Question 1

In the short run, the equilibrium level of real GDP

Accepted Answer

A)  is necessarily greater than potential GDP. 
B)  is necessarily equal to potential GDP. 
C)  is necessarily less than potential GDP. 
D)  could be less than, equal to, or greater than potential GDP. 
A)  is necessarily greater than potential GDP. 
B)  is necessarily equal to potential GDP. 
C)  is necessarily less than potential GDP. 
D)  could be less than, equal to, or greater than potential GDP.

Question 2

In long- run macroeconomic equilibrium,

Accepted Answer

A)  the aggregate demand curve adjusts to the point where the long- run aggregate supply curve and the short- run aggregate supply curve intersect. 
B)  the real wage rate has adjusted so that the economy is on the short- run aggregate supply curve but not on the long- run aggregate supply curve. 
C)  long- run aggregate supply curve has shifted so that potential GDP equals real GDP. 
D)  None of the above answers is correct. 
A)  the aggregate demand curve adjusts to the point where the long- run aggregate supply curve and the short- run aggregate supply curve intersect. 
B)  the real wage rate has adjusted so that the economy is on the short- run aggregate supply curve but not on the long- run aggregate supply curve. 
C)  long- run aggregate supply curve has shifted so that potential GDP equals real GDP. 
D)  None of the above answers is correct.

Question 3

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

Accepted Answer

A)  an increase in exports. 
B)  a decrease in the real value of wealth. 
C)  a decrease in interest rates. 
D)  an increase in the real value of wealth. 
A)  an increase in exports. 
B)  a decrease in the real value of wealth. 
C)  a decrease in interest rates. 
D)  an increase in the real value of wealth.

Question 4

-In the above figure, the short- run equilibrium will eventually adjust to a long- run equilibrium with a

Accepted Answer

A)  lower price level and larger real GDP. 
B)  higher price level and smaller real GDP. 
C)  lower price level and smaller real GDP 
D)  higher price level and larger real GDP. 
A)  lower price level and larger real GDP. 
B)  higher price level and smaller real GDP. 
C)  lower price level and smaller real GDP 
D)  higher price level and larger real GDP.

Question 5

-In the above figure, real GDP at full employment is

Accepted Answer

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

Question 6

Which of the following does NOT shift the short- run aggregate supply curve?

Accepted Answer

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

Question 7

An above full- employment equilibrium occurs when

Accepted Answer

A)  short- run aggregate supply decreases while neither aggregate demand nor long- run aggregate supply changes. 
B)  the equilibrium level of real GDP is greater than potential GDP. 
C)  aggregate demand decreases while neither the short- run nor long- run aggregate supply changes. 
D)  the equilibrium level of real GDP is less than potential GDP. 
A)  short- run aggregate supply decreases while neither aggregate demand nor long- run aggregate supply changes. 
B)  the equilibrium level of real GDP is greater than potential GDP. 
C)  aggregate demand decreases while neither the short- run nor long- run aggregate supply changes. 
D)  the equilibrium level of real GDP is less than potential GDP.

Question 8

A technological advance the long- run aggregate supply curve and the short- run aggregate supply curve.

Accepted Answer

A)  shifts; shifts 
B)  does not shift; does not shift 
C)  does not shift; shifts 
D)  shifts; does not shift 
A)  shifts; shifts 
B)  does not shift; does not shift 
C)  does not shift; shifts 
D)  shifts; does not shift

Question 9

In the short- run, a decrease in government expenditure real GDP and the price level.

Accepted Answer

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

Question 10

A rise in the exchange rate of the dollar

Accepted Answer

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

Question 11

According to HYPERLINK "http://www.oecd.org/" www.oecd.org, the United States spends a larger portion of expenditures on higher education compared to any other country. Increasing the amount of higher education produces
i. rightward shifts in the U.S. long- run aggregate supply curve
ii. movements up along the U.S. aggregate demand curve
iii. increases in U.S. human capital.

Accepted Answer

A)  ii and iii only 
B)  i, ii and iii 
C)  iii only 
D)  i and iii only 
A)  ii and iii only 
B)  i, ii and iii 
C)  iii only 
D)  i and iii only

Question 12

One reason that the aggregate demand curve has a negative slope is because

Accepted Answer

A)  the amount of money in the economy increases when the price level rises. 
B)  firms supply less when prices rise. 
C)  people buy more foreign goods when the domestic price level rises. 
D)  firms supply more when prices rise. 
A)  the amount of money in the economy increases when the price level rises. 
B)  firms supply less when prices rise. 
C)  people buy more foreign goods when the domestic price level rises. 
D)  firms supply more when prices rise.

Question 13

A recessionary gap means that short- run macroeconomic equilibrium GDP

Accepted Answer

A)  equals full- employment GDP. 
B)  is more than full- employment GDP. 
C)  is less than 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)  equals full- employment GDP. 
B)  is more than full- employment GDP. 
C)  is less than 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 14

Which of the following occurs while moving along a short- run aggregate supply curve?

Accepted Answer

A)  Neither the price level nor the money wage rate changes. 
B)  The price level changes and the money wage rate is constant. 
C)  The money wage rate and the price level change by the same percentage. 
D)  The money wage rate changes and the price level is constant. 
A)  Neither the price level nor the money wage rate changes. 
B)  The price level changes and the money wage rate is constant. 
C)  The money wage rate and the price level change by the same percentage. 
D)  The money wage rate changes and the price level is constant.

Question 15

-In the above figure, the economy is initially at point B. If taxes increase, there is

Accepted Answer

A)  a shift to AD1. 
B)  a shift to AD2. 
C)  a movement to point C. 
D)  a movement to point A. 
A)  a shift to AD1. 
B)  a shift to AD2. 
C)  a movement to point C. 
D)  a movement to point A.

Question 16

An increase in the level of technology shifts

Accepted Answer

A)  both the SAS and LAS curves rightward. 
B)  both the SAS and LAS curves leftward. 
C)  the LAS curve rightward but leaves the SAS curve unchanged. 
D)  the SAS curve rightward but leaves the LAS unchanged. 
A)  both the SAS and LAS curves rightward. 
B)  both the SAS and LAS curves leftward. 
C)  the LAS curve rightward but leaves the SAS curve unchanged. 
D)  the SAS curve rightward but leaves the LAS unchanged.

Question 17

-In the above figure, the economy is at point A when the money wage rate and the price level both fall by 10 percent. 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 18

Aggregate demand will increase if the quantity of money _.

Accepted Answer

A)  increases or tax rates decrease 
B)  or transfer payments decrease 
C)  remains constant or tax rates increase 
D)  decreases or tax rates increase 
A)  increases or tax rates decrease 
B)  or transfer payments decrease 
C)  remains constant or tax rates increase 
D)  decreases or tax rates increase

Question 19

During an above full- employment equilibrium, actual GDP is greater than potential GDP.

Accepted Answer

A) True 
 B)False

Question 20

What is the effect on the aggregate demand curve from an increase in the price level? In particular, does the aggregate demand curve shift leftward or rightward?

Accepted Answer

When the price level increases, there is

In the short run, the equilibrium level of real GDP

In long- run macroeconomic equilibrium,

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

-In the above figure, the short- run equilibrium will eventually adjust to a long- run equilibrium with a

-In the above figure, real GDP at full employment is

Which of the following does NOT shift the short- run aggregate supply curve?

An above full- employment equilibrium occurs when

A technological advance the long- run aggregate supply curve and the short- run aggregate supply curve.

In the short- run, a decrease in government expenditure real GDP and the price level.

A rise in the exchange rate of the dollar

One reason that the aggregate demand curve has a negative slope is because

A recessionary gap means that short- run macroeconomic equilibrium GDP

Which of the following occurs while moving along a short- run aggregate supply curve?

-In the above figure, the economy is initially at point B. If taxes increase, there is

An increase in the level of technology shifts

-In the above figure, the economy is at point A when the money wage rate and the price level both fall by 10 percent. Firms will be willing to supply output equal to

Aggregate demand will increase if the quantity of money _.

During an above full- employment equilibrium, actual GDP is greater than potential GDP.

What is the effect on the aggregate demand curve from an increase in the price level? In particular, does the aggregate demand curve shift leftward or rightward?

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 short run, the equilibrium level of real GDP

In long- run macroeconomic equilibrium,

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

-In the above figure, the short- run equilibrium will eventually adjust to a long- run equilibrium with a

-In the above figure, real GDP at full employment is

Which of the following does NOT shift the short- run aggregate supply curve?

An above full- employment equilibrium occurs when

A technological advance the long- run aggregate supply curve and the short- run aggregate supply curve.

In the short- run, a decrease in government expenditure real GDP and the price level.

A rise in the exchange rate of the dollar

One reason that the aggregate demand curve has a negative slope is because

A recessionary gap means that short- run macroeconomic equilibrium GDP

Which of the following occurs while moving along a short- run aggregate supply curve?

-In the above figure, the economy is initially at point B. If taxes increase, there is

An increase in the level of technology shifts

-In the above figure, the economy is at point A when the money wage rate and the price level both fall by 10 percent. Firms will be willing to supply output equal to

Aggregate demand will increase if the quantity of money _.

During an above full- employment equilibrium, actual GDP is greater than potential GDP.

What is the effect on the aggregate demand curve from an increase in the price level? In particular, does the aggregate demand curve shift leftward or rightward?

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