Question 1

Which of the following shifts the aggregate demand curve leftward?

Accepted Answer

A)  a decrease in government expenditures on goods and services 
B)  an increase in net exports of goods and services 
C)  an increase in consumption expenditures 
D)  a decrease in taxes 
A)  a decrease in government expenditures on goods and services 
B)  an increase in net exports of goods and services 
C)  an increase in consumption expenditures 
D)  a decrease in taxes

Question 2

A change in results in a movement along the short- run aggregate supply curve but no shift in the short- run aggregate supply curve.

Accepted Answer

A)  technology 
B)  the quantity of capital 
C)  the price level 
D)  the money wage rate 
A)  technology 
B)  the quantity of capital 
C)  the price level 
D)  the money wage rate

Question 3

When the labor market is in equilibrium,

Accepted Answer

A)  the price level equals potential prices. 
B)  real GDP equals potential GDP. 
C)  the SAS curve is horizontal. 
D)  the price level is stable. 
A)  the price level equals potential prices. 
B)  real GDP equals potential GDP. 
C)  the SAS curve is horizontal. 
D)  the price level is stable.

Question 4

-In the figure above, potential GDP equals

Accepted Answer

A)  $12.0 trillion. 
B)  $11.5 trillion. 
C)  $12.5 trillion. 
D)  None of the above answers is correct. 
A)  $12.0 trillion. 
B)  $11.5 trillion. 
C)  $12.5 trillion. 
D)  None of the above answers is correct.

Question 5

The quantity of real GDP demanded equals $12.2 trillion when the GDP deflator is 90. If the GDP deflator rises to 95, the quantity of real GDP demanded equals

Accepted Answer

A)  $12.2 trillion. 
B)  less than $12.2 trillion. 
C)  more than $12.2 trillion. 
D)  more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change. 
A)  $12.2 trillion. 
B)  less than $12.2 trillion. 
C)  more than $12.2 trillion. 
D)  more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change.

Question 6

A decrease in the money wage rate

Accepted Answer

A)  increases the short- run aggregate supply. 
B)  decreases the short- run aggregate supply. 
C)  decreases the long- run aggregate supply. 
D)  increases the long- run aggregate supply. 
A)  increases the short- run aggregate supply. 
B)  decreases the short- run aggregate supply. 
C)  decreases the long- run aggregate supply. 
D)  increases the long- run aggregate supply.

Question 7

Last year in the country of Union, the price level increased and real GDP increased. Such an outcome might have occurred because short- run aggregate supply and aggregate demand .

Accepted Answer

A)  increased; did not change 
B)  increased; decreased 
C)  did not change; increased 
D)  decreased; decreased 
A)  increased; did not change 
B)  increased; decreased 
C)  did not change; increased 
D)  decreased; decreased

Question 8

Economic growth in India has averaged about 8.5 percent in recent years and while inflation averaged almost 9 percent. The AS- AD model shows this process as

Accepted Answer

A)  rightward shifts in the both the aggregate demand and long- run aggregate supply curves. 
B)  rightward shifts in the aggregate demand curve and leftward shifts in the short- run aggregate supply curve. 
C)  rightward shifts in the short- run aggregate supply curve. 
D)  movements upward along the aggregate demand curve. 
A)  rightward shifts in the both the aggregate demand and long- run aggregate supply curves. 
B)  rightward shifts in the aggregate demand curve and leftward shifts in the short- run aggregate supply curve. 
C)  rightward shifts in the short- run aggregate supply curve. 
D)  movements upward along the aggregate demand curve.

Question 9

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

Accepted Answer

A)  potential GDP increased, but at a slower rate than aggregate demand. 
B)  potential GDP decreased. 
C)  there was a movement up along the aggregate demand curve in 2008. 
D)  aggregate supply did not change. 
A)  potential GDP increased, but at a slower rate than aggregate demand. 
B)  potential GDP decreased. 
C)  there was a movement up along the aggregate demand curve in 2008. 
D)  aggregate supply did not change.

Question 10

An economy is at full employment. Which of the following events can create a recessionary gap?

Accepted Answer

A)  an increase in taxes 
B)  a decrease in the quantity of capital 
C)  a decrease in money wages 
D)  an increase in foreign income 
A)  an increase in taxes 
B)  a decrease in the quantity of capital 
C)  a decrease in money wages 
D)  an increase in foreign income

Question 11

A short- run macroeconomic equilibrium occurs

Accepted Answer

A)  when the rate at which prices of goods and services increase equals the rate at which money wage rates increase. 
B)  at the intersection of the short- run aggregate supply curve and the aggregate demand curve. 
C)  at the intersection of the short- run aggregate supply curve and the long- run aggregate supply curve. 
D)  at the intersection of the short- run aggregate supply curve, the long- run aggregate supply curve, and the aggregate demand curve. 
A)  when the rate at which prices of goods and services increase equals the rate at which money wage rates increase. 
B)  at the intersection of the short- run aggregate supply curve and the aggregate demand curve. 
C)  at the intersection of the short- run aggregate supply curve and the long- run aggregate supply curve. 
D)  at the intersection of the short- run aggregate supply curve, the long- run aggregate supply curve, and the aggregate demand curve.

Question 12

For movements along the long- run aggregate supply curve,

Accepted Answer

A)  the prices of goods and services change while the prices of productive resources hold steady. 
B)  potential GDP is dependent on the price level. 
C)  the price level and the money wage rate change by the same percentage. 
D)  All of the above are correct. 
A)  the prices of goods and services change while the prices of productive resources hold steady. 
B)  potential GDP is dependent on the price level. 
C)  the price level and the money wage rate change by the same percentage. 
D)  All of the above are correct.

Question 13

Which of the following variables does NOT directly influence the supply of real GDP?

Accepted Answer

A)  the quantity of labor 
B)  the state of technology 
C)  the quantity demanded 
D)  the quantity of capital 
A)  the quantity of labor 
B)  the state of technology 
C)  the quantity demanded 
D)  the quantity of capital

Question 14

In the macroeconomic short run,

Accepted Answer

A)  actual real GDP may be less than or more than potential GDP. 
B)  actual real GDP always equals potential GDP. 
C)  the unemployment rate is zero. 
D)  the economy is always moving away from full employment. 
A)  actual real GDP may be less than or more than potential GDP. 
B)  actual real GDP always equals potential GDP. 
C)  the unemployment rate is zero. 
D)  the economy is always moving away from full employment.

Question 15

According to the intertemporal substitution effect, a fall in the price level will

Accepted Answer

A)  increase the real value of wealth, which causes interest rates to increase. As a result, the quantity of real GDP demanded decreases. 
B)  decrease the real value of wealth, which causes the quantity of real GDP demanded to increase. 
C)  cause the interest rate to fall. As a result, investment increases and the quantity of real GDP demanded increases. 
D)  lead to an increase in net exports, which causes the quantity of real GDP demanded to increase. 
A)  increase the real value of wealth, which causes interest rates to increase. As a result, the quantity of real GDP demanded decreases. 
B)  decrease the real value of wealth, which causes the quantity of real GDP demanded to increase. 
C)  cause the interest rate to fall. As a result, investment increases and the quantity of real GDP demanded increases. 
D)  lead to an increase in net exports, which causes the quantity of real GDP demanded to increase.

Question 16

Starting at full employment, a business cycle can be described by the following sequence: equilibrium, equilibrium, equilibrium.

Accepted Answer

A)  below full- employment; full- employment; below full- employment 
B)  below full- employment; full- employment; above full- employment 
C)  full- employment; below full- employment; above full- employment 
D)  above full- employment; below full- employment; full- employment 
A)  below full- employment; full- employment; below full- employment 
B)  below full- employment; full- employment; above full- employment 
C)  full- employment; below full- employment; above full- employment 
D)  above full- employment; below full- employment; full- employment

