Question 1

According to the intertemporal substitution effect, when the price level rises and other things remain the same

Accepted Answer

A)  government taxes rise. 
B)  the interest rate falls. 
C)  the interest rate rises. 
D)  the quantity of money increases. 
A)  government taxes rise. 
B)  the interest rate falls. 
C)  the interest rate rises. 
D)  the quantity of money increases.

Question 2

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

Accepted Answer

A)  the price level rises and real GDP increases. 
B)  the price level rises and real GDP does not change. 
C)  real GDP increases and the price level does not change. 
D)  nothing happens because the economy is in long run equilibrium. 
A)  the price level rises and real GDP increases. 
B)  the price level rises and real GDP does not change. 
C)  real GDP increases and the price level does not change. 
D)  nothing happens because the economy is in long run equilibrium.

Question 3

Higher taxes

Accepted Answer

A)  increase the aggregate quantity demanded. 
B)  increase aggregate demand. 
C)  decrease aggregate demand. 
D)  decrease the aggregate quantity demanded. 
A)  increase the aggregate quantity demanded. 
B)  increase aggregate demand. 
C)  decrease aggregate demand. 
D)  decrease the aggregate quantity demanded.

Question 4

In the short- run, a rise in the money wage rate leads to

Accepted Answer

A)  an increase in the price level and a decrease in real GDP. 
B)  an increase in the price level and an increase in real GDP. 
C)  no change in the price level, but an increase in real GDP. 
D)  an increase in the price level, but no change in real GDP. 
A)  an increase in the price level and a decrease in real GDP. 
B)  an increase in the price level and an increase in real GDP. 
C)  no change in the price level, but an increase in real GDP. 
D)  an increase in the price level, but no change in real GDP.

Question 5

Suppose there is a temporary increase in the price of oil. This is represented by

Accepted Answer

A)  a leftward shift of the SAS and the LAS curve. 
B)  a rightward shift of the SAS curve. 
C)  a leftward shift of the LAS curve. 
D)  a leftward shift of the SAS curve. 
A)  a leftward shift of the SAS and the LAS curve. 
B)  a rightward shift of the SAS curve. 
C)  a leftward shift of the LAS curve. 
D)  a leftward shift of the SAS curve.

Question 6

-In the above figure, which movement illustrates the impact of the price level and money wage rate falling at the same rate?

Accepted Answer

A)  E to J 
B)  E to K 
C)  E to H 
D)  E to G 
A)  E to J 
B)  E to K 
C)  E to H 
D)  E to G

Question 7

In long- run macroeconomic equilibrium,

Accepted Answer

A)  real GDP equals potential GDP. 
B)  real GDP and the price level are determined by short- run aggregate supply and aggregate demand and long- run aggregate supply is irrelevant. 
C)  the price level is fixed and aggregate demand determines real GDP. 
D)  real GDP is less than potential GDP. 
A)  real GDP equals potential GDP. 
B)  real GDP and the price level are determined by short- run aggregate supply and aggregate demand and long- run aggregate supply is irrelevant. 
C)  the price level is fixed and aggregate demand determines real GDP. 
D)  real GDP is less than potential GDP.

Question 8

The intertemporal substitution effect refers to substitution of

Accepted Answer

A)  goods and services for less expensive goods and services. 
B)  goods and services today for goods and services in the future. 
C)  goods for services. 
D)  goods and services produced domestically for goods and services produced in another country. 
A)  goods and services for less expensive goods and services. 
B)  goods and services today for goods and services in the future. 
C)  goods for services. 
D)  goods and services produced domestically for goods and services produced in another country.

Question 9

-In the above figure, the economy is at point A. Then the price level rises to 110 while the money wage rate remains constant. Firms will be willing to supply output equal to

Accepted Answer

A)  $12.0 trillion 
B)  more than $12.0 trillion 
C)  less than $12.0 trillion 
D)  Without more information, it is impossible to determine which of the above answers is correct. 
A)  $12.0 trillion 
B)  more than $12.0 trillion 
C)  less than $12.0 trillion 
D)  Without more information, it is impossible to determine which of the above answers is correct.

