Question 1

In the short run, a rightward shift of the short-run aggregate supply curve____________  real GDP and____________  the price level.

Accepted Answer

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

Question 2

-In the above figure, if the economy is at point a, an increase in_________ will move the economy to_________

Accepted Answer

A)  real wealth from a fall in the price level; point d 
B)  real wealth; point d 
C)  expected future income; point d 
D)  expected future income; point b 
A)  real wealth from a fall in the price level; point d 
B)  real wealth; point d 
C)  expected future income; point d 
D)  expected future income; point b

Question 3

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

Accepted Answer

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

Question 4

In a short-run macroeconomic equilibrium, potential GDP exceeds real GDP. If aggregate demand does not change, then the

Accepted Answer

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

Question 5

People expect their incomes will decrease next year. As a result, the_________ will shift __________.

Accepted Answer

A)  aggregate demand curve; rightward 
B)  long-run aggregate supply curve; rightward 
C)  short-run aggregate supply curve; rightward 
D)  aggregate demand curve; leftward 
A)  aggregate demand curve; rightward 
B)  long-run aggregate supply curve; rightward 
C)  short-run aggregate supply curve; rightward 
D)  aggregate demand curve; leftward

Question 6

-In the figure above, the economy is at point A when the price level falls to 100. Money wage rates and all other resource prices remain constant. Firms are willing to supply output equal to

Accepted Answer

A)  $13.5 trillion. 
B)  $13.0 trillion. 
C)  $12.5 trillion. 
D)  None of the above answers is correct. 
A)  $13.5 trillion. 
B)  $13.0 trillion. 
C)  $12.5 trillion. 
D)  None of the above answers is correct.

Question 7

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

Accepted Answer

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

Question 8

A recessionary gap means that short-run macroeconomic equilibrium GDP

Accepted Answer

A)  equals full-employment GDP. 
B)  is less than full-employment GDP. 
C)  is more 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 less than full-employment GDP. 
C)  is more 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 9

-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)  $13.0 trillion 
B)  less than $13.0 trillion 
C)  more than $13.0 trillion 
D)  Without more information, it is impossible to determine which of the above answers is correct. 
A)  $13.0 trillion 
B)  less than $13.0 trillion 
C)  more than $13.0 trillion 
D)  Without more information, it is impossible to determine which of the above answers is correct.

Question 10

The aggregate demand curve

Accepted Answer

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

Question 11

Which of the following events will increase long-run aggregate supply?

Accepted Answer

A)  a decrease in expected profit 
B)  an advance in technology 
C)  an increase in the interest rate 
D)  an increase in resource prices 
A)  a decrease in expected profit 
B)  an advance in technology 
C)  an increase in the interest rate 
D)  an increase in resource prices

Question 12

Suppose that during 2009, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos. What sort of equilibrium existed in Chile?

Accepted Answer

Chileʹs actual real GDP exceed

Question 13

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

Accepted Answer

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

Question 14

Which school of thought believes that real GDP always equals potential GDP?

Accepted Answer

A)  only Keynesian 
B)  only classical 
C)  Monetarist 
D)  both Keynesian and classical 
A)  only Keynesian 
B)  only classical 
C)  Monetarist 
D)  both Keynesian and classical

Question 15

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

Accepted Answer

A)  the price level rises and real GDP does not change. 
B)  real GDP increases and the price level does not change. 
C)  nothing happens because the economy is in long run equilibrium. 
D)  the price level rises and real GDP increases. 
A)  the price level rises and real GDP does not change. 
B)  real GDP increases and the price level does not change. 
C)  nothing happens because the economy is in long run equilibrium. 
D)  the price level rises and real GDP increases.

Question 16

Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded .

Accepted Answer

A)  equals the quantity of real GDP supplied 
B)  does not equal full-employment GDP 
C)  equals full-employment GDP 
D)  equals potential GDP 
A)  equals the quantity of real GDP supplied 
B)  does not equal full-employment GDP 
C)  equals full-employment GDP 
D)  equals potential GDP

Question 17

Which of the following shifts the aggregate demand curve rightward?

Accepted Answer

A)  a decrease in net exports 
B)  a decrease in government expenditure on goods and services 
C)  an increase in investment 
D)  a decrease in consumption 
A)  a decrease in net exports 
B)  a decrease in government expenditure on goods and services 
C)  an increase in investment 
D)  a decrease in consumption

Question 18

-In the above figure, the short-run aggregate supply curve is SAS1. If the prices of resources fall, there is

Accepted Answer

A)  a shift to SAS0. 
B)  an upward movement along SAS1. 
C)  a downward movement along SAS1. 
D)  a shift to SAS2. 
A)  a shift to SAS0. 
B)  an upward movement along SAS1. 
C)  a downward movement along SAS1. 
D)  a shift to SAS2.

Question 19

A monetarist economist believes that if the economy was left alone, it would rarely operate at full employment.

Accepted Answer

A) True 
 B)False

Question 20

What are the components of fiscal policy? Explain how fiscal policy affects aggregate demand.

Accepted Answer

Fiscal policy affects aggregate demand t

In the short run, a rightward shift of the short-run aggregate supply curve real GDP and the price level.

-In the above figure, if the economy is at point a, an increase in_ will move the economy to_

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

In a short-run macroeconomic equilibrium, potential GDP exceeds real GDP. If aggregate demand does not change, then the

People expect their incomes will decrease next year. As a result, the_ will shift __.

-In the figure above, the economy is at point A when the price level falls to 100. Money wage rates and all other resource prices remain constant. Firms are willing to supply output equal to

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

A recessionary gap means that short-run macroeconomic equilibrium GDP

-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

The aggregate demand curve

Which of the following events will increase long-run aggregate supply?

Suppose that during 2009, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos. What sort of equilibrium existed in Chile?

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

Which school of thought believes that real GDP always equals potential GDP?

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded .

Which of the following shifts the aggregate demand curve rightward?

-In the above figure, the short-run aggregate supply curve is SAS₁. If the prices of resources fall, there is

A monetarist economist believes that if the economy was left alone, it would rarely operate at full employment.

What are the components of fiscal policy? Explain how fiscal policy affects aggregate demand.

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 10: Aggregate Supply and Aggregate Demand

In the short run, a rightward shift of the short-run aggregate supply curve____________ real GDP and____________ the price level.

-In the above figure, if the economy is at point a, an increase in_________ will move the economy to_________

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

In a short-run macroeconomic equilibrium, potential GDP exceeds real GDP. If aggregate demand does not change, then the

People expect their incomes will decrease next year. As a result, the_________ will shift __________.

-In the figure above, the economy is at point A when the price level falls to 100. Money wage rates and all other resource prices remain constant. Firms are willing to supply output equal to

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

A recessionary gap means that short-run macroeconomic equilibrium GDP

-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

The aggregate demand curve

Which of the following events will increase long-run aggregate supply?

Suppose that during 2009, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos. What sort of equilibrium existed in Chile?

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

Which school of thought believes that real GDP always equals potential GDP?

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded .

Which of the following shifts the aggregate demand curve rightward?

-In the above figure, the short-run aggregate supply curve is SAS1. If the prices of resources fall, there is

A monetarist economist believes that if the economy was left alone, it would rarely operate at full employment.

What are the components of fiscal policy? Explain how fiscal policy affects aggregate demand.

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

In the short run, a rightward shift of the short-run aggregate supply curve real GDP and the price level.

-In the above figure, if the economy is at point a, an increase in_ will move the economy to_

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

People expect their incomes will decrease next year. As a result, the_ will shift __.

-In the above figure, the short-run aggregate supply curve is SAS₁. If the prices of resources fall, there is