For Macroeconomics by Andrew B Abel Ben S Bernanke Dean Croushore Ronald D Kneebone Exam Question with 100 Correct Answers 2026
Macroeconomics Exam Question Bank by Abel et al 2026 | Exam Ready A+ Scored What is a likely reason for the decrease in real GDP during a recession? - answer - a decrease in investment spending Which term best describes an increase in the spending of households and businesses resulting from the increased purchasing power of a - answer - wealth effect One reason the aggregate-demand is downward sloping is that - answer - an increase in price level increases the interest rate and decreases investment. How would aggregate demand change if foreign incomes increase and the exchange rate value of the dollar increases? - answer - The increase in income would increase aggregate demand; the increase in the exchange rate would decrease aggregate demand. Which of the following will lead to a decrease in aggregate demand in Canada? - answer - a higher price level What can a government do to increase aggregate demand? - answer - introduce a new tax credit for business investment Which of the following explains the real exchange rate? - answer - Real exchange rate = (Nominal exchange rate × Domestic price) / Foreign price Which of the following will NOT shift the aggregate-demand curve? - answer - prices What is the real exchange rate effect? - answer - A lower price level causes the real exchange rate to depreciate, which encourages spending on net exports. Which effect is likely to occur when oil prices fall? - answer - Aggregate supply shifts right, the price level falls, and real output rises. Why is the long-run aggregate-supply vertical? - answer - The quantity of output does not depend on the level of prices. Which of the following occurs during a recession? - answer - an increase in unemployment and a decrease in real output and real income Which curve is shifted by an improvement in technology? - answer - both the short-run and the long-run aggregate supply Which curve is shifted by an improvement in the quality of education in Canada increasing the productivity of labor? - answer - both the short-run and the long-run aggregate supply Which of the following does NOT explain the slope of the short-run aggregate-supply curve? - answer - the real-exchange rate effect theory What shifts the aggregate-demand curve to the left? - answer - firms' pessimism about future business conditions. Starting with initial long-run equilibrium, which effect, in the short run, will likely occur from a sudden decrease in optimism about future business conditions? - answer - a reduction in both output and the price level Which basic economic concept most clearly provides the foundation for the long-run aggregate-supply curve? - answer - the classical dichotomy and monetary neutrality What is the effect of a decrease in the price level? - answer - an increase in the value of the money that is in circulation A recession is a period of two or more consecutive quarters of negative real gross domestic product growth and rising unemployment. - answer - True The short-run aggregate-supply curve shifts to the left when the expected price level rises. - answer - True Aggregate supply is a curve that shows the quantity of goods and services that households, firms, and government want to buy at each price level. - answer - False One of the reasons that a short-run aggregate-supply curve slopes upward is the shoe-leather cost. - answer - False Most debates among economists about the causes of the Great Depression of the 1930s are centred on a large decline in aggregate supply. - answer - False
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