Question 1

-In the above figure, which part corresponds to a fall in the money wage rate?

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 2

In the short run, the intersection of the aggregate demand and the short- run aggregate supply curves,

Accepted Answer

A)  determines the equilibrium level of real GDP. 
B)  is a point where there is neither a surplus nor a shortage of goods. 
C)  determines the equilibrium price level. 
D)  All of the above answers are correct. 
A)  determines the equilibrium level of real GDP. 
B)  is a point where there is neither a surplus nor a shortage of goods. 
C)  determines the equilibrium price level. 
D)  All of the above answers are correct.

Question 3

We distinguish between the long- run aggregate supply curve and the short- run aggregate supply curve. In the long run

Accepted Answer

A)  the aggregate supply curve is horizontal while in the short run it is upward sloping. 
B)  real GDP equals potential GDP. 
C)  the price level is constant but in the short run it fluctuates. 
D)  technology is fixed but not in the short run. 
A)  the aggregate supply curve is horizontal while in the short run it is upward sloping. 
B)  real GDP equals potential GDP. 
C)  the price level is constant but in the short run it fluctuates. 
D)  technology is fixed but not in the short run.

Question 4

In 2008, the Bank of England increased the country's money supply and lowered its interest rate. This policy was designed to

Accepted Answer

A)  encourage people to buy more goods and services. 
B)  shift the aggregate demand curve rightward. 
C)  cause a movement up along the aggregate demand curve. 
D)  Both A and B are correct. 
A)  encourage people to buy more goods and services. 
B)  shift the aggregate demand curve rightward. 
C)  cause a movement up along the aggregate demand curve. 
D)  Both A and B are correct.

Question 5

The business cycle is actually a continuous series of different .

Accepted Answer

A)  nominal GDP values 
B)  short- run macroeconomic equilibriums 
C)  potential GDP values 
D)  full- employment equilibriums 
A)  nominal GDP values 
B)  short- run macroeconomic equilibriums 
C)  potential GDP values 
D)  full- employment equilibriums

Question 6

Which of the following helps determine the growth rate of potential GDP?
I. capital accumulation
II. technology advances
III. the money supply

Accepted Answer

A)  I and II 
B)  I, II and III 
C)  I 
D)  I and III 
A)  I and II 
B)  I, II and III 
C)  I 
D)  I and III

Question 7

According to the intertemporal substitution effect, when the price level increases, the interest rate

Accepted Answer

A)  is not affected. 
B)  rises and the quantity of real GDP demanded decreases. 
C)  rises and the quantity of real GDP demanded increases. 
D)  falls and the quantity of real GDP demanded decreases. 
A)  is not affected. 
B)  rises and the quantity of real GDP demanded decreases. 
C)  rises and the quantity of real GDP demanded increases. 
D)  falls and the quantity of real GDP demanded decreases.

Question 8

-In the above figure, if aggregate demand does not change the short- run equilibrium will

Accepted Answer

A)  eventually adjust to a long- run equilibrium with a lower price level. 
B)  eventually adjust to a long- run equilibrium with a higher price level. 
C)  will not adjust on its own. 
D)  None of the above answers are correct. 
A)  eventually adjust to a long- run equilibrium with a lower price level. 
B)  eventually adjust to a long- run equilibrium with a higher price level. 
C)  will not adjust on its own. 
D)  None of the above answers are correct.

Question 9

-In the above figure, which part corresponds to an increase in the money wage rate?

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 10

A movement along the aggregate demand curve but not a shift in the aggregate demand curve is created by

Accepted Answer

A)  a change in the quantity of money. 
B)  an increase in government purchases. 
C)  a fall in the price level. 
D)  an increase in nominal GDP. 
A)  a change in the quantity of money. 
B)  an increase in government purchases. 
C)  a fall in the price level. 
D)  an increase in nominal GDP.

Question 11

-In the above figure, suppose the economy had been at point A and now is at B. What could have lead to the movement to B?

Accepted Answer

A)  A tax hike. 
B)  Money wage rates rose. 
C)  Government expenditures on goods and services increased. 
D)  Winter storms cause factories in the north to be shut down for several weeks. 
A)  A tax hike. 
B)  Money wage rates rose. 
C)  Government expenditures on goods and services increased. 
D)  Winter storms cause factories in the north to be shut down for several weeks.

Question 12

The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

Accepted Answer

A)  larger consumption expenditure. 
B)  greater the quantity of real GDP demanded. 
C)  smaller the quantity of real GDP demanded. 
D)  None of the above answers is correct. 
A)  larger consumption expenditure. 
B)  greater the quantity of real GDP demanded. 
C)  smaller the quantity of real GDP demanded. 
D)  None of the above answers is correct.

Question 13

-The reason that it is possible for the economy in the above figure to be at equilibrium E2 rather than at E1 is that

Accepted Answer

A)  in the short run the economy can produce more than it can in a long- run situation. 
B)  AD always shifts rightward and never shifts leftward. 
C)  the economy must be in a recession. 
D)  in the long run there is always less than full employment. 
A)  in the short run the economy can produce more than it can in a long- run situation. 
B)  AD always shifts rightward and never shifts leftward. 
C)  the economy must be in a recession. 
D)  in the long run there is always less than full employment.

