Question 1

Long- run aggregate supply will decrease for all of the following reasons EXCEPT

Accepted Answer

A)  decreased capital. 
B)  decreased human capital. 
C)  reduced money wages. 
D)  decrease in the level of full employment. 
A)  decreased capital. 
B)  decreased human capital. 
C)  reduced money wages. 
D)  decrease in the level of full employment.

Question 2

An increase in expected future income

Accepted Answer

A)  increases the aggregate quantity demanded. 
B)  decreases aggregate demand. 
C)  decreases the aggregate quantity demanded. 
D)  increases aggregate demand. 
A)  increases the aggregate quantity demanded. 
B)  decreases aggregate demand. 
C)  decreases the aggregate quantity demanded. 
D)  increases aggregate demand.

Question 3

A change in creates a movement along the aggregate demand curve, while a change in
Shifts the aggregate demand curve.

Accepted Answer

A)  the price level; government expenditures 
B)  foreign income; the foreign exchange rate 
C)  expected profits; tax rates 
D)  real wealth; human capital 
A)  the price level; government expenditures 
B)  foreign income; the foreign exchange rate 
C)  expected profits; tax rates 
D)  real wealth; human capital

Question 4

The country of Stanley is at an above- full employment equilibrium. Which of the following events will return Stanley to full- employment?

Accepted Answer

A)  an increase in the quantity of money 
B)  an increase in the money wage rate 
C)  an increase in government expenditures 
D)  a decrease in the interest rate 
A)  an increase in the quantity of money 
B)  an increase in the money wage rate 
C)  an increase in government expenditures 
D)  a decrease in the interest rate

Question 5

-In the above figure, point C represents

Accepted Answer

A)  a full- employment equilibrium. 
B)  an inflationary gap. 
C)  a recessionary gap. 
D)  a decrease in aggregate demand. 
A)  a full- employment equilibrium. 
B)  an inflationary gap. 
C)  a recessionary gap. 
D)  a decrease in aggregate demand.

Question 6

An increase in government expenditure on goods and services

Accepted Answer

A)  decreases the aggregate quantity demanded. 
B)  increases aggregate demand. 
C)  decreases aggregate demand. 
D)  increases the aggregate quantity demanded. 
A)  decreases the aggregate quantity demanded. 
B)  increases aggregate demand. 
C)  decreases aggregate demand. 
D)  increases the aggregate quantity demanded.

Question 7

As the price level falls, the quantity of real wealth _ and the aggregate quantity of real GDP demanded _.

Accepted Answer

A)  increases; decreases 
B)  decreases; increases 
C)  increases; increases 
D)  decreases; decreases 
A)  increases; decreases 
B)  decreases; increases 
C)  increases; increases 
D)  decreases; decreases

Question 8

The price level in India increases from 131 to 137 while its trading partners' price levels remain constant. As a result, people will buy Indian- made goods and there will be a movement
Along India's aggregate demand curve.

Accepted Answer

A)  more; downward 
B)  more; upward 
C)  less; upward 
D)  less; downward 
A)  more; downward 
B)  more; upward 
C)  less; upward 
D)  less; downward

Question 9

-In the above figure, point B represents

Accepted Answer

A)  a decrease in aggregate demand. 
B)  an inflationary gap. 
C)  a recessionary gap. 
D)  a full- employment equilibrium. 
A)  a decrease in aggregate demand. 
B)  an inflationary gap. 
C)  a recessionary gap. 
D)  a full- employment equilibrium.

Question 10

-The data in the above table indicate that the economy will be in a short- run macroeconomic equilibrium at a price level

Accepted Answer

A)  of 110. 
B)  between 119 and 111. 
C)  between 130 and 121. 
D)  of 120. 
A)  of 110. 
B)  between 119 and 111. 
C)  between 130 and 121. 
D)  of 120.

Question 11

If the money wage and other resource prices do not change when the price level rises by 10 percent,
)

Accepted Answer

A)  there is movement along the short- run aggregate supply curve 
B)  the long- run aggregate supply curve shifts leftward 
C)  massive labor lay- offs occur 
D)  the short- run aggregate supply curve shifts leftward 
A)  there is movement along the short- run aggregate supply curve 
B)  the long- run aggregate supply curve shifts leftward 
C)  massive labor lay- offs occur 
D)  the short- run aggregate supply curve shifts leftward

Question 12

What happens if the economy is at its long- run equilibrium and aggregate demand increases?

Accepted Answer

The increase in aggregate demand means t

Question 13

The table below shows the price level and real GDP (in rupees) for India. Suppose that potential G 26,500 rupees.
 
In 2004, India experienced

Accepted Answer

A)  a rightward shift in the long- run aggregate supply curve. 
B)  a recessionary gap. 
C)  an inflationary gap. 
D)  an above full- employment gap. 
A)  a rightward shift in the long- run aggregate supply curve. 
B)  a recessionary gap. 
C)  an inflationary gap. 
D)  an above full- employment gap.

Question 14

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Supp full employment occurs when real GDP is 27,000 million rupees.
 
The economy is experiencing _ gap and firms will .

