Question 1

-Use the figure above to answer this question. At a price level of of 90,

Accepted Answer

A)  the aggregate quantity demanded exceeds real GDP and inventories will decrease. 
B)  inventories increase and firms will increase production. 
C)  the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise. 
D)  people will be forced to cut consumption so that aggregate demand will decrease. 
A)  the aggregate quantity demanded exceeds real GDP and inventories will decrease. 
B)  inventories increase and firms will increase production. 
C)  the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise. 
D)  people will be forced to cut consumption so that aggregate demand will decrease.

Question 2

An inflationary gap is occurs when

Accepted Answer

A)  the economy is at full employment. 
B)  real GDP is less than potential GDP. 
C)  real GDP equals potential GDP. 
D)  real GDP exceeds potential GDP. 
A)  the economy is at full employment. 
B)  real GDP is less than potential GDP. 
C)  real GDP equals potential GDP. 
D)  real GDP exceeds potential GDP.

Question 3

If there is an increase in technology, the long-run aggregate supply curve shifts rightward, but the short-run aggregate supply curve does not shift.

Accepted Answer

A) True 
 B)False

Question 4

-In the above figure, which part corresponds to a destruction of part of the nationʹs capital stock?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 5

The long-run aggregate supply curve is vertical because

Accepted Answer

A)  potential GDP is independent of the price level. 
B)  there is no cyclical inflation. 
C)  at full employment prices are stable. 
D)  the money wage rate increases faster than the price level. 
A)  potential GDP is independent of the price level. 
B)  there is no cyclical inflation. 
C)  at full employment prices are stable. 
D)  the money wage rate increases faster than the price level.

Question 6

Which of the following does NOT shift the aggregate demand curve?

Accepted Answer

A)  an increase in the price level 
B)  an increase in investment 
C)  a decrease in the quantity of money 
D)  a decrease in taxes 
A)  an increase in the price level 
B)  an increase in investment 
C)  a decrease in the quantity of money 
D)  a decrease in taxes

Question 7

Aggregate demand is the relationship between the quantity of real GDP demanded and the___________

Accepted Answer

A)  real wage rate 
B)  nominal GDP demanded 
C)  price level 
D)  money wage rate 
A)  real wage rate 
B)  nominal GDP demanded 
C)  price level 
D)  money wage rate

Question 8

The long-run aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 9

The short-run aggregate supply curve

Accepted Answer

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

Question 10

A monetarist economist believes that

Accepted Answer

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

Question 11

The long-run aggregate supply LAS) curve

Accepted Answer

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

Question 12

The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

Accepted Answer

A)  larger consumption expenditure. 
B)  greater the quantity of real GDP demanded. 
C)  smaller the quantity of real GDP demanded. 
D)  None of the above answers is correct. 
A)  larger consumption expenditure. 
B)  greater the quantity of real GDP demanded. 
C)  smaller the quantity of real GDP demanded. 
D)  None of the above answers is correct.

Question 13

Which of the following increases aggregate demand and shifts the AD curve rightward?

Accepted Answer

A)  predictions of a recession that lead to expectations of lower future income 
B)  an increase in the quantity of money and a resulting fall in the interest rate 
C)  a fall in the price level 
D)  an increase in the exchange rate that makes imports less expensive 
A)  predictions of a recession that lead to expectations of lower future income 
B)  an increase in the quantity of money and a resulting fall in the interest rate 
C)  a fall in the price level 
D)  an increase in the exchange rate that makes imports less expensive

Question 14

-The above figure depicts an economy with a short-run equilibrium

Accepted Answer

A)  at higher than full-employment. 
B)  at full employment. 
C)  below full employment. 
D)  None of the above answers are correct. 
A)  at higher than full-employment. 
B)  at full employment. 
C)  below full employment. 
D)  None of the above answers are correct.

Question 15

What are the factors that can shift the short-run aggregate supply curve but not the long-run aggregate supply curve? Explain your answer.

Accepted Answer

The only factor that shifts the short-ru

Question 16

The country of Mu has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing ____________aggregate supply.

Accepted Answer

A)  at the same pace as long-run 
B)  slower than long-run 
C)  faster than long-run 
D)  slower than short-run 
A)  at the same pace as long-run 
B)  slower than long-run 
C)  faster than long-run 
D)  slower than short-run

Question 17

Economic growth

Accepted Answer

A)  occurs when the long-run aggregate supply curve shifts upward. 
B)  requires a compensating decrease in aggregate demand to offset the increase in aggregate supply. 
C)  is an increase in potential GDP as the long-run aggregate supply curve shifts rightward. 
D)  All of the above answers are correct. 
A)  occurs when the long-run aggregate supply curve shifts upward. 
B)  requires a compensating decrease in aggregate demand to offset the increase in aggregate supply. 
C)  is an increase in potential GDP as the long-run aggregate supply curve shifts rightward. 
D)  All of the above answers are correct.

Question 18

In the first half of 2008, food and energy costs in the United States increased. At the same time, the financial crisis slowed production as firms predicted lower profits. A ___________ macroeconomist would support the use of ___________ .