Question 17

The short- run aggregate supply curve

Accepted Answer

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

Question 18

The short- run aggregate supply curve

Accepted Answer

A)  becomes vertical if there is excess production capacity within the economy. 
B)  shows a negative relationship between the price level and real national income holding constant potential GDP and all resource prices. 
C)  shows what each producer is willing and able to produce at each level of income holding constant potential GDP and all resource prices. 
D)  relates aggregate production and the price level holding constant potential GDP and all resource prices. 
A)  becomes vertical if there is excess production capacity within the economy. 
B)  shows a negative relationship between the price level and real national income holding constant potential GDP and all resource prices. 
C)  shows what each producer is willing and able to produce at each level of income holding constant potential GDP and all resource prices. 
D)  relates aggregate production and the price level holding constant potential GDP and all resource prices.

Question 19

In the macroeconomic long run,

Accepted Answer

A)  output always is above potential GDP. 
B)  there is full employment and real GDP is equal to potential GDP. 
C)  there is full employment with no unemployment. 
D)  GDP always is below potential GDP. 
A)  output always is above potential GDP. 
B)  there is full employment and real GDP is equal to potential GDP. 
C)  there is full employment with no unemployment. 
D)  GDP always is below potential GDP.

Question 20

-In the above figure, the shift from AD1 to AD2 might have been the result of

Accepted Answer

A)  an increase in the quantity of money. 
B)  an increase in government expenditure. 
C)  a decrease in taxes. 
D)  All of the above answers are correct. 
A)  an increase in the quantity of money. 
B)  an increase in government expenditure. 
C)  a decrease in taxes. 
D)  All of the above answers are correct.

Which of the following shifts the aggregate demand curve leftward?

A change in results in a movement along the short- run aggregate supply curve but no shift in the short- run aggregate supply curve.

When the labor market is in equilibrium,

-In the figure above, potential GDP equals

The quantity of real GDP demanded equals $12.2 trillion when the GDP deflator is 90. If the GDP deflator rises to 95, the quantity of real GDP demanded equals

A decrease in the money wage rate

Last year in the country of Union, the price level increased and real GDP increased. Such an outcome might have occurred because short- run aggregate supply and aggregate demand .

Economic growth in India has averaged about 8.5 percent in recent years and while inflation averaged almost 9 percent. The AS- AD model shows this process as

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

An economy is at full employment. Which of the following events can create a recessionary gap?

A short- run macroeconomic equilibrium occurs

For movements along the long- run aggregate supply curve,

Which of the following variables does NOT directly influence the supply of real GDP?

In the macroeconomic short run,

According to the intertemporal substitution effect, a fall in the price level will

Starting at full employment, a business cycle can be described by the following sequence: equilibrium, equilibrium, equilibrium.

The short- run aggregate supply curve

The short- run aggregate supply curve

In the macroeconomic long run,

-In the above figure, the shift from AD₁to AD₂might have been the result of

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

Which of the following shifts the aggregate demand curve leftward?

A change in results in a movement along the short- run aggregate supply curve but no shift in the short- run aggregate supply curve.

When the labor market is in equilibrium,

-In the figure above, potential GDP equals

The quantity of real GDP demanded equals $12.2 trillion when the GDP deflator is 90. If the GDP deflator rises to 95, the quantity of real GDP demanded equals

A decrease in the money wage rate

Last year in the country of Union, the price level increased and real GDP increased. Such an outcome might have occurred because short- run aggregate supply and aggregate demand .

Economic growth in India has averaged about 8.5 percent in recent years and while inflation averaged almost 9 percent. The AS- AD model shows this process as

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

An economy is at full employment. Which of the following events can create a recessionary gap?

A short- run macroeconomic equilibrium occurs

For movements along the long- run aggregate supply curve,

Which of the following variables does NOT directly influence the supply of real GDP?

In the macroeconomic short run,

According to the intertemporal substitution effect, a fall in the price level will

Starting at full employment, a business cycle can be described by the following sequence: equilibrium, equilibrium, equilibrium.

The short- run aggregate supply curve

The short- run aggregate supply curve

In the macroeconomic long run,

-In the above figure, the shift from AD1 to AD2 might have been the result of

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 shift from AD₁to AD₂might have been the result of