Question 1

In the short run, the aggregate supply curve of an economy is:

Accepted Answer

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

Question 2

Refer to the information below.A change in net export spending would most likely be caused by changes in: The following list of factors is related to the aggregate demand curve.Real-balances effect
Household expectations
Interest-rate effect
Personal income tax rates
Profit expectations
National income abroad
Government spending
Foreign trade effect
Exchange rates
Degree of excess capacity

Accepted Answer

A) 2 and 3. 
B) 5 and 6. 
C) 7 and 8. 
D) 6 and 9. 
A) 2 and 3. 
B) 5 and 6. 
C) 7 and 8. 
D) 6 and 9.

Question 3

An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labour to produce its total output of 640 units.Each unit of capital costs $10, each unit of raw materials, $4, and each unit of labour, $3.Refer to the above information.As a result of the change indicated in the previous question, the aggregate:

Accepted Answer

A) supply curve would shift to the left. 
B) supply curve would shift to the right. 
C) demand curve would shift to the left. 
D) demand curve would shift to the right. 
A) supply curve would shift to the left. 
B) supply curve would shift to the right. 
C) demand curve would shift to the left. 
D) demand curve would shift to the right.

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.The per unit cost of production in the economy described above is:

Accepted Answer

A) $.50. 
B) $1 
C) $2 
D) $5 
A) $.50. 
B) $1 
C) $2 
D) $5

Question 5

Refer to the diagram below.Other things equal, a shift of the aggregate supply curve from AS0 to AS1 might be caused by a(n):

Accepted Answer

A) increase in government regulation. 
B) increase in aggregate demand. 
C) increase in productivity. 
D) decline in nominal wages. 
A) increase in government regulation. 
B) increase in aggregate demand. 
C) increase in productivity. 
D) decline in nominal wages.

Question 6

An increase in government spending can be expected to shift the:

Accepted Answer

A) aggregate expenditures curve downward and the aggregate demand curve leftward. 
B) aggregate expenditures curve upward and the aggregate demand curve leftward. 
C) aggregate expenditures curve downward and the aggregate demand curve rightward. 
D) aggregate expenditures curve upward and the aggregate demand curve rightward. 
A) aggregate expenditures curve downward and the aggregate demand curve leftward. 
B) aggregate expenditures curve upward and the aggregate demand curve leftward. 
C) aggregate expenditures curve downward and the aggregate demand curve rightward. 
D) aggregate expenditures curve upward and the aggregate demand curve rightward.

Question 7

The short run aggregate supply curve:

Accepted Answer

A) shows the various amounts of real output which businesses will produce at each price level. 
B) is downward sloping because real purchasing power increases as the price level falls. 
C) contains a vertical range where real output is variable and the price level is constant. 
D) is explained by the interest rate, wealth, and foreign trade effects. 
A) shows the various amounts of real output which businesses will produce at each price level. 
B) is downward sloping because real purchasing power increases as the price level falls. 
C) contains a vertical range where real output is variable and the price level is constant. 
D) is explained by the interest rate, wealth, and foreign trade effects.

Question 8

A change in the price level products a?

Accepted Answer

A) The real-balances effect 
B) The nominal-balances effect 
C) The interest-rate effect 
D) The foreign-trade effect 
A) The real-balances effect 
B) The nominal-balances effect 
C) The interest-rate effect 
D) The foreign-trade effect

Question 9

Per unit production cost is:

Accepted Answer

A) real output divided by inputs. 
B) total input cost divided by total output. 
C) units of output divided by total input cost. 
D) a determinant of aggregate demand. 
A) real output divided by inputs. 
B) total input cost divided by total output. 
C) units of output divided by total input cost. 
D) a determinant of aggregate demand.

Question 10

In the late 1990s and early 2000s:

Accepted Answer

A) both AD and AS increased 
B) inflation was relatively high. 
C) AD increased but AS decreased. 
D) AD decreased but AS increased. 
A) both AD and AS increased 
B) inflation was relatively high. 
C) AD increased but AS decreased. 
D) AD decreased but AS increased.

Question 11

The following aggregate demand and aggregate supply schedules are for a hypothetical economy.   Refer to the data above.The vertical range of the aggregate supply curve is associated with price levels:

Accepted Answer

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

Question 12

A movement downward along an existing aggregate demand curve is equivalent to a(n):

Accepted Answer

A) decrease in aggregate demand. 
B) increase in aggregate demand. 
C) upward shift in the aggregate expenditures schedule. 
D) downward shift in the aggregate expenditures schedule. 
A) decrease in aggregate demand. 
B) increase in aggregate demand. 
C) upward shift in the aggregate expenditures schedule. 
D) downward shift in the aggregate expenditures schedule.