Question 14

All of the following shift the short- run aggregate supply curve EXCEPT

Accepted Answer

A)  technological progress. 
B)  a change in the money wage rate. 
C)  a change in the price of a raw material. 
D)  a change in the price level. 
A)  technological progress. 
B)  a change in the money wage rate. 
C)  a change in the price of a raw material. 
D)  a change in the price level.

Question 15

The short- run aggregate supply curve is upward sloping because

Accepted Answer

A)  capital is scarce. 
B)  potential GDP is less than real GDP when the price level falls. 
C)  firms need to receive higher prices to cover the higher costs of producing increasing levels of output. 
D)  technology is scarce. 
A)  capital is scarce. 
B)  potential GDP is less than real GDP when the price level falls. 
C)  firms need to receive higher prices to cover the higher costs of producing increasing levels of output. 
D)  technology is scarce.

Question 16

-An inflationary gap means that short- run macroeconomic equilibrium GDP

Accepted Answer

A)  is more than full- employment GDP. 
B)  is less than full- employment GDP. 
C)  equals full- employment GDP. 
D)  may be less than, more than, or the same as full- employment GDP depending on the level of potential GDP. 
A)  is more than full- employment GDP. 
B)  is less than full- employment GDP. 
C)  equals full- employment GDP. 
D)  may be less than, more than, or the same as full- employment GDP depending on the level of potential GDP.

Question 17

-The above figure illustrates

Accepted Answer

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

Question 18

What are fiscal and monetary policies? Do they have an immediate effect on the AD curve or the SAS curve?

Accepted Answer

Fiscal policy is defined as changes in g

Question 19

When the price level in France increases while the exchange rate and the price level in the United States remain the same, the result is

Accepted Answer

A)  French citizens are more likely to buy U.S.- made goods. 
B)  U.S. citizens are less likely to buy French- made goods. 
C)  U.S.- made goods become relatively cheaper compared to French- made goods. 
D)  All of the above answers are correct. 
A)  French citizens are more likely to buy U.S.- made goods. 
B)  U.S. citizens are less likely to buy French- made goods. 
C)  U.S.- made goods become relatively cheaper compared to French- made goods. 
D)  All of the above answers are correct.

Question 20

A monetarist economist believes that

Accepted Answer

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

-In the above figure, which part corresponds to a fall in the money wage rate?

In the short run, the intersection of the aggregate demand and the short- run aggregate supply curves,

We distinguish between the long- run aggregate supply curve and the short- run aggregate supply curve. In the long run

In 2008, the Bank of England increased the country's money supply and lowered its interest rate. This policy was designed to

The business cycle is actually a continuous series of different .

Which of the following helps determine the growth rate of potential GDP? I. capital accumulation II. technology advances III. the money supply

According to the intertemporal substitution effect, when the price level increases, the interest rate

-In the above figure, if aggregate demand does not change the short- run equilibrium will

-In the above figure, which part corresponds to an increase in the money wage rate?

A movement along the aggregate demand curve but not a shift in the aggregate demand curve is created by

-In the above figure, suppose the economy had been at point A and now is at B. What could have lead to the movement to B?

The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

-The reason that it is possible for the economy in the above figure to be at equilibrium E₂rather than at E₁is that

All of the following shift the short- run aggregate supply curve EXCEPT

The short- run aggregate supply curve is upward sloping because

-An inflationary gap means that short- run macroeconomic equilibrium GDP

-The above figure illustrates

What are fiscal and monetary policies? Do they have an immediate effect on the AD curve or the SAS curve?

When the price level in France increases while the exchange rate and the price level in the United States remain the same, the result is

A monetarist economist believes 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

-In the above figure, which part corresponds to a fall in the money wage rate?

In the short run, the intersection of the aggregate demand and the short- run aggregate supply curves,

We distinguish between the long- run aggregate supply curve and the short- run aggregate supply curve. In the long run

In 2008, the Bank of England increased the country's money supply and lowered its interest rate. This policy was designed to

The business cycle is actually a continuous series of different .

Which of the following helps determine the growth rate of potential GDP? I. capital accumulation II. technology advances III. the money supply

According to the intertemporal substitution effect, when the price level increases, the interest rate

-In the above figure, if aggregate demand does not change the short- run equilibrium will

-In the above figure, which part corresponds to an increase in the money wage rate?

A movement along the aggregate demand curve but not a shift in the aggregate demand curve is created by

-In the above figure, suppose the economy had been at point A and now is at B. What could have lead to the movement to B?

The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

-The reason that it is possible for the economy in the above figure to be at equilibrium E2 rather than at E1 is that

All of the following shift the short- run aggregate supply curve EXCEPT

The short- run aggregate supply curve is upward sloping because

-An inflationary gap means that short- run macroeconomic equilibrium GDP

-The above figure illustrates

What are fiscal and monetary policies? Do they have an immediate effect on the AD curve or the SAS curve?

When the price level in France increases while the exchange rate and the price level in the United States remain the same, the result is

A monetarist economist believes 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

-The reason that it is possible for the economy in the above figure to be at equilibrium E₂rather than at E₁is that