Question 1

Productivity is calculated by:

Accepted Answer

A) dividing total output by total input. 
B) dividing total input by total output. 
C) multiplying total output by total input. 
D) adding total input to total output. 
A) dividing total output by total input. 
B) dividing total input by total output. 
C) multiplying total output by total input. 
D) adding total input to total output.

Question 2

Depreciation of the dollar relative to foreign currencies will tend to increase net exports and aggregate demand.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the above diagram.If equilibrium real output is Q2, then:

Accepted Answer

A) aggregate demand is AD1. 
B) the equilibrium price level is P1. 
C) producers will supply output level Q1. 
D) the equilibrium price level is P2. 
A) aggregate demand is AD1. 
B) the equilibrium price level is P1. 
C) producers will supply output level Q1. 
D) the equilibrium price level is P2.

Question 4

Which of the diagrams below best portrays the effects of an increase in consumer spending?

Accepted Answer

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

Question 5

If personal taxes were decreased and input productivity increased simultaneously, the equilibrium:

Accepted Answer

A) output would rise. 
B) output would fall. 
C) price level would necessarily fall. 
D) price level would necessarily rise. 
A) output would rise. 
B) output would fall. 
C) price level would necessarily fall. 
D) price level would necessarily rise.

Question 6

The interest rate effect indicates that a(n):

Accepted Answer

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

Question 7

Refer to the above diagram.At the equilibrium price and quantity:

Accepted Answer

A) aggregate demand exceeds aggregate supply. 
B) the amount of real output demanded and supplied are equal. 
C) aggregate demand equals aggregate supply. 
D) aggregate supply exceeds aggregate demand. 
A) aggregate demand exceeds aggregate supply. 
B) the amount of real output demanded and supplied are equal. 
C) aggregate demand equals aggregate supply. 
D) aggregate supply exceeds aggregate demand.

Question 8

A decrease in per unit production costs will shift the aggregate supply curve leftward.

Accepted Answer

A) True 
 B)False

Question 9

Refer to the diagram given below.   Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P2 and that the economy is initially operating at the full-employment level of output Qf.In the long run, an increase in the price level from P2 to P3 will:

Accepted Answer

A) increase the real output from Qf to Q2. 
B) shift the aggregate supply curve from AS2 to AS1. 
C) decrease the real output from Q2 to Q1. 
D) not change the level of real output. 
A) increase the real output from Qf to Q2. 
B) shift the aggregate supply curve from AS2 to AS1. 
C) decrease the real output from Q2 to Q1. 
D) not change the level of real output.

Question 10

Refer to the diagram given below.   Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P2 and that the economy initially is operating at the full-employment level of output Qf.In the diagram, the long-run aggregate supply curve:

Accepted Answer

A) is represented by AS2. 
B) is a vertical line extending from Qf upward through the points e, b, and d. 
C) may be either AS1, AS2, or AS3 depending on whether the price level is P1, P2, or P3. 
D) is a horizontal line extending from P2 rightward through points f, b, and g. 
A) is represented by AS2. 
B) is a vertical line extending from Qf upward through the points e, b, and d. 
C) may be either AS1, AS2, or AS3 depending on whether the price level is P1, P2, or P3. 
D) is a horizontal line extending from P2 rightward through points f, b, and g.

Question 11

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 12

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

Accepted Answer

A) productivity has increased 
B) input prices have increased 
C) excess capacity has decreased 
D) government regulations have been reduced 
A) productivity has increased 
B) input prices have increased 
C) excess capacity has decreased 
D) government regulations have been reduced

Question 13

Other things being equal, if the national incomes of our major international lending partners were to rise, our:

Accepted Answer

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

Question 14

Refer to the above diagrams.A decline in aggregate expenditures from AE2 to AE1resulting from the wealth, interest rate, and foreign trade effects would be depicted as:

Accepted Answer

A) a movement from A to B along aggregate demand curve AD1. 
B) a movement from C to A along aggregate demand curve AD1. 
C) a shift of aggregate demand from AD1 to AD2. 
D) a shift of aggregate demand from AD2 to AD1. 
A) a movement from A to B along aggregate demand curve AD1. 
B) a movement from C to A along aggregate demand curve AD1. 
C) a shift of aggregate demand from AD1 to AD2. 
D) a shift of aggregate demand from AD2 to AD1.

Question 15

Which of the above diagrams best portrays the effects of a dramatic increase in energy prices?

Accepted Answer

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

Question 16

A decrease in the price level in the aggregate expenditures model would:

Accepted Answer

A) decrease aggregate expenditures and real GDP. 
B) increase aggregate expenditures and real GDP. 
C) decrease aggregate expenditures and increase real GDP. 
D) increase aggregate expenditures and decrease real GDP. 
A) decrease aggregate expenditures and real GDP. 
B) increase aggregate expenditures and real GDP. 
C) decrease aggregate expenditures and increase real GDP. 
D) increase aggregate expenditures and decrease real GDP.

Question 17

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy.   Refer to the above table.The equilibrium price level and quantity of real domestic output will be:

Accepted Answer

A) 150 and $1000. 
B) 150 and $1500. 
C) 200 and $2000. 
D) 250 and $2500. 
A) 150 and $1000. 
B) 150 and $1500. 
C) 200 and $2000. 
D) 250 and $2500.

Question 18

Which of the following would not shift the aggregate supply curve?

Accepted Answer

A) an increase in labour productivity 
B) a decline in the price of imported oil 
C) a decline in business taxes 
D) an increase in the price level 
A) an increase in labour productivity 
B) a decline in the price of imported oil 
C) a decline in business taxes 
D) an increase in the price level

Question 19

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 20

Refer to the above diagram.If the price level rises above P1 because of an increase in aggregate demand, the:

Accepted Answer

A) economy will move up along curve B and output will temporarily increase. 
B) long-run aggregate supply curve C will shift upward. 
C) short-run aggregate supply curve B will automatically shift to the right. 
D) economy's output first will decline, then increase, and finally return to Q1. 
A) economy will move up along curve B and output will temporarily increase. 
B) long-run aggregate supply curve C will shift upward. 
C) short-run aggregate supply curve B will automatically shift to the right. 
D) economy's output first will decline, then increase, and finally return to Q1.

Exam 12: Part B: Aggregate Demand and Aggregate Supply

Productivity is calculated by:

Depreciation of the dollar relative to foreign currencies will tend to increase net exports and aggregate demand.

Refer to the above diagram.If equilibrium real output is Q2, then:

Which of the diagrams below best portrays the effects of an increase in consumer spending?

If personal taxes were decreased and input productivity increased simultaneously, the equilibrium:

The interest rate effect indicates that a(n):

Refer to the above diagram.At the equilibrium price and quantity:

A decrease in per unit production costs will shift the aggregate supply curve leftward.

Refer to the diagram given below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P2 and that the economy is initially operating at the full-employment level of output Qf.In the long run, an increase in the price level from P2 to P3 will:

Refer to the diagram given below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P2 and that the economy initially is operating at the full-employment level of output Qf.In the diagram, the long-run aggregate supply curve:

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

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

Other things being equal, if the national incomes of our major international lending partners were to rise, our:

Refer to the above diagrams.A decline in aggregate expenditures from AE2 to AE1resulting from the wealth, interest rate, and foreign trade effects would be depicted as:

Which of the above diagrams best portrays the effects of a dramatic increase in energy prices?

A decrease in the price level in the aggregate expenditures model would:

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. Refer to the above table.The equilibrium price level and quantity of real domestic output will be:

Which of the following would not shift the aggregate supply curve?

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

Refer to the above diagram.If the price level rises above P1 because of an increase in aggregate demand, the:

Part A: Limits, Alternatives, and Choices

Part B: Limits, Alternatives, and Choices

Part A: The Market System and the Circular Flow

Part B: The Market System and the Circular Flow

Part A: Demand, Supply, and Market Equilibrium

Part B: Demand, Supply, and Market Equilibrium

Part A: Market Failures: Public Goods and Externalities

Part B: Market Failures: Public Goods and Externalities

Part A: Governments Role and Government Failure

Part B: Governments Role and Government Failure

Part A: An Introduction to Macroeconomics

Part B: An Introduction to Macroeconomics

Part A: Measuring the Economys Output

Part B: Measuring the Economys Output

Part A: Economic Growth

Part B: Economic Growth

Part A: Business Cycles, Unemployment, and Inflation

Part B: Business Cycles, Unemployment, and Inflation

Part A: Basic Macroeconomic Relationships

Part B: Basic Macroeconomic Relationships

Part A: The Aggregate Expenditures Model

Part B: The Aggregate Expenditures Model

Part A: Aggregate Demand and Aggregate Supply

Part A: Fiscal Policy, Deficits, Surpluses, and Debt

Part B: Fiscal Policy, Deficits, Surpluses, and Debt

Part A: Money, Banking, and Money Creation

Part B: Money, Banking, and Money Creation

Part A: Interest Rates and Monetary Policy

Part B: Interest Rates and Monetary Policy

Part A: Long-Run Macroeconomic Adjustments

Part B: Long-Run Macroeconomic Adjustments

Part A: International Trade

Part B: International Trade

Part C: Financial Economics

Part A: The Balance of Payments and Exchange Rates

Part B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters

Refer to the above diagram.If equilibrium real output is Q₂, then:

Refer to the diagram given below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P₂ and that the economy initially is operating at the full-employment level of output Q_f.In the diagram, the long-run aggregate supply curve:

Refer to the above diagrams.A decline in aggregate expenditures from AE₂ to AE₁resulting from the wealth, interest rate, and foreign trade effects would be depicted as:

Refer to the above diagram.If the price level rises above P₁ because of an increase in aggregate demand, the: