Econ 102 Final Exam

If prices fall, then real wealth ________ and the quantity of aggregate demand __________. A. increases; increases B. increases; decreases C. decreases; decreases D. decreases; increases E. is unaffected; is unaffected

A. Increases; increases

An increase in short-run aggregate supply immediately leads to: A. an increase in real wealth and a shift of the aggregate demand curve. B. an increase in real wealth and a movement along the aggregate demand curve. C. a shift of the aggregate demand curve caused by menu costs. D. a shift of the aggregate demand curve caused by money illusion. E. an increase in money illusion and a movement along the aggregate demand curve.

A. an increase in real wealth and a movement along the aggregate demand curve

A rise in the price level that leads to a change in the interest rate. This will cause ____________. A. an upward movement along the aggregate demand curve. B. a downward movement along the aggregate demand curve. C. a rightward shift of the aggregate demand curve. D. a leftward shift of the aggregate demand curve. E. no change

A. an upward movement along the aggregate demand curve

The long-run aggregate supply curve is: A. vertical because full employment output is independent of the price level. B. upward sloping because the economy grows over time. C. horizontal because full employment output is independent of the price level. D. upward sloping because as the price level rises, firms will increase output. E. downward sloping because rising prices reduce real wealth and spending.

A. vertical because full employment output is independent of the price level

If the price level falls but workers are reluctant to accept a pay cut, this is an example of: A. menu cost. B. money illusion. C. a legally binding contract. D. a supply shock. E. an implicit contract.

B. money illusion

Which of the following would shift aggregate demand to the right? A. College graduates are having a difficult time finding jobs. B. There is a decline in consumer confidence. C. Stock market values increase by 20%. D. A fall in the price level increases the value of real wealth. E. The value of the dollar increases.

C. Stock market values increase by 20%

Input prices affect the firm's __________, and output prices affect the firm's __________. A. revenue; costs B. costs; costs C. costs; revenue D. revenue; revenue E. decisions in the short run but not in the long run; decisions in the long run but not in the short run

C. costs; revenue

All else being equal, as the population ages and many people leave the labor force: A. the unemployment rate will rise. B. the price level will fall. C. long-run aggregate supply will fall. D. long-run aggregate supply will be unaffected. E. aggregate demand must rise.

C. long-run aggregate supply will fall

An increase in the general price level will lead to: A. a rightward shift of the short-run aggregate supply curve as firms increase output. B. a downward movement along the short-run aggregate supply curve as firms decrease output. C. a leftward shift of the short-run aggregate supply curve as firms decrease output. D. an upward movement along the short-run aggregate supply curve as firms increase output. E. no change in output because input prices are sticky.

D. an upward movement along the short-run aggregate supply curve as firms increase output

An increase in short-run aggregate supply could be the result of: A. an increase in the general price level. B. a negative supply shock. C. an increase in the price of oil. D. an increase in consumption spending. E. a reduction in expected future prices.

E. a reduction in expected future prices

Aggregate demand is determined by adding up the spending of: A. domestic consumers who buy goods and services produced in the United States. B. domestic consumers and firms that buy goods and services produced in the United States. C. domestic and foreign consumers who buy goods and services produced in the United States. D. domestic and foreign consumers and firms that buy goods and services produced in the United States. E. consumers, firms, the government, and foreigners that buy goods and services produced in the United States.

E. consumers, firms, the government, and foreigners that buy goods and services produced in the United States