Question 1

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

Accepted Answer

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

Question 2

-In the above figure, the inflationary gap when AD2 is the aggregate demand curve equals

Accepted Answer

A)  the difference between $12.5 trillion and $12.0 trillion. 
B)  LAS minus SAS at a price level of 100. 
C)  AD1. 
D)  the difference between 110 and 100. 
A)  the difference between $12.5 trillion and $12.0 trillion. 
B)  LAS minus SAS at a price level of 100. 
C)  AD1. 
D)  the difference between 110 and 100.

Question 3

China is one of the worldʹs largest exporters. As the worldʹs economies slipped into a worldwide recession in 2008, there was a __________Chinaʹs aggregate demand curve as Chinaʹs exports___________

Accepted Answer

A)  movement upward along; increased 
B)  leftward shift of; decreased 
C)  rightward shift of; decreased 
D)  movement upward along; decreased 
A)  movement upward along; increased 
B)  leftward shift of; decreased 
C)  rightward shift of; decreased 
D)  movement upward along; decreased

Question 4

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

Question 5

-In the above figure, the economy is at point A. Then the price level rises to 110 while the money wage rate remains constant. Firms will be willing to supply output equal to

Accepted Answer

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

Question 6

Compare the policy prescriptions of Keynesian, Classical, and Monetarist economists.

Accepted Answer

Keynesians believe that without assistan

Question 7

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward raises the price level and decreases real GDP.

Accepted Answer

A) True 
 B)False

Question 8

The quantity of real GDP supplied depends on the

Accepted Answer

A)  price level, the unemployment rate, and the quantity of government expenditures on goods and services. 
B)  level of aggregate demand. 
C)  quantity of labor, the quantity of capital, and the state of technology. 
D)  quantity of capital, bonds, and stocks. 
A)  price level, the unemployment rate, and the quantity of government expenditures on goods and services. 
B)  level of aggregate demand. 
C)  quantity of labor, the quantity of capital, and the state of technology. 
D)  quantity of capital, bonds, and stocks.

Question 9

If the world economy expands so that foreign demand for U.S.-made goods increases, in the short run what will happen to aggregate demand, the price level, and real GDP in the U.S.?

Accepted Answer

Net exports increase so U.S. a

Question 10

A short-run macroeconomic equilibrium occurs

Accepted Answer

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

Question 11

-The data in the above figure indicate that the economy will be in a long -run macroeconomic equilibrium at a price level of

Accepted Answer

A)  140. 
B)  100. 
C)  120. 
D)  130. 
A)  140. 
B)  100. 
C)  120. 
D)  130.

Question 12

The supply of real GDP is a function of

Accepted Answer

A)  the quantities of labor, capital and the state of technology. 
B)  the sum of wages, salaries, corporate profits, rents and interest. 
C)  the total expenditures of consumers, investors and government. 
D)  only the state of technology. 
A)  the quantities of labor, capital and the state of technology. 
B)  the sum of wages, salaries, corporate profits, rents and interest. 
C)  the total expenditures of consumers, investors and government. 
D)  only the state of technology.

Question 13

The positive relationship between short-run aggregate supply and the price level indicates that, in the short run,

Accepted Answer

A)  firms produce more output as the price level falls. 
B)  the money wage rate increases when moving along the short-run aggregate supply curve. 
C)  firms produce more output as the price level rises. 
D)  lower price levels are more profitable for firms. 
A)  firms produce more output as the price level falls. 
B)  the money wage rate increases when moving along the short-run aggregate supply curve. 
C)  firms produce more output as the price level rises. 
D)  lower price levels are more profitable for firms.

Question 14

An increase in foreign incomes

Accepted Answer

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

Question 15

-In the above figure, when the economy is in a long-run equilibrium, real GDP will be

Accepted Answer

A)  $13.0 trillion. 
B)  $14.0 trillion. 
C)  $12.5 trillion. 
D)  $13.5 trillion. 
A)  $13.0 trillion. 
B)  $14.0 trillion. 
C)  $12.5 trillion. 
D)  $13.5 trillion.

Question 16

-Based on the figure above, short-run equilibrium occurs at the price level of

Accepted Answer

A)  130 and real GDP of $8 trillion. 
B)  140 and real GDP of $12 trillion. 
C)  120 and real GDP of $4 trillion. 
D)  130 and real GDP of $12 trillion. 
A)  130 and real GDP of $8 trillion. 
B)  140 and real GDP of $12 trillion. 
C)  120 and real GDP of $4 trillion. 
D)  130 and real GDP of $12 trillion.

Question 17

If the money price of a resource such as oil falls, then the

Accepted Answer

A)  SAS curve shifts rightward. 
B)  SAS curve shifts leftward. 
C)  LAS curve shifts leftward. 
D)  LAS curve shifts rightward. 
A)  SAS curve shifts rightward. 
B)  SAS curve shifts leftward. 
C)  LAS curve shifts leftward. 
D)  LAS curve shifts rightward.

Question 18

Which of the following statements is  FALSE ?

Accepted Answer

A)  Government expenditure affects aggregate demand directly because government expenditure is a component of aggregate demand. 
B)  Fiscal policy is the attempt to influence the economy using taxes, transfer payments, and government expenditures. 
C)  Taxes and transfer payments affect aggregate demand by changing disposable income. 
D)  An increase in disposable income leads to a decrease in aggregate demand. 
A)  Government expenditure affects aggregate demand directly because government expenditure is a component of aggregate demand. 
B)  Fiscal policy is the attempt to influence the economy using taxes, transfer payments, and government expenditures. 
C)  Taxes and transfer payments affect aggregate demand by changing disposable income. 
D)  An increase in disposable income leads to a decrease in aggregate demand.

Question 19

A rise in the price level changes aggregate demand because

Accepted Answer

A)  the real value of peopleʹs wealth varies directly with the price level and so does their spending. 
B)  the real value of peopleʹs wealth decreases and so they decrease their consumption. 
C)  the more money people have, the more it is worth and hence the more goods and services they demand. 
D)  firms increase their investment when prices are higher. 
A)  the real value of peopleʹs wealth varies directly with the price level and so does their spending. 
B)  the real value of peopleʹs wealth decreases and so they decrease their consumption. 
C)  the more money people have, the more it is worth and hence the more goods and services they demand. 
D)  firms increase their investment when prices are higher.

Question 20

-In the above figure, point C represents

Accepted Answer

A)  a decrease in aggregate demand. 
B)  a full-employment equilibrium. 
C)  an inflationary gap. 
D)  a recessionary gap. 
A)  a decrease in aggregate demand. 
B)  a full-employment equilibrium. 
C)  an inflationary gap. 
D)  a recessionary gap.

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

-In the above figure, the inflationary gap when AD₂is the aggregate demand curve equals

China is one of the worldʹs largest exporters. As the worldʹs economies slipped into a worldwide recession in 2008, there was a Chinaʹs aggregate demand curve as Chinaʹs exports_

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

-In the above figure, the economy is at point A. Then the price level rises to 110 while the money wage rate remains constant. Firms will be willing to supply output equal to

Compare the policy prescriptions of Keynesian, Classical, and Monetarist economists.

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward raises the price level and decreases real GDP.

The quantity of real GDP supplied depends on the

If the world economy expands so that foreign demand for U.S.-made goods increases, in the short run what will happen to aggregate demand, the price level, and real GDP in the U.S.?

A short-run macroeconomic equilibrium occurs

-The data in the above figure indicate that the economy will be in a long -run macroeconomic equilibrium at a price level of

The supply of real GDP is a function of

The positive relationship between short-run aggregate supply and the price level indicates that, in the short run,

An increase in foreign incomes

-In the above figure, when the economy is in a long-run equilibrium, real GDP will be

-Based on the figure above, short-run equilibrium occurs at the price level of

If the money price of a resource such as oil falls, then the

Which of the following statements is FALSE ?

A rise in the price level changes aggregate demand because

-In the above figure, point C represents

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

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

-In the above figure, the inflationary gap when AD2 is the aggregate demand curve equals

China is one of the worldʹs largest exporters. As the worldʹs economies slipped into a worldwide recession in 2008, there was a __________Chinaʹs aggregate demand curve as Chinaʹs exports___________

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

-In the above figure, the economy is at point A. Then the price level rises to 110 while the money wage rate remains constant. Firms will be willing to supply output equal to

Compare the policy prescriptions of Keynesian, Classical, and Monetarist economists.

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward raises the price level and decreases real GDP.

The quantity of real GDP supplied depends on the

If the world economy expands so that foreign demand for U.S.-made goods increases, in the short run what will happen to aggregate demand, the price level, and real GDP in the U.S.?

A short-run macroeconomic equilibrium occurs

-The data in the above figure indicate that the economy will be in a long -run macroeconomic equilibrium at a price level of

The supply of real GDP is a function of

The positive relationship between short-run aggregate supply and the price level indicates that, in the short run,

An increase in foreign incomes

-In the above figure, when the economy is in a long-run equilibrium, real GDP will be

-Based on the figure above, short-run equilibrium occurs at the price level of

If the money price of a resource such as oil falls, then the

Which of the following statements is FALSE ?

A rise in the price level changes aggregate demand because

-In the above figure, point C represents

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 above figure, the inflationary gap when AD₂is the aggregate demand curve equals

China is one of the worldʹs largest exporters. As the worldʹs economies slipped into a worldwide recession in 2008, there was a Chinaʹs aggregate demand curve as Chinaʹs exports_