Accepted Answer

A)  an inflationary gap; increase production 
B)  a recessionary gap; increase production 
C)  a recessionary gap; decrease money wages paid to workers 
D)  an inflationary gap; increase money wages paid to workers 
A)  an inflationary gap; increase production 
B)  a recessionary gap; increase production 
C)  a recessionary gap; decrease money wages paid to workers 
D)  an inflationary gap; increase money wages paid to workers

Question 15

Which of the following can be said about economic growth?
I. Economic growth is the result of increases in long- run aggregate supply.
II. Economic growth is the result of increases in aggregate demand.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  neither I or II 
A)  I only 
B)  II only 
C)  I and II 
D)  neither I or II

Question 16

Aggregate demand decreases when

Accepted Answer

A)  businesses come to expect higher profits in the future. 
B)  the government implements monetary policies that decrease the quantity of money. 
C)  incomes in foreign countries increase. 
D)  the government cuts taxes. 
A)  businesses come to expect higher profits in the future. 
B)  the government implements monetary policies that decrease the quantity of money. 
C)  incomes in foreign countries increase. 
D)  the government cuts taxes.

Question 17

-In the above figure, the inflationary gap when AD2 is the aggregate demand curve equals

Accepted Answer

A)  AD1. 
B)  the difference between $12.5 trillion and $12.0 trillion. 
C)  the difference between 110 and 100. 
D)  LAS minus SAS at a price level of 100. 
A)  AD1. 
B)  the difference between $12.5 trillion and $12.0 trillion. 
C)  the difference between 110 and 100. 
D)  LAS minus SAS at a price level of 100.

Question 18

-The above figure illustrates

Accepted Answer

A)  a full- employment equilibrium. 
B)  an inflationary gap. 
C)  a recessionary gap. 
D)  an equilibrium at the economy's physical limits. 
A)  a full- employment equilibrium. 
B)  an inflationary gap. 
C)  a recessionary gap. 
D)  an equilibrium at the economy's physical limits.

Question 19

The short- run aggregate supply curve

Accepted Answer

A)  shifts because of changes in the price level. 
B)  shows the impact changes in the price level have on the quantity of real GDP when resource prices are constant. 
C)  illustrates the level of potential real GDP. 
D)  is vertical. 
A)  shifts because of changes in the price level. 
B)  shows the impact changes in the price level have on the quantity of real GDP when resource prices are constant. 
C)  illustrates the level of potential real GDP. 
D)  is vertical.

Question 20

In the long- run, the quantity of real GDP supplied increases when the price level increases.

Accepted Answer

A) True 
 B)False

Long- run aggregate supply will decrease for all of the following reasons EXCEPT

An increase in expected future income

A change in creates a movement along the aggregate demand curve, while a change in Shifts the aggregate demand curve.

The country of Stanley is at an above- full employment equilibrium. Which of the following events will return Stanley to full- employment?

-In the above figure, point C represents

An increase in government expenditure on goods and services

As the price level falls, the quantity of real wealth _ and the aggregate quantity of real GDP demanded _.

The price level in India increases from 131 to 137 while its trading partners' price levels remain constant. As a result, people will buy Indian- made goods and there will be a movement Along India's aggregate demand curve.

-In the above figure, point B represents

-The data in the above table indicate that the economy will be in a short- run macroeconomic equilibrium at a price level

If the money wage and other resource prices do not change when the price level rises by 10 percent, )

What happens if the economy is at its long- run equilibrium and aggregate demand increases?

The table below shows the price level and real GDP (in rupees) for India. Suppose that potential G 26,500 rupees. In 2004, India experienced

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Supp full employment occurs when real GDP is 27,000 million rupees. The economy is experiencing _ gap and firms will .

Which of the following can be said about economic growth? I. Economic growth is the result of increases in long- run aggregate supply. II. Economic growth is the result of increases in aggregate demand.

Aggregate demand decreases when

-In the above figure, the inflationary gap when AD₂is the aggregate demand curve equals

-The above figure illustrates

The short- run aggregate supply curve

In the long- run, the quantity of real GDP supplied increases when the price level increases.

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 10: Aggregate Supply and Aggregate Demand

Long- run aggregate supply will decrease for all of the following reasons EXCEPT

An increase in expected future income

A change in creates a movement along the aggregate demand curve, while a change in Shifts the aggregate demand curve.

The country of Stanley is at an above- full employment equilibrium. Which of the following events will return Stanley to full- employment?

-In the above figure, point C represents

An increase in government expenditure on goods and services

As the price level falls, the quantity of real wealth _ and the aggregate quantity of real GDP demanded _.

The price level in India increases from 131 to 137 while its trading partners' price levels remain constant. As a result, people will buy Indian- made goods and there will be a movement Along India's aggregate demand curve.

-In the above figure, point B represents

-The data in the above table indicate that the economy will be in a short- run macroeconomic equilibrium at a price level

If the money wage and other resource prices do not change when the price level rises by 10 percent, )

What happens if the economy is at its long- run equilibrium and aggregate demand increases?

The table below shows the price level and real GDP (in rupees) for India. Suppose that potential G 26,500 rupees. In 2004, India experienced

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Supp full employment occurs when real GDP is 27,000 million rupees. The economy is experiencing _ gap and firms will .

Which of the following can be said about economic growth? I. Economic growth is the result of increases in long- run aggregate supply. II. Economic growth is the result of increases in aggregate demand.

Aggregate demand decreases when

-In the above figure, the inflationary gap when AD2 is the aggregate demand curve equals

-The above figure illustrates

The short- run aggregate supply curve

In the long- run, the quantity of real GDP supplied increases when the price level increases.

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

-In the above figure, the inflationary gap when AD₂is the aggregate demand curve equals