Question 1

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

Accepted Answer

A)  real consumption expenditure increases. 
B)  real wealth decreases. 
C)  there is no change in real wealth. 
D)  real wealth increases. 
A)  real consumption expenditure increases. 
B)  real wealth decreases. 
C)  there is no change in real wealth. 
D)  real wealth increases.

Question 2

A fall in the money wage rate shifts

Accepted Answer

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

Question 3

A classical economist believes that

Accepted Answer

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

Question 4

Which of the following shift the LAS curve rightward?

Accepted Answer

A)  a decrease in the labor force 
B)  a decrease in the money wage 
C)  an increase in the price level 
D)  a increase in the education level of the labor force 
A)  a decrease in the labor force 
B)  a decrease in the money wage 
C)  an increase in the price level 
D)  a increase in the education level of the labor force

Question 5

At potential GDP

Accepted Answer

A)  unemployment is at its natural rate. 
B)  there is no unemployment but there is not necessarily full employment. 
C)  there is no unemployment and there is full employment. 
D)  None of the above is correct. 
A)  unemployment is at its natural rate. 
B)  there is no unemployment but there is not necessarily full employment. 
C)  there is no unemployment and there is full employment. 
D)  None of the above is correct.

Question 6

If aggregate demand grows only slightly faster than potential GDP, then the economy will
)

Accepted Answer

A)  experience economic growth with high inflation 
B)  be at a business- cycle peak 
C)  experience economic growth with low inflation 
D)  experience recession 
A)  experience economic growth with high inflation 
B)  be at a business- cycle peak 
C)  experience economic growth with low inflation 
D)  experience recession

Question 7

If the economy is at the natural unemployment rate,

Accepted Answer

A)  real GDP  potential GDP. 
C)  real GDP = potential GDP. 
D)  All of the above can occur when the economy is at the natural unemployment rate. 
A)  real GDP  potential GDP. 
C)  real GDP = potential GDP. 
D)  All of the above can occur when the economy is at the natural unemployment rate.

Question 8

Long- run macroeconomic equilibrium is achieved when the money wage rate has adjusted so that employment is such that real GDP equals potential GDP.

Accepted Answer

A) True 
 B)False

Question 9

If the money wage rate increases, the short- run aggregate supply curve shifts rightward.

Accepted Answer

A) True 
 B)False

Question 10

The long- run aggregate supply curve is the relationship between the quantity of real GDP supplied and _ _ when _ .

Accepted Answer

A)  the price level; real GDP equals potential GDP 
B)  real GDP demanded; the wage rate is constant 
C)  real GDP demanded; the price level does not change 
D)  the price level; real GDP equals nominal GDP 
A)  the price level; real GDP equals potential GDP 
B)  real GDP demanded; the wage rate is constant 
C)  real GDP demanded; the price level does not change 
D)  the price level; real GDP equals nominal GDP

Question 11

Moving along which curve does the money wage rate and the price level change in the same proportions?

Accepted Answer

A)  the SAS curve 
B)  the LAS curve 
C)  the AD curve 
D)  None of the above because there is no curve along which both the money wage rate and the price level change in the same proportions. 
A)  the SAS curve 
B)  the LAS curve 
C)  the AD curve 
D)  None of the above because there is no curve along which both the money wage rate and the price level change in the same proportions.

Question 12

-In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 100 and real GDP of $11.0 trillion, then it must be the case that

Accepted Answer

A)  aggregate supply has increased. 
B)  aggregate demand has increased. 
C)  aggregate supply has decreased. 
D)  aggregate demand has decreased. 
A)  aggregate supply has increased. 
B)  aggregate demand has increased. 
C)  aggregate supply has decreased. 
D)  aggregate demand has decreased.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

What happens to the aggregate demand curve in the United States if the exchange rate increases so that U.S.- made products become more expensive?

Accepted Answer

Net exports decrease

Question 15

An increase in the amount of human capital the short- run aggregate supply curve and
The long- 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 16

The AD curve slopes

Accepted Answer

A)  downward due to the wealth and substitution effects. 
B)  upward due to the wealth and substitution effects. 
C)  downward due to the wealth and price effects. 
D)  upward due to the price and substitution effects. 
A)  downward due to the wealth and substitution effects. 
B)  upward due to the wealth and substitution effects. 
C)  downward due to the wealth and price effects. 
D)  upward due to the price and substitution effects.

