Chapter 11

Question 1

In 2008, the United States was in recession. Which of the following things would you not expect to have happened?

Answer 1

Increased real GDP

Question 2

The effect of an increase in the price level on the aggregate-demand curve is represented by a

Answer 2

movement to the left along a given aggregate-demand curve.

Question 3

Other things the same, as the price level decreases it induces greater spending on

Answer 3

both net exports and investment.

Question 4

From 2001 to 2005 there was a dramatic rise in the value of houses. If this rise made homeowners feel wealthier, then it would have shifted aggregate

Answer 4

demand right.

Question 5

In countries that have high minimum wages and require a lengthy and costly process to get permission to open a business,

Answer 5

reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right.

Question 6

When the Fed buys bonds the supply of money

Answer 6

increases and so aggregate demand shifts right.

Question 7

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

Answer 7

more profitable and employment and output rises.