Question 1

Per-unit production cost is determined by dividing output by total input cost.

Accepted Answer

A) True 
 B)False

Question 2

Which would most likely shift the aggregate supply curve? A change in:

Accepted Answer

A) consumer expectations. 
B) government spending. 
C) excess capacity in business. 
D) prices of imported resources. 
A) consumer expectations. 
B) government spending. 
C) excess capacity in business. 
D) prices of imported resources.

Question 3

The following table is for a particular country in which C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports.All figures are in billions of dollars.   Refer to the above table.The interest rate effect of changes in the price level is shown by columns:

Accepted Answer

A) (1) and (4) of the table. 
B) (5) and (6) of the table. 
C) (1) and (3) of the table. 
D) (2) and (4) of the table. 
A) (1) and (4) of the table. 
B) (5) and (6) of the table. 
C) (1) and (3) of the table. 
D) (2) and (4) of the table.

Question 4

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Refer to the information above, the level of productivity is:

Accepted Answer

A) 20 
B) 10 
C) 5 
D) 2 
A) 20 
B) 10 
C) 5 
D) 2

Question 5

The Canadian economy was able to achieve full employment with relative price level stability in the early 2000 because aggregate:

Accepted Answer

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

Question 6

The interest-rate effect suggests that:

Accepted Answer

A) a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending. 
B) an increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending. 
C) an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending. 
D) an increase in the price level will decrease the demand for money, reduce interest rates, and increase consumption and investment spending. 
A) a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending. 
B) an increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending. 
C) an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending. 
D) an increase in the price level will decrease the demand for money, reduce interest rates, and increase consumption and investment spending.

Question 7

The following list of items are related to aggregate demand and/or aggregate supply.Entrepreneurial ability Consumer expectations
Degree of excess capacity
Personal income tax rates
Productivity
National income abroad
Business taxes
Domestic resource availability
Business taxes
Domestic resource availability
Prices of imported products
Profit expectations on investments
Refer to the above list.A change in which factor is most likely to change both aggregate demand and aggregate supply?

Accepted Answer

A) 3 
B) 5 
C) 7 
D) 9 
A) 3 
B) 5 
C) 7 
D) 9

Question 8

The real-balances effect suggests that a:

Accepted Answer

A) lower price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending. 
B) lower price level will decrease the real value of many financial assets and therefore cause an increase in spending. 
C) lower price level will increase the real value of many financial assets and therefore cause an increase in spending. 
D) higher price level will increase the real value of many financial assets and therefore cause an increase in spending. 
A) lower price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending. 
B) lower price level will decrease the real value of many financial assets and therefore cause an increase in spending. 
C) lower price level will increase the real value of many financial assets and therefore cause an increase in spending. 
D) higher price level will increase the real value of many financial assets and therefore cause an increase in spending.

Question 9

With output and input prices fixed, the immediate short run aggregate supply curve is:

Accepted Answer

A) vertical. 
B) upward sloping. 
C) horizontal. 
D) downward sloping. 
A) vertical. 
B) upward sloping. 
C) horizontal. 
D) downward sloping.

Question 10

The following aggregate demand and supply schedules are for a hypothetical economy:   Refer to the above data.The equilibrium price level will be:

Accepted Answer

A) 150 
B) 200 
C) 250 
D) 300 
A) 150 
B) 200 
C) 250 
D) 300

Question 11

An increase in aggregate expenditures resulting from some factor other than a change in the price level is equivalent to:

Accepted Answer

A) a rightward shift of the aggregate demand curve in the AD-AS model. 
B) a leftward shift of the aggregate demand curve in the AD-AS model. 
C) a movement downward along a fixed aggregate demand curve in the AD-AS model. 
D) a decrease in aggregate supply in the AD-AS model. 
A) a rightward shift of the aggregate demand curve in the AD-AS model. 
B) a leftward shift of the aggregate demand curve in the AD-AS model. 
C) a movement downward along a fixed aggregate demand curve in the AD-AS model. 
D) a decrease in aggregate supply in the AD-AS model.

Question 12

The real-balances effect indicates that:

Accepted Answer

A) an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending. 
B) a lower price level will decrease the real value of many financial assets and therefore reduce spending. 
C) a higher price level will increase the real value of many financial assets and therefore increase spending. 
D) a higher price level will decrease the real value of many financial assets and therefore reduce spending. 
A) an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending. 
B) a lower price level will decrease the real value of many financial assets and therefore reduce spending. 
C) a higher price level will increase the real value of many financial assets and therefore increase spending. 
D) a higher price level will decrease the real value of many financial assets and therefore reduce spending.

Question 13

A firm is concerned that if it lowers its prices, its competitors will not only match its price cuts but may also retaliate by making even deeper cuts.This is referred to as:

Accepted Answer

A) price wars. 
B) healthy competition. 
C) the capitalist system at work. 
D) unfair trade practices. 
A) price wars. 
B) healthy competition. 
C) the capitalist system at work. 
D) unfair trade practices.

Question 14

Refer to the diagram given below.   Suppose an increase in aggregate demand shifts AD1 to AD2.At P1, the amount of output demanded will be:

Accepted Answer

A) equal to the amount of output supplied. 
B) greater than the amount of output supplied. 
C) less than the amount of output supplied. 
D) at the full-employment level of output. 
A) equal to the amount of output supplied. 
B) greater than the amount of output supplied. 
C) less than the amount of output supplied. 
D) at the full-employment level of output.

Question 15

The interest-rate effect causes the aggregate demand curve for an economy to:

Accepted Answer

A) slope downward. 
B) slope upward. 
C) become flatter. 
D) becomes teeper. 
A) slope downward. 
B) slope upward. 
C) become flatter. 
D) becomes teeper.

Question 16

Cost-push inflation occurs because of a:

Accepted Answer

A) rightward shift in the aggregate demand curve. 
B) leftward shift in the aggregate demand curve. 
C) rightward shift in the aggregate supply curve. 
D) leftward shift in the aggregate supply curve. 
A) rightward shift in the aggregate demand curve. 
B) leftward shift in the aggregate demand curve. 
C) rightward shift in the aggregate supply curve. 
D) leftward shift in the aggregate supply curve.

Question 17

The long-run aggregate supply curve is vertical:

Accepted Answer

A) because the rate of inflation is steady in the long run. 
B) because resource prices eventually catch up with product prices. 
C) because product prices always increase at a faster rate than resource prices. 
D) only when the money supply increases at the same rate as real GDP. 
A) because the rate of inflation is steady in the long run. 
B) because resource prices eventually catch up with product prices. 
C) because product prices always increase at a faster rate than resource prices. 
D) only when the money supply increases at the same rate as real GDP.

Question 18

Refer to the figure below.   In the above figure, AD1 and AS1 represent the original aggregate demand and aggregate supply curves, respectively.AD2 and AS2 show the new aggregate demand and supply curves.The changes in aggregate demand and aggregate supply result in a(n):

Accepted Answer

A) increase in the price level. 
B) increase in the real output and no change in the price level. 
C) increase in the real output and the price level. 
D) decline in the real output and no change in the price level. 
A) increase in the price level. 
B) increase in the real output and no change in the price level. 
C) increase in the real output and the price level. 
D) decline in the real output and no change in the price level.

Question 19

An increase in the price level, other things equal, will shift the:

Accepted Answer

A) consumption, investment, and net exports schedules of the aggregate expenditures model downward. 
B) consumption, investment, and net exports schedules of the aggregate expenditures model upward. 
C) consumption, and investment schedules of the aggregate expenditures model upward, but the net exports schedule downward. 
D) consumption, and net exports schedules of the aggregate expenditures model upward, but the investment schedule downward. 
A) consumption, investment, and net exports schedules of the aggregate expenditures model downward. 
B) consumption, investment, and net exports schedules of the aggregate expenditures model upward. 
C) consumption, and investment schedules of the aggregate expenditures model upward, but the net exports schedule downward. 
D) consumption, and net exports schedules of the aggregate expenditures model upward, but the investment schedule downward.

Question 20

Other things equal, a decrease in the price level will:

Accepted Answer

A) shift the short run aggregate supply curve to the left. 
B) shift the aggregate demand curve to the left. 
C) cause a movement up a short-run aggregate supply curve. 
D) cause a movement down a short run aggregate supply curve. 
A) shift the short run aggregate supply curve to the left. 
B) shift the aggregate demand curve to the left. 
C) cause a movement up a short-run aggregate supply curve. 
D) cause a movement down a short run aggregate supply curve.

Exam 12: B: Aggregate Demand and Aggregate Supply

Per-unit production cost is determined by dividing output by total input cost.

Which would most likely shift the aggregate supply curve? A change in:

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Refer to the information above, the level of productivity is:

The Canadian economy was able to achieve full employment with relative price level stability in the early 2000 because aggregate:

The interest-rate effect suggests that:

The real-balances effect suggests that a:

With output and input prices fixed, the immediate short run aggregate supply curve is:

The following aggregate demand and supply schedules are for a hypothetical economy: Refer to the above data.The equilibrium price level will be:

An increase in aggregate expenditures resulting from some factor other than a change in the price level is equivalent to:

The real-balances effect indicates that:

A firm is concerned that if it lowers its prices, its competitors will not only match its price cuts but may also retaliate by making even deeper cuts.This is referred to as:

Refer to the diagram given below. Suppose an increase in aggregate demand shifts AD1 to AD2.At P1, the amount of output demanded will be:

The interest-rate effect causes the aggregate demand curve for an economy to:

Cost-push inflation occurs because of a:

The long-run aggregate supply curve is vertical:

Refer to the figure below. In the above figure, AD1 and AS1 represent the original aggregate demand and aggregate supply curves, respectively.AD2 and AS2 show the new aggregate demand and supply curves.The changes in aggregate demand and aggregate supply result in a(n):

An increase in the price level, other things equal, will shift the:

Other things equal, a decrease in the price level will:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters

Refer to the diagram given below. Suppose an increase in aggregate demand shifts AD₁ to AD₂.At P₁, the amount of output demanded will be:

Refer to the figure below. In the above figure, AD₁ and AS₁ represent the original aggregate demand and aggregate supply curves, respectively.AD₂ and AS₂ show the new aggregate demand and supply curves.The changes in aggregate demand and aggregate supply result in a(n):