Question 17

One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,

Accepted Answer

A)  firms produce fewer goods and services. 
B)  people substitute toward more imported goods and services. 
C)  peoples' wealth increases. 
D)  firms produce more goods and services. 
A)  firms produce fewer goods and services. 
B)  people substitute toward more imported goods and services. 
C)  peoples' wealth increases. 
D)  firms produce more goods and services.

Question 18

According to the wealth effect, if real wealth decreases then people

Accepted Answer

A)  increase their consumption expenditure. 
B)  decrease their consumption expenditure. 
C)  do not respond if their nominal wealth does not change. 
D)  decrease their consumption expenditure only if their nominal wealth also decreases. 
A)  increase their consumption expenditure. 
B)  decrease their consumption expenditure. 
C)  do not respond if their nominal wealth does not change. 
D)  decrease their consumption expenditure only if their nominal wealth also decreases.

Question 19

The Federal Reserve lowers interest rates. As a result, in the short run, real GDP _ and the price level .

Accepted Answer

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

Question 20

A major technological advance shifts the

Accepted Answer

A)  short- run aggregate supply curve rightward but does not shift the long- run aggregate supply curve. 
B)  long- run aggregate supply curve rightward and the short- run aggregate supply curve leftward. 
C)  long- run and the short- run aggregate supply curves rightward. 
D)  long- run aggregate supply curve rightward but does not shift the short- run aggregate supply curve. 
A)  short- run aggregate supply curve rightward but does not shift the long- run aggregate supply curve. 
B)  long- run aggregate supply curve rightward and the short- run aggregate supply curve leftward. 
C)  long- run and the short- run aggregate supply curves rightward. 
D)  long- run aggregate supply curve rightward but does not shift the short- run aggregate supply curve.

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

A fall in the money wage rate shifts

A classical economist believes that

Which of the following shift the LAS curve rightward?

At potential GDP

If aggregate demand grows only slightly faster than potential GDP, then the economy will )

If the economy is at the natural unemployment rate,

Long- run macroeconomic equilibrium is achieved when the money wage rate has adjusted so that employment is such that real GDP equals potential GDP.

If the money wage rate increases, the short- run aggregate supply curve shifts rightward.

The long- run aggregate supply curve is the relationship between the quantity of real GDP supplied and _ _ when _ .

Moving along which curve does the money wage rate and the price level change in the same proportions?

-In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 100 and real GDP of $11.0 trillion, then it must be the case that

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

What happens to the aggregate demand curve in the United States if the exchange rate increases so that U.S.- made products become more expensive?

An increase in the amount of human capital the short- run aggregate supply curve and The long- run aggregate supply curve.

The AD curve slopes

One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,

According to the wealth effect, if real wealth decreases then people

The Federal Reserve lowers interest rates. As a result, in the short run, real GDP _ and the price level .

A major technological advance shifts 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

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

A fall in the money wage rate shifts

A classical economist believes that

Which of the following shift the LAS curve rightward?

At potential GDP

If aggregate demand grows only slightly faster than potential GDP, then the economy will )

If the economy is at the natural unemployment rate,

Long- run macroeconomic equilibrium is achieved when the money wage rate has adjusted so that employment is such that real GDP equals potential GDP.

If the money wage rate increases, the short- run aggregate supply curve shifts rightward.

The long- run aggregate supply curve is the relationship between the quantity of real GDP supplied and _ _ when _ .

Moving along which curve does the money wage rate and the price level change in the same proportions?

-In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 100 and real GDP of $11.0 trillion, then it must be the case that

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

What happens to the aggregate demand curve in the United States if the exchange rate increases so that U.S.- made products become more expensive?

An increase in the amount of human capital the short- run aggregate supply curve and The long- run aggregate supply curve.

The AD curve slopes

One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,

According to the wealth effect, if real wealth decreases then people

The Federal Reserve lowers interest rates. As a result, in the short run, real GDP _ and the price level .

A major technological advance shifts 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