Question 13

Refer to the diagram given below.   If aggregate supply shifts from AS1 to AS2, then the price level will:

Accepted Answer

A) increase and real domestic output will increase. 
B) decrease and real domestic output will increase. 
C) increase and real domestic output will decrease. 
D) decrease and real domestic output will decrease. 
A) increase and real domestic output will increase. 
B) decrease and real domestic output will increase. 
C) increase and real domestic output will decrease. 
D) decrease and real domestic output will decrease.

Question 14

Refer to the table below that shows the data of a country.   The table given above 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 the figures are in billions of dollars.If the country's aggregate supply curve is a vertical line at the $25 billion level of real GDP, the price level will be:

Accepted Answer

A) 128. 
B) 125. 
C) 122. 
D) 119. 
A) 128. 
B) 125. 
C) 122. 
D) 119.

Question 15

If real output rises and the price level falls, this would likely be due to a:

Accepted Answer

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

Question 16

The economy experiences a decrease in the price level and an increase in real domestic output.Which is a likely explanation?

Accepted Answer

A) consumer incomes and the quantity of labour have decreased 
B) interest rates and wage rates have decreased 
C) the prices of imported resources have increased 
D) national income abroad has increased 
A) consumer incomes and the quantity of labour have decreased 
B) interest rates and wage rates have decreased 
C) the prices of imported resources have increased 
D) national income abroad has increased

Question 17

Other things equal, a reduction in personal and business taxes can be expected to:

Accepted Answer

A) increase aggregate demand and decrease aggregate supply. 
B) increase both aggregate demand and aggregate supply. 
C) decrease both aggregate demand and aggregate supply. 
D) decrease aggregate demand and increase aggregate supply. 
A) increase aggregate demand and decrease aggregate supply. 
B) increase both aggregate demand and aggregate supply. 
C) decrease both aggregate demand and aggregate supply. 
D) decrease aggregate demand and increase aggregate supply.

Question 18

Which would be considered to be one of the factors that shift the aggregate supply curve? A change in:

Accepted Answer

A) consumer spending. 
B) net export spending. 
C) government regulation. 
D) profit expectations on investment projects. 
A) consumer spending. 
B) net export spending. 
C) government regulation. 
D) profit expectations on investment projects.

Question 19

Which of the above diagrams best portrays the effects of a decrease in the availability of key natural resources?

Accepted Answer

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

Question 20

The passage of new legislation requiring more extensive government regulation of business will most likely:

Accepted Answer

A) increase aggregate demand. 
B) increase aggregate supply. 
C) decrease aggregate demand. 
D) decrease aggregate supply. 
A) increase aggregate demand. 
B) increase aggregate supply. 
C) decrease aggregate demand. 
D) decrease aggregate supply.

Exam 12: B: Aggregate Demand and Aggregate Supply

In the short run, the aggregate supply curve of an economy is:

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.The per unit cost of production in the economy described above is:

Refer to the diagram below.Other things equal, a shift of the aggregate supply curve from AS0 to AS1 might be caused by a(n):

An increase in government spending can be expected to shift the:

The short run aggregate supply curve:

A change in the price level products a?

Per unit production cost is:

In the late 1990s and early 2000s:

The following aggregate demand and aggregate supply schedules are for a hypothetical economy. Refer to the data above.The vertical range of the aggregate supply curve is associated with price levels:

A movement downward along an existing aggregate demand curve is equivalent to a(n):

Refer to the diagram given below. If aggregate supply shifts from AS1 to AS2, then the price level will:

If real output rises and the price level falls, this would likely be due to a:

The economy experiences a decrease in the price level and an increase in real domestic output.Which is a likely explanation?

Other things equal, a reduction in personal and business taxes can be expected to:

Which would be considered to be one of the factors that shift the aggregate supply curve? A change in:

Which of the above diagrams best portrays the effects of a decrease in the availability of key natural resources?

The passage of new legislation requiring more extensive government regulation of business will most likely:

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 below.Other things equal, a shift of the aggregate supply curve from AS₀ to AS₁ might be caused by a(n):

Refer to the diagram given below. If aggregate supply shifts from AS₁ to AS₂, then the price level will: