Question 1

With an increase in the capital stock, the short- run aggregate supply curve

Accepted Answer

A)  shifts leftward. 
B)  remains as it is. 
C)  shifts rightward. 
D)  becomes steeper. 
A)  shifts leftward. 
B)  remains as it is. 
C)  shifts rightward. 
D)  becomes steeper.

Question 2

The aggregate supply/aggregate demand model is used to help understand all of the following EXCEPT

Accepted Answer

A)  inflation. 
B)  growth of potential GDP. 
C)  the aggregate value of stock traded in the stock market. 
D)  business cycle fluctuations. 
A)  inflation. 
B)  growth of potential GDP. 
C)  the aggregate value of stock traded in the stock market. 
D)  business cycle fluctuations.

Question 3

An increase in the quantity of money

Accepted Answer

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

Question 4

-Based on the table above,
a) What is the equilibrium price level and real GDP?
b) If potential GDP is $11.0 trillion, what does that imply about the economy's level of employment?
c) If potential GDP is $9.0 trillion, what does that imply about the economy's level of employment?

Accepted Answer

a) The equilibrium price level is 105; t

Question 5

A Keynesian economist believes that

Accepted Answer

A)  the economy is self- regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
B)  if the economy was left alone, it would rarely operate at full employment. 
C)  the economy is self- regulating and always at full employment. 
D)  the economy is self- regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic. 
A)  the economy is self- regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
B)  if the economy was left alone, it would rarely operate at full employment. 
C)  the economy is self- regulating and always at full employment. 
D)  the economy is self- regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic.

Question 6

-In the above figure, the aggregate demand curve is AD2, so the short- run equilibrium level of real GDP is

Accepted Answer

A)  between $12 and $12.5 trillion. 
B)  $12.5 trillion. 
C)  $12 trillion. 
D)  None of the above answers is correct. 
A)  between $12 and $12.5 trillion. 
B)  $12.5 trillion. 
C)  $12 trillion. 
D)  None of the above answers is correct.

Question 7

Assume the economy is at long run equilibrium and oil prices rise. As a result, the shifts
)

Accepted Answer

A)  AD; rightward 
B)  AD; leftward 
C)  SAS; leftward 
D)  SAS; rightward 
A)  AD; rightward 
B)  AD; leftward 
C)  SAS; leftward 
D)  SAS; rightward

Question 8

-In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate?

Accepted Answer

A)  E to H 
B)  E to F 
C)  E to J 
D)  E to I 
A)  E to H 
B)  E to F 
C)  E to J 
D)  E to I

Question 9

A decrease in short- run aggregate supply the equilibrium price level and the equilibrium quantity of real GDP.

Accepted Answer

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

Question 10

The short- run aggregate supply curve shows a positive relationship between the price level and real GDP.

Accepted Answer

A) True 
 B)False

Question 11

-The economy is initially at point A in the figure. An increase in _ will move the economy to point and then an increase in will move the economy to point .

Accepted Answer

A)  the money wage rate; B; government expenditure; C 
B)  the money wage rate; C; taxes; D 
C)  taxes; D; government expenditure; B 
D)  government expenditure; D; the money wage rate; B 
A)  the money wage rate; B; government expenditure; C 
B)  the money wage rate; C; taxes; D 
C)  taxes; D; government expenditure; B 
D)  government expenditure; D; the money wage rate; B

Question 12

Higher resource prices shift the

Accepted Answer

A)  short- run aggregate supply curve leftward, raising the price level and decreasing real GDP so it is less than potential GDP. 
B)  short- run aggregate supply curve rightward, raising the price level and decreasing real GDP so it is less than potential GDP. 
C)  long- run aggregate supply curve leftward, decreasing real GDP and increasing potential GDP. 
D)  short- run aggregate supply curve leftward, raising the price level and decreasing potential GDP. 
A)  short- run aggregate supply curve leftward, raising the price level and decreasing real GDP so it is less than potential GDP. 
B)  short- run aggregate supply curve rightward, raising the price level and decreasing real GDP so it is less than potential GDP. 
C)  long- run aggregate supply curve leftward, decreasing real GDP and increasing potential GDP. 
D)  short- run aggregate supply curve leftward, raising the price level and decreasing potential GDP.

Question 13

The long- run aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 14

points out that a rise in the price level decreases the value of real wealth, which then decreases consumption.

Accepted Answer

A)  The interest rate effect 
B)  The wealth effect 
C)  The open- economy effect 
D)  The substitution effect 
A)  The interest rate effect 
B)  The wealth effect 
C)  The open- economy effect 
D)  The substitution effect

Question 15

-In the above figure, the movement from point B to point A might be the result of

Accepted Answer

A)  an increase in the demand for manufacturing goods because of new technology. 
B)  an increase in government expenditures because of a war. 
C)  an increase in government expenditures because of increases in education expenditures. 
D)  a fall in the price level. 
A)  an increase in the demand for manufacturing goods because of new technology. 
B)  an increase in government expenditures because of a war. 
C)  an increase in government expenditures because of increases in education expenditures. 
D)  a fall in the price level.

Question 16

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion. What happens if the current price level equals 125?

Accepted Answer

The quantity of real GDP demanded is gre

Question 17

-In the above figure, if the economy is at point A, which of the following is true?