Question 10

-In the above figure, the short- run aggregate supply curve is SAS1. If the level of technology in the economy increases, there is

Accepted Answer

A)  a shift to SAS2. 
B)  an upward movement along SAS1. 
C)  a shift to SAS0. 
D)  a downward movement along SAS1. 
A)  a shift to SAS2. 
B)  an upward movement along SAS1. 
C)  a shift to SAS0. 
D)  a downward movement along SAS1.

Question 11

China is one of the world's largest exporters. As the world's economies slipped into a worldwide recession in 2008, there will be a _ China's aggregate demand curve as China's exports
)

Accepted Answer

A)  movement upward along; increase 
B)  movement upward along; decrease 
C)  leftward shift of; decrease 
D)  rightward shift of; decrease 
A)  movement upward along; increase 
B)  movement upward along; decrease 
C)  leftward shift of; decrease 
D)  rightward shift of; decrease

Question 12

Consider a BMW automobile plant. If the price of BMWs increase by 10 percent and the money wage rate and other costs , there will be .

Accepted Answer

A)  increase by 10 percent; an increase in BMWs profits 
B)  do not change; an increase in BMW's production and profit 
C)  do not change; no change in production 
D)  increase by 10 percent; an increase in BMWs production 
A)  increase by 10 percent; an increase in BMWs profits 
B)  do not change; an increase in BMW's production and profit 
C)  do not change; no change in production 
D)  increase by 10 percent; an increase in BMWs production

Question 13

The supply of real GDP is a function of

Accepted Answer

A)  the quantities of labor, capital and the state of technology. 
B)  the total expenditures of consumers, investors and government. 
C)  only the state of technology. 
D)  the sum of wages, salaries, corporate profits, rents and interest. 
A)  the quantities of labor, capital and the state of technology. 
B)  the total expenditures of consumers, investors and government. 
C)  only the state of technology. 
D)  the sum of wages, salaries, corporate profits, rents and interest.

Question 14

If the money prices of resources changes, the SAS curve shifts.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that the economy begins at a long- run equilibrium. Which of the following raises the price level and decrease real GDP in the short run?

Accepted Answer

A)  an increase in the price of oil that decreases aggregate supply 
B)  an increase in the stock of capital that increases aggregate supply 
C)  a decrease in the quantity of money 
D)  an increase in government expenditures 
A)  an increase in the price of oil that decreases aggregate supply 
B)  an increase in the stock of capital that increases aggregate supply 
C)  a decrease in the quantity of money 
D)  an increase in government expenditures

Question 16

-In the above figure, which point corresponds to an increase in technology?

Accepted Answer

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

Question 17

An increase in the price level decreases net exports, thereby decreasing the amount of real goods and services purchased in the United States. This phenomenon as

Accepted Answer

A)  the wealth effect. 
B)  the barter effect. 
C)  the GDP effect. 
D)  a substitution effect. 
A)  the wealth effect. 
B)  the barter effect. 
C)  the GDP effect. 
D)  a substitution effect.

Question 18

The aggregate demand curve

Accepted Answer

A)  is horizontal. 
B)  is vertical. 
C)  has a positive slope. 
D)  has a negative slope. 
A)  is horizontal. 
B)  is vertical. 
C)  has a positive slope. 
D)  has a negative slope.

Question 19

There are several reasons why the aggregate demand curve is downward sloping. Which of the following correctly describes one of these explanations?

Accepted Answer

A)  A fall in the price level, holding foreign prices and the exchange rate constant, increases net exports. 
B)  A rise in the price level lowers the interest rate and increases investment spending. 
C)  A rise in the price level raises the purchasing power wealth and increases desired consumption. 
D)  A rise in the price level raises interest rates and increases investment spending. 
A)  A fall in the price level, holding foreign prices and the exchange rate constant, increases net exports. 
B)  A rise in the price level lowers the interest rate and increases investment spending. 
C)  A rise in the price level raises the purchasing power wealth and increases desired consumption. 
D)  A rise in the price level raises interest rates and increases investment spending.

