increased consumption, shifting the aggregate-demand curve to the right.

 

Question 17

Which of the following both shift aggregate demand left?

Answer

a decrease in taxes and at a given price level consumers feel more wealthy

a decrease in taxes and at a given price level consumers feel less wealthy

an increase in taxes and at a given price level consumers feel more wealthy

an increase in taxes and at a given price level consumers feel less wealthy

 

Question 18

If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then

Answer

U.S. goods become more expensive relative to foreign goods so aggregate demand shifts right.

U.S. goods become less expensive relative to foreign goods so aggregate demand shifts right.

U.S. goods become more expensive relative to foreign goods so aggregate demand shifts left.

U.S. goods become less expensive relative to foreign goods so aggregate demand shifts left.

 

Question 19

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

Answer

in the price level and output.

in the price level, but not output.

in output, but not the price level.

in neither the price level nor output.

 

Question 20

The long-run aggregate supply curve shifts right if

Answer

immigration from abroad increases.

the capital stock increases.

technology advances.

All of the above are correct.

 

Question 21

According to the aggregate demand and aggregate supply model, in the long run an increase in the money supply leads to

Answer

increases in both the price level and real GDP.

an increase in real GDP but does not change the price level.

an increase in the price level but does not change real GDP.

no change in either the price level or real GDP.

 

Question 22

In the long run, technological progress

Answer

and increases in the money supply both make the price level rise.

and increases in the money supply both make the price level fall.

makes the price level rise, while increases in the money supply make prices fall.

makes the price level fall, while increases in the money supply make prices rise.

Question 23

If the price level rises above what was expected and nominal wages are fixed, then

Answer

production becomes less profitable so firms will hire fewer workers.

production becomes less profitable so firms will hire more workers.

production becomes more profitable so firms will hire fewer workers.

production become more profitable so firms will hire more workers.

 

Question 24

Other things the same, when the price level rises more than expected, some firms will have

Answer

higher than desired prices which increases their sales.

higher than desired prices which depresses their sales.

lower than desired prices which increases their sales.

lower than desired prices which depresses their sales.

 

Question 25

According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what they produce had

Answer

increased, so they would increase production.

increased, so they would decrease production.

decreased, so they would increase production.

decreased, so they would decrease production.

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