Question 1

Exhibit 8-4
  
-Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS? to SRAS? would have been the result of

Accepted Answer

A)  a decrease in the price level. 
B)  an increase in the price level. 
C)  an increase in wage rates. 
D)  a decrease in wage rates. 
A)  a decrease in the price level. 
B)  an increase in the price level. 
C)  an increase in wage rates. 
D)  a decrease in wage rates.

Question 2

As interest rates rise,the ____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)________________ in Real GDP.

Accepted Answer

A)  AD; leftward; decrease; decrease 
B)  AD; rightward; increase; increase 
C)  SRAS; rightward; decrease; increase 
D)  SRAS; leftward; increase; decrease 
A)  AD; leftward; decrease; decrease 
B)  AD; rightward; increase; increase 
C)  SRAS; rightward; decrease; increase 
D)  SRAS; leftward; increase; decrease

Question 3

In a two-country world,a decrease in foreign input prices,ceteris paribus,

Accepted Answer

A)  shifts the SRAS curve leftward, causing the price level to increase. 
B)  shifts the SRAS curve leftward, causing the price level to decrease. 
C)  shifts the SRAS curve rightward, causing the price level to increase. 
D)  shifts the SRAS curve rightward, causing the price level to decrease. 
E)  does not affect the SRAS curve or the price level. 
A)  shifts the SRAS curve leftward, causing the price level to increase. 
B)  shifts the SRAS curve leftward, causing the price level to decrease. 
C)  shifts the SRAS curve rightward, causing the price level to increase. 
D)  shifts the SRAS curve rightward, causing the price level to decrease. 
E)  does not affect the SRAS curve or the price level.

Question 4

Suppose the following: (1)the wage rises,(2)the interest rate rises,(3)any change in AD is greater than any change in SRAS.Based on this information,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A)  rise; rise 
B)  fall; rise 
C)  fall; fall 
D)  rise; fall 
A)  rise; rise 
B)  fall; rise 
C)  fall; fall 
D)  rise; fall

Question 5

The short-run aggregate supply (SRAS)curve shows the quantity

Accepted Answer

A)  demanded of all goods and services at different price levels, ceteris paribus. 
B)  supplied of all goods and services at a particular price level, ceteris paribus. 
C)  supplied of all goods and services at different price levels, ceteris paribus. 
D)  supplied of GDP at a particular price level, ceteris paribus. 
A)  demanded of all goods and services at different price levels, ceteris paribus. 
B)  supplied of all goods and services at a particular price level, ceteris paribus. 
C)  supplied of all goods and services at different price levels, ceteris paribus. 
D)  supplied of GDP at a particular price level, ceteris paribus.

Question 6

If aggregate quantity demanded is greater than aggregate quantity supplied at a particular price level,then

Accepted Answer

A)  consumers will bid prices upward, and a greater quantity of output will be supplied. 
B)  the shortage will likely be eliminated. 
C)  a and b 
D)  none of the above 
A)  consumers will bid prices upward, and a greater quantity of output will be supplied. 
B)  the shortage will likely be eliminated. 
C)  a and b 
D)  none of the above

Question 7

Starting from short-run equilibrium,the following occurs: personal income taxes rise and foreign real national income rises.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A)  The price level rises and Real GDP falls. 
B)  The price level falls and Real GDP falls. 
C)  The price level rises and Real GDP rises. 
D)  The price level falls and Real GDP rises. 
E)  There is not enough information to answer this question. 
A)  The price level rises and Real GDP falls. 
B)  The price level falls and Real GDP falls. 
C)  The price level rises and Real GDP rises. 
D)  The price level falls and Real GDP rises. 
E)  There is not enough information to answer this question.

Question 8

The economy suffers an adverse supply shock.As a result,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A)  rise; rise 
B)  fall; fall 
C)  fall; remain constant 
D)  fall; rise 
E)  rise; fall 
A)  rise; rise 
B)  fall; fall 
C)  fall; remain constant 
D)  fall; rise 
E)  rise; fall

Question 9

Exhibit 8-1
  
-Refer to Exhibit 8-1. If we assume that Real GDP and the unemployment rate are inversely related,which of the points on this graph is most likely representative of the highest unemployment rate?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 10

The AD curve shows that,as the price level falls,the quantity of

Accepted Answer

A)  GDP demanded increases. 
B)  GDP demand decreases. 
C)  Real GDP demanded increases. 
D)  Real GDP demanded decreases. 
E)  none of the above 
A)  GDP demanded increases. 
B)  GDP demand decreases. 
C)  Real GDP demanded increases. 
D)  Real GDP demanded decreases. 
E)  none of the above

Question 11

A rise in wage rates

Accepted Answer

A)  causes the AD curve to shift leftward. 
B)  causes the short-run aggregate supply (SRAS) curve to shift rightward. 
C)  does not affect the present position of the SRAS curve. 
D)  causes the AD curve to shift rightward. 
E)  causes the SRAS curve to shift leftward. 
A)  causes the AD curve to shift leftward. 
B)  causes the short-run aggregate supply (SRAS) curve to shift rightward. 
C)  does not affect the present position of the SRAS curve. 
D)  causes the AD curve to shift rightward. 
E)  causes the SRAS curve to shift leftward.

Question 12

Ceteris paribus,Real GDP and the unemployment rate are

Accepted Answer

A)  directly related. 
B)  inversely related. 
C)  unrelated. 
D)  directly related when GDP is below its natural level and inversely related when GDP is above its natural level. 
A)  directly related. 
B)  inversely related. 
C)  unrelated. 
D)  directly related when GDP is below its natural level and inversely related when GDP is above its natural level.