Question 20

The long- run aggregate supply curve is vertical at $12 trillion but the short- run aggregate supply curve intersects the aggregate demand curve at $13 trillion. We know that

Accepted Answer

A)  the economy is producing below full employment in the short run, and will adjust by hiring more workers, thus decreasing unemployment. 
B)  adjustments will occur so that the long- run aggregate supply equals $13 trillion. 
C)  adjustments will occur so that the short- run aggregate supply eventually intersects the aggregate demand curve at $12 trillion. 
D)  the price level is too high. The long- run equilibrium will occur with a lower price level. 
A)  the economy is producing below full employment in the short run, and will adjust by hiring more workers, thus decreasing unemployment. 
B)  adjustments will occur so that the long- run aggregate supply equals $13 trillion. 
C)  adjustments will occur so that the short- run aggregate supply eventually intersects the aggregate demand curve at $12 trillion. 
D)  the price level is too high. The long- run equilibrium will occur with a lower price level.

According to the intertemporal substitution effect, when the price level rises and other things remain the same

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

Higher taxes

In the short- run, a rise in the money wage rate leads to

Suppose there is a temporary increase in the price of oil. This is represented by

-In the above figure, which movement illustrates the impact of the price level and money wage rate falling at the same rate?

In long- run macroeconomic equilibrium,

The intertemporal substitution effect refers to substitution of

-In the above figure, the economy is at point A. Then the price level rises to 110 while the money wage rate remains constant. Firms will be willing to supply output equal to

-In the above figure, the short- run aggregate supply curve is SAS₁. If the level of technology in the economy increases, there is

China is one of the world's largest exporters. As the world's economies slipped into a worldwide recession in 2008, there will be a _ China's aggregate demand curve as China's exports )

Consider a BMW automobile plant. If the price of BMWs increase by 10 percent and the money wage rate and other costs , there will be .

The supply of real GDP is a function of

If the money prices of resources changes, the SAS curve shifts.

Suppose that the economy begins at a long- run equilibrium. Which of the following raises the price level and decrease real GDP in the short run?

-In the above figure, which point corresponds to an increase in technology?

An increase in the price level decreases net exports, thereby decreasing the amount of real goods and services purchased in the United States. This phenomenon as

The aggregate demand curve

There are several reasons why the aggregate demand curve is downward sloping. Which of the following correctly describes one of these explanations?

The long- run aggregate supply curve is vertical at $12 trillion but the short- run aggregate supply curve intersects the aggregate demand curve at $13 trillion. We know that

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

According to the intertemporal substitution effect, when the price level rises and other things remain the same

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

Higher taxes

In the short- run, a rise in the money wage rate leads to

Suppose there is a temporary increase in the price of oil. This is represented by

-In the above figure, which movement illustrates the impact of the price level and money wage rate falling at the same rate?

In long- run macroeconomic equilibrium,

The intertemporal substitution effect refers to substitution of

-In the above figure, the economy is at point A. Then the price level rises to 110 while the money wage rate remains constant. Firms will be willing to supply output equal to

-In the above figure, the short- run aggregate supply curve is SAS1. If the level of technology in the economy increases, there is

China is one of the world's largest exporters. As the world's economies slipped into a worldwide recession in 2008, there will be a _ China's aggregate demand curve as China's exports )

Consider a BMW automobile plant. If the price of BMWs increase by 10 percent and the money wage rate and other costs , there will be .

The supply of real GDP is a function of

If the money prices of resources changes, the SAS curve shifts.

Suppose that the economy begins at a long- run equilibrium. Which of the following raises the price level and decrease real GDP in the short run?

-In the above figure, which point corresponds to an increase in technology?

An increase in the price level decreases net exports, thereby decreasing the amount of real goods and services purchased in the United States. This phenomenon as

The aggregate demand curve

There are several reasons why the aggregate demand curve is downward sloping. Which of the following correctly describes one of these explanations?

The long- run aggregate supply curve is vertical at $12 trillion but the short- run aggregate supply curve intersects the aggregate demand curve at $13 trillion. We know that

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 short- run aggregate supply curve is SAS₁. If the level of technology in the economy increases, there is