MACROECONOMICS FINAL EXAM 2026
COMPLETE QUESTIONS AND VERIFIED
ANSWERS
◉ a decrease in government spending will cause a: Answer:
decrease in aggregate demand
◉ an increase in personal income tax rates will cause a: Answer:
decrease (shift left) in aggregate demand
◉ the real-balance effect on aggregate demand suggests that a:
Answer: lower price will increase the real value of many financial
assets and therefore cause an increase in spending
◉ an increase in expected future income will: Answer: increase
aggregate demand
◉ minimum wage laws tend to make the price level more flexible
rather than less flexible. T/F? Answer: false
◉ if the dollar appreciates relative to foreign currencies, then:
Answer: foreign buyers will find U.S. goods to become more
expensive
,◉ the foreign purchases, interest rates, and real-balance effects
explain why the: Answer: aggregate demand curve is downward
sloping
◉ a decrease in aggregate demand in the short run will reduce:
Answer: both real output and the price level
◉ the fear of unwanted price wars may explain why many firms are
reluctant to: Answer: reduce prices when a decline in aggregate
demand occurs
◉ an increase in net exports will shift the: Answer: aggregate
expenditures curve upward and the aggregate demand curve
rightward
◉ a decrease in expected returns on investment will most likely shift
the AD curve to the: Answer: left because Ig will decrease
◉ an increase in personal income tax rates will cause a: Answer:
decrease (left shift) in aggregate demand
◉ a decrease in intereste rates caused by a change in the price level
would cause an: Answer: increase in the quantity of real output
demanded (movement down along AD)
, ◉ when the economy is experiencing demand-pull inflation, its real
GDP tends to be rising. T/F? Answer: true
◉ if the U.S. dollar appreciates in value relative to foreign currencies,
then this will: Answer: decrease aggregate demand and increase
aggregate supply
◉ wage contracts, efficiency wages, and the minimum wage are
explanations for why: Answer: wages tend to be inflexible
downward
◉ the fear of unwanted price wars may explain why many firms are
reluctant to: Answer: reduce prices when a decline in aggregate
demand occurs
◉ an increase in productivity will: Answer: increase aggregate
supply
◉ a sharp rise in the real value of stock prices, which is independent
of and change in the price level, would best be an example of:
Answer: a change in real value of consumer wealth
COMPLETE QUESTIONS AND VERIFIED
ANSWERS
◉ a decrease in government spending will cause a: Answer:
decrease in aggregate demand
◉ an increase in personal income tax rates will cause a: Answer:
decrease (shift left) in aggregate demand
◉ the real-balance effect on aggregate demand suggests that a:
Answer: lower price will increase the real value of many financial
assets and therefore cause an increase in spending
◉ an increase in expected future income will: Answer: increase
aggregate demand
◉ minimum wage laws tend to make the price level more flexible
rather than less flexible. T/F? Answer: false
◉ if the dollar appreciates relative to foreign currencies, then:
Answer: foreign buyers will find U.S. goods to become more
expensive
,◉ the foreign purchases, interest rates, and real-balance effects
explain why the: Answer: aggregate demand curve is downward
sloping
◉ a decrease in aggregate demand in the short run will reduce:
Answer: both real output and the price level
◉ the fear of unwanted price wars may explain why many firms are
reluctant to: Answer: reduce prices when a decline in aggregate
demand occurs
◉ an increase in net exports will shift the: Answer: aggregate
expenditures curve upward and the aggregate demand curve
rightward
◉ a decrease in expected returns on investment will most likely shift
the AD curve to the: Answer: left because Ig will decrease
◉ an increase in personal income tax rates will cause a: Answer:
decrease (left shift) in aggregate demand
◉ a decrease in intereste rates caused by a change in the price level
would cause an: Answer: increase in the quantity of real output
demanded (movement down along AD)
, ◉ when the economy is experiencing demand-pull inflation, its real
GDP tends to be rising. T/F? Answer: true
◉ if the U.S. dollar appreciates in value relative to foreign currencies,
then this will: Answer: decrease aggregate demand and increase
aggregate supply
◉ wage contracts, efficiency wages, and the minimum wage are
explanations for why: Answer: wages tend to be inflexible
downward
◉ the fear of unwanted price wars may explain why many firms are
reluctant to: Answer: reduce prices when a decline in aggregate
demand occurs
◉ an increase in productivity will: Answer: increase aggregate
supply
◉ a sharp rise in the real value of stock prices, which is independent
of and change in the price level, would best be an example of:
Answer: a change in real value of consumer wealth
