Chapter 33 Questions, part 2

Most economists use the aggregate demand and aggregate supply model primarily to analyze _____.

• short-run fluctuations in the economy.

• the effects of macroeconomic policy on the prices of individual goods.

• the long-run effects of international trade policies.

• productivity and economic growth.

The model of short-run economic fluctuations focuses on the price level and _____.

• real GDP.

• economic growth.

• the neutrality of money.

• None of the other options are correct.

The model of aggregate demand and aggregate supply explains the relationship between _____.

• the price and quantity of a particular good.

• unemployment and output.

• wages and employment.

• real GDP and the price level.

Which of the sentences concerning the aggregate demand and aggregate supply model is correct?

• The aggregate demand and supply model is nothing more than a large version of the model of market demand and supply.

• The price level and quantity of output adjust to bring aggregate demand and supply into balance.

• The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price.

• All of the other options are correct.

Which of the following is included in the aggregate demand for goods and services?

• consumption demand

• investment demand

• net exports

• All of these are correct.

Which of the following is not included in aggregate demand?

• purchases of stock and bonds

• purchases of services such as visits to the doctor

• purchases of capital goods such as equipment in a factory

• purchases by foreigners of consumer goods produced in the United States

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

• rises, and interest rates rise.

• rises, and interest rates fall.

• falls, and interest rates rise.

• falls, and interest rates fall.

Other things the same, as the price level rises, exchange rates _______

• and interest rates rise.

• and interest rates fall.

• fall and interest rates rise.

• rise and interest rates fall.

When the dollar appreciates, U.S. _______

• exports decrease, while imports increase.

• exports and imports decrease.

• exports and imports increase.

• exports increase, while imports decrease.

When the dollar depreciates, each dollar buys _______

• more foreign currency, and so buys more foreign goods.

• more foreign currency, and so buys fewer foreign goods.

• less foreign currency, and so buys more foreign goods.

• less foreign currency, and so buys fewer foreign goods.