Accepted Answer

A)  There is an inflationary gap. 
B)  Point A is the long- run equilibrium point. 
C)  There is a recessionary gap. 
D)  None of the above answers are correct. 
A)  There is an inflationary gap. 
B)  Point A is the long- run equilibrium point. 
C)  There is a recessionary gap. 
D)  None of the above answers are correct.

Question 18

Suppose the value of the U.S. dollar decreases from $1.20 Canadian to $1.10 Canadian. U.S. exports will _ _, U.S. imports will , and U.S. aggregate demand will .

Accepted Answer

A)  increase; increase; increase 
B)  decrease; increase; decrease 
C)  decrease; increase; increase 
D)  increase; decrease; increase 
A)  increase; increase; increase 
B)  decrease; increase; decrease 
C)  decrease; increase; increase 
D)  increase; decrease; increase

Question 19

In a short- run macroeconomic equilibrium, real GDP exceeds potential GDP, so if aggregate demand does not change the

Accepted Answer

A)  long- run aggregate supply curve will shift leftward as the money wage rate falls. 
B)  long- run aggregate supply curve will shift leftward as the money wage rate rises. 
C)  short- run aggregate supply curve will shift leftward as the money wage rate rises. 
D)  short- run aggregate supply curve will shift rightward as the money wage rate falls. 
A)  long- run aggregate supply curve will shift leftward as the money wage rate falls. 
B)  long- run aggregate supply curve will shift leftward as the money wage rate rises. 
C)  short- run aggregate supply curve will shift leftward as the money wage rate rises. 
D)  short- run aggregate supply curve will shift rightward as the money wage rate falls.

Question 20

-The data in the above table show that when the price level is 120, if aggregate demand does not change then the

Accepted Answer

A)  long- run aggregate supply curve will shift leftward. 
B)  long- run aggregate supply curve will shift rightward. 
C)  short- run aggregate supply curve will shift leftward. 
D)  short- run aggregate supply curve will shift rightward. 
A)  long- run aggregate supply curve will shift leftward. 
B)  long- run aggregate supply curve will shift rightward. 
C)  short- run aggregate supply curve will shift leftward. 
D)  short- run aggregate supply curve will shift rightward.

With an increase in the capital stock, the short- run aggregate supply curve

The aggregate supply/aggregate demand model is used to help understand all of the following EXCEPT

An increase in the quantity of money

-Based on the table above, a) What is the equilibrium price level and real GDP? b) If potential GDP is $11.0 trillion, what does that imply about the economy's level of employment? c) If potential GDP is $9.0 trillion, what does that imply about the economy's level of employment?

A Keynesian economist believes that

-In the above figure, the aggregate demand curve is AD₂, so the short- run equilibrium level of real GDP is

Assume the economy is at long run equilibrium and oil prices rise. As a result, the shifts )

-In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate?

A decrease in short- run aggregate supply the equilibrium price level and the equilibrium quantity of real GDP.

The short- run aggregate supply curve shows a positive relationship between the price level and real GDP.

-The economy is initially at point A in the figure. An increase in _ will move the economy to point and then an increase in will move the economy to point .

Higher resource prices shift the

The long- run aggregate supply curve is vertical.

points out that a rise in the price level decreases the value of real wealth, which then decreases consumption.

-In the above figure, the movement from point B to point A might be the result of

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion. What happens if the current price level equals 125?

-In the above figure, if the economy is at point A, which of the following is true?

Suppose the value of the U.S. dollar decreases from $1.20 Canadian to $1.10 Canadian. U.S. exports will _ _, U.S. imports will , and U.S. aggregate demand will .

In a short- run macroeconomic equilibrium, real GDP exceeds potential GDP, so if aggregate demand does not change the

-The data in the above table show that when the price level is 120, if aggregate demand does not change then the

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

With an increase in the capital stock, the short- run aggregate supply curve

The aggregate supply/aggregate demand model is used to help understand all of the following EXCEPT

An increase in the quantity of money

-Based on the table above, a) What is the equilibrium price level and real GDP? b) If potential GDP is $11.0 trillion, what does that imply about the economy's level of employment? c) If potential GDP is $9.0 trillion, what does that imply about the economy's level of employment?

A Keynesian economist believes that

-In the above figure, the aggregate demand curve is AD2, so the short- run equilibrium level of real GDP is

Assume the economy is at long run equilibrium and oil prices rise. As a result, the shifts )

-In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate?

A decrease in short- run aggregate supply the equilibrium price level and the equilibrium quantity of real GDP.

The short- run aggregate supply curve shows a positive relationship between the price level and real GDP.

-The economy is initially at point A in the figure. An increase in _ will move the economy to point and then an increase in will move the economy to point .

Higher resource prices shift the

The long- run aggregate supply curve is vertical.

points out that a rise in the price level decreases the value of real wealth, which then decreases consumption.

-In the above figure, the movement from point B to point A might be the result of

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion. What happens if the current price level equals 125?

-In the above figure, if the economy is at point A, which of the following is true?

Suppose the value of the U.S. dollar decreases from $1.20 Canadian to $1.10 Canadian. U.S. exports will _ _, U.S. imports will , and U.S. aggregate demand will .

In a short- run macroeconomic equilibrium, real GDP exceeds potential GDP, so if aggregate demand does not change the

-The data in the above table show that when the price level is 120, if aggregate demand does not change then the

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 aggregate demand curve is AD₂, so the short- run equilibrium level of real GDP is