Accepted Answer

A)  classical; taxes to push the economy back to full employment 
B)  Keynesian; technology to push the economy back to full employment 
C)  Keynesian; fiscal or monetary policy to stimulate aggregate demand 
D)  classical; monetary policy to stimulate aggregate demand 
A)  classical; taxes to push the economy back to full employment 
B)  Keynesian; technology to push the economy back to full employment 
C)  Keynesian; fiscal or monetary policy to stimulate aggregate demand 
D)  classical; monetary policy to stimulate aggregate demand

Question 19

$$\begin{array} { | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Price } \
\text { level }
\end{array} & \begin{array} { l } 
\text { A ggregate } \
\text { demand } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { l } 
\text { Short-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { l } 
\text { Long-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 130 & 8 & 12 & 10 \
\hline 120 & 9 & 11 & 10 \
\hline 110 & 10 & 10 & 10 \
\hline 100 & 11 & 9 & 10 \
\hline 90 & 12 & 8 & 10 \
\hline
\end{array}$$
-The data in the above table indicate that when the price level is 100,

Accepted Answer

A)  inventories are at levels planned by firms. 
B)  firms will plan to decrease the level of output. 
C)  firms have unexpectedly high inventories, so prices fall. 
D)  firms have unexpectedly low inventories, so prices will rise. 
A)  inventories are at levels planned by firms. 
B)  firms will plan to decrease the level of output. 
C)  firms have unexpectedly high inventories, so prices fall. 
D)  firms have unexpectedly low inventories, so prices will rise.

Question 20

$$\begin{array} { | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Price } \
\text { level }
\end{array} & \begin{array} { l } 
\text { A ggregate } \
\text { demand } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { l } 
\text { Short-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { l } 
\text { Long-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 140 & 9.0 & 11.5 & 10.0 \
\hline 130 & 9.5 & 11.0 & 10.0 \
\hline 120 & 10.0 & 10.5 & 10.0 \
\hline 110 & 105 & 10.0 & 10.0 \
\hline 100 & 11.0 & 9.5 & 10.0 \
\hline
\end{array}$$
-The data in the above table indicate that the economy will be in a short-run macroeconomic equilibrium at a price level

Accepted Answer

A)  between 119 and 111. 
B)  of 110. 
C)  of 120. 
D)  between 130 and 121. 
A)  between 119 and 111. 
B)  of 110. 
C)  of 120. 
D)  between 130 and 121.

-Use the figure above to answer this question. At a price level of of 90,

An inflationary gap is occurs when

If there is an increase in technology, the long-run aggregate supply curve shifts rightward, but the short-run aggregate supply curve does not shift.

-In the above figure, which part corresponds to a destruction of part of the nationʹs capital stock?

The long-run aggregate supply curve is vertical because

Which of the following does NOT shift the aggregate demand curve?

Aggregate demand is the relationship between the quantity of real GDP demanded and the___________

The long-run aggregate supply curve is vertical.

The short-run aggregate supply curve

A monetarist economist believes that

The long-run aggregate supply LAS) curve

The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

Which of the following increases aggregate demand and shifts the AD curve rightward?

-The above figure depicts an economy with a short-run equilibrium

What are the factors that can shift the short-run aggregate supply curve but not the long-run aggregate supply curve? Explain your answer.

The country of Mu has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing ____________aggregate supply.

Economic growth

In the first half of 2008, food and energy costs in the United States increased. At the same time, the financial crisis slowed production as firms predicted lower profits. A _ macroeconomist would support the use of _ .

Price level A ggregate demand (trillions of 2005 dollars) Short-run aggregate supply (trillions of 2005 dollars) Long-run aggregate supply (trillions of 2005 dollars) 130 8 12 10 120 9 11 10 110 10 10 10 100 11 9 10 90 12 8 10 -The data in the above table indicate that when the price level is 100,

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

-Use the figure above to answer this question. At a price level of of 90,

An inflationary gap is occurs when

If there is an increase in technology, the long-run aggregate supply curve shifts rightward, but the short-run aggregate supply curve does not shift.

-In the above figure, which part corresponds to a destruction of part of the nationʹs capital stock?

The long-run aggregate supply curve is vertical because

Which of the following does NOT shift the aggregate demand curve?

Aggregate demand is the relationship between the quantity of real GDP demanded and the___________

The long-run aggregate supply curve is vertical.

The short-run aggregate supply curve

A monetarist economist believes that

The long-run aggregate supply LAS) curve

The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

Which of the following increases aggregate demand and shifts the AD curve rightward?

-The above figure depicts an economy with a short-run equilibrium

What are the factors that can shift the short-run aggregate supply curve but not the long-run aggregate supply curve? Explain your answer.

The country of Mu has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing ____________aggregate supply.

Economic growth

In the first half of 2008, food and energy costs in the United States increased. At the same time, the financial crisis slowed production as firms predicted lower profits. A ___________ macroeconomist would support the use of ___________ .

Price level A ggregate demand (trillions of 2005 dollars) Short-run aggregate supply (trillions of 2005 dollars) Long-run aggregate supply (trillions of 2005 dollars) 130 8 12 10 120 9 11 10 110 10 10 10 100 11 9 10 90 12 8 10 -The data in the above table indicate that when the price level is 100,

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 first half of 2008, food and energy costs in the United States increased. At the same time, the financial crisis slowed production as firms predicted lower profits. A _ macroeconomist would support the use of _ .