Question 13

Which set of changes will definitely shift the aggregate demand (AD)curve to the right?

Accepted Answer

A)  Business taxes decline and foreign real national income rises. 
B)  Businesses become pessimistic about future sales and the U.S. dollar depreciates. 
C)  Wealth increases and individuals expect higher (future) incomes. 
D)  a and b 
E)  a and c 
A)  Business taxes decline and foreign real national income rises. 
B)  Businesses become pessimistic about future sales and the U.S. dollar depreciates. 
C)  Wealth increases and individuals expect higher (future) incomes. 
D)  a and b 
E)  a and c

Question 14

Exhibit 8-1
  
-Refer to Exhibit 8-1. Assume the economy is originally in equilibrium at point A. If unusually bad weather leads to decreased production of wheat,corn,and other crops,at which point is the economy most likely to end up in the short run?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 15

In short-run equilibrium,the quantities supplied and demanded of Real GDP can be less than or greater than Natural Real GDP.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 8-1
  
-Refer to Exhibit 8-1. Assume that the economy is originally in equilibrium at point B. If businesses become pessimistic about future sales,at which point is the economy most likely to end up in the short run?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 17

Wage rates fall.This increases __________ and the __________ curve shifts rightward.

Accepted Answer

A)  aggregate demand (A
D) ; AD 
B)  short-run aggregate supply (SRAS); AD 
C)  short-run aggregate supply (SRAS); SRAS 
D)  employment; AD 
E)  none of the above 
A)  aggregate demand (A
D) ; AD 
B)  short-run aggregate supply (SRAS); AD 
C)  short-run aggregate supply (SRAS); SRAS 
D)  employment; AD 
E)  none of the above

Question 18

A subprime loan is a term for a loan that poses less risk than the average loan.

Accepted Answer

A) True 
 B)False

Question 19

An increase in the price of oil will cause

Accepted Answer

A)  a movement down the SRAS curve. 
B)  a movement up the SRAS curve. 
C)  a leftward shift in the SRAS curve. 
D)  a rightward shift in the SRAS curve. 
E)  no change regarding the SRAS curve. 
A)  a movement down the SRAS curve. 
B)  a movement up the SRAS curve. 
C)  a leftward shift in the SRAS curve. 
D)  a rightward shift in the SRAS curve. 
E)  no change regarding the SRAS curve.

Question 20

The real balance effect is one of the

Accepted Answer

A)  reasons why an AD curve is downward-sloping. 
B)  shifters of an AD curve. 
C)  reasons why a short-run aggregate supply curve can be derived. 
D)  shifters of a short-run aggregate supply curve. 
A)  reasons why an AD curve is downward-sloping. 
B)  shifters of an AD curve. 
C)  reasons why a short-run aggregate supply curve can be derived. 
D)  shifters of a short-run aggregate supply curve.

Exam 8: Aggregate Demand and Aggregate Supply

Exhibit 8-4 -Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS? to SRAS? would have been the result of

As interest rates rise,the ____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)________________ in Real GDP.

In a two-country world,a decrease in foreign input prices,ceteris paribus,

Suppose the following: (1)the wage rises,(2)the interest rate rises,(3)any change in AD is greater than any change in SRAS.Based on this information,in the short run Real GDP will __________ and the price level will __________.

The short-run aggregate supply (SRAS)curve shows the quantity

If aggregate quantity demanded is greater than aggregate quantity supplied at a particular price level,then

Starting from short-run equilibrium,the following occurs: personal income taxes rise and foreign real national income rises.What is the effect on the price level and Real GDP in the short run?

The economy suffers an adverse supply shock.As a result,in the short run Real GDP will __________ and the price level will __________.

Exhibit 8-1 -Refer to Exhibit 8-1. If we assume that Real GDP and the unemployment rate are inversely related,which of the points on this graph is most likely representative of the highest unemployment rate?

The AD curve shows that,as the price level falls,the quantity of

A rise in wage rates

Ceteris paribus,Real GDP and the unemployment rate are

Which set of changes will definitely shift the aggregate demand (AD)curve to the right?

Exhibit 8-1 -Refer to Exhibit 8-1. Assume the economy is originally in equilibrium at point A. If unusually bad weather leads to decreased production of wheat,corn,and other crops,at which point is the economy most likely to end up in the short run?

In short-run equilibrium,the quantities supplied and demanded of Real GDP can be less than or greater than Natural Real GDP.

Exhibit 8-1 -Refer to Exhibit 8-1. Assume that the economy is originally in equilibrium at point B. If businesses become pessimistic about future sales,at which point is the economy most likely to end up in the short run?

Wage rates fall.This increases __________ and the __________ curve shifts rightward.

A subprime loan is a term for a loan that poses less risk than the average loan.

An increase in the price of oil will cause

The real balance effect is one of the

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

As interest rates rise,the ______ curve shifts _ resulting in a(n)_ in the U.S.price level and a(n)______ in Real GDP.

Suppose the following: (1)the wage rises,(2)the interest rate rises,(3)any change in AD is greater than any change in SRAS.Based on this information,in the short run Real GDP will and the price level will .

The economy suffers an adverse supply shock.As a result,in the short run Real GDP will and the price level will .

Wage rates fall.This increases and the curve shifts rightward.