Question 1

When the monopoly power of firms increases, short-run aggregate supply shifts to the left.

Accepted Answer

A) True 
 B)False

Question 2

The short-run aggregate supply curve:

Accepted Answer

A)  is vertical because the economy is at full capacity. 
B)  is upward sloping because some costs are slow to rise as output expands. 
C)  is horizontal because input prices do not rise as output rises. 
D)  cannot be generalized because each economy is unique. 
A)  is vertical because the economy is at full capacity. 
B)  is upward sloping because some costs are slow to rise as output expands. 
C)  is horizontal because input prices do not rise as output rises. 
D)  cannot be generalized because each economy is unique.

Question 3

Increased consumer confidence will shift the aggregate demand curve to the _____ and _____ output demanded.

Accepted Answer

A)  left; decrease 
B)  left; increase 
C)  right; increase 
D)  right; decrease 
A)  left; decrease 
B)  left; increase 
C)  right; increase 
D)  right; decrease

Question 4

_____ occurs when a negative supply shock hits the economy, shifting the short-run aggregate supply curve leftward.

Accepted Answer

A)  Demand-pull inflation 
B)  Demand-push inflation 
C)  Cost-push inflation 
D)  Cost-pull inflation 
A)  Demand-pull inflation 
B)  Demand-push inflation 
C)  Cost-push inflation 
D)  Cost-pull inflation

Question 5

Which of the following events will shift the aggregate demand curve to the right?

Accepted Answer

A)  a decrease in exports 
B)  an increase in imports 
C)  a rise in the interest rate 
D)  a new government program to eliminate poverty 
A)  a decrease in exports 
B)  an increase in imports 
C)  a rise in the interest rate 
D)  a new government program to eliminate poverty

Question 6

According to the figure of ADAS and assuming the economy begins at point C, an increase in consumer confidence leads to what changes in the short run?

Accepted Answer

A)  an increase in unemployment 
B)  cost-push inflation 
C)  a decline in tax revenue 
D)  demand-pull inflation 
A)  an increase in unemployment 
B)  cost-push inflation 
C)  a decline in tax revenue 
D)  demand-pull inflation

Question 7

If you know the marginal propensity to consume, you can calculate the marginal propensity to save.

Accepted Answer

A) True 
 B)False

Question 8

Assume that Macroland is a country that imports 70% of the inputs used in its production and 40% of the products consumed. It has an overall trade balance. Which of the following events would cause Macroland's short-run aggregate supply curve to shift to the left?

Accepted Answer

A)  an increase in the average education level of the labor force 
B)  a depreciation in the value of Macroland's currency 
C)  an increase in consumption taxes and a decrease in corporate income taxes 
D)  a surge in the value of stocks exchanged on Macroland's stock market 
A)  an increase in the average education level of the labor force 
B)  a depreciation in the value of Macroland's currency 
C)  an increase in consumption taxes and a decrease in corporate income taxes 
D)  a surge in the value of stocks exchanged on Macroland's stock market

Question 9

John Maynard Keynes's analysis was based on an economy whose resources were underutilized.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would NOT cause a shift in the short-run aggregate supply curve?

Accepted Answer

A)  an increase in resource prices 
B)  a decrease in the expected rate of inflation 
C)  a major technological advance 
D)  a decrease in real interest rates 
A)  an increase in resource prices 
B)  a decrease in the expected rate of inflation 
C)  a major technological advance 
D)  a decrease in real interest rates

Question 11

Suppose energy prices spike. In the short run, output will _____; in the long run, output will _____ from its starting point.

Accepted Answer

A)  decrease; remain unchanged 
B)  decrease; increase 
C)  remain unchanged; decrease 
D)  remain unchanged; increase 
A)  decrease; remain unchanged 
B)  decrease; increase 
C)  remain unchanged; decrease 
D)  remain unchanged; increase

Question 12

If the marginal propensity to consume is 0.5, then $50 of every additional $100 of income will be spent.

Accepted Answer

A) True 
 B)False

Question 13

What happens if business expectations improve?

Accepted Answer

A)  Aggregate supply shifts to the left. 
B)  Aggregate supply shifts to the right. 
C)  Aggregate demand shifts to the left. 
D)  Aggregate demand shifts to the right. 
A)  Aggregate supply shifts to the left. 
B)  Aggregate supply shifts to the right. 
C)  Aggregate demand shifts to the left. 
D)  Aggregate demand shifts to the right.

Question 14

Which of the following factors will cause the aggregate demand curve to shift to the left?

Accepted Answer

A)  a rise in consumer confidence 
B)  a fall in excess capacity at businesses 
C)  an increase in foreign income 
D)  the appreciation of the dollar 
A)  a rise in consumer confidence 
B)  a fall in excess capacity at businesses 
C)  an increase in foreign income 
D)  the appreciation of the dollar

Question 15

Which of the following will shift the short-run aggregate supply curve to the left?

Accepted Answer

A)  an increase in the minimum wage 
B)  a decrease in immigration from other countries 
C)  a decrease in the price of oil 
D)  a decrease in the actual price level 
A)  an increase in the minimum wage 
B)  a decrease in immigration from other countries 
C)  a decrease in the price of oil 
D)  a decrease in the actual price level

Question 16

Cost-push inflation is a result of too much spending on goods and services.

Accepted Answer

A) True 
 B)False

Question 17

(Figure: Determining SRAS Shifts)   If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS0 to _____ and the price level will be at _____.

Accepted Answer

A)  SRAS1; P0 
B)  SRAS1; P1 
C)  SRAS2; P1 
D)  SRAS2; P2 
A)  SRAS1; P0 
B)  SRAS1; P1 
C)  SRAS2; P1 
D)  SRAS2; P2

Question 18

Which of the following statements regarding the short-run aggregate supply curve is true?

Accepted Answer

A)  The short-run aggregate supply curve shifts to the left when tax rates on businesses are lowered. 
B)  The short-run aggregate supply curve shifts to the right when the costs of capital rise. 
C)  The short-run aggregate supply curve shifts to the left when business expectations become more positive. 
D)  The short-run aggregate supply curve shifts to the right with a reduction in burdensome regulations. 
A)  The short-run aggregate supply curve shifts to the left when tax rates on businesses are lowered. 
B)  The short-run aggregate supply curve shifts to the right when the costs of capital rise. 
C)  The short-run aggregate supply curve shifts to the left when business expectations become more positive. 
D)  The short-run aggregate supply curve shifts to the right with a reduction in burdensome regulations.

Question 19

A falling aggregate price level _____ demand for a country's exports and therefore _____ output demanded.

Accepted Answer

A)  increases; increases 
B)  increases; reduces 
C)  reduces; increases 
D)  reduces; reduces 
A)  increases; increases 
B)  increases; reduces 
C)  reduces; increases 
D)  reduces; reduces

Question 20

(Figure: Interpreting Aggregate Shifts) The graph shows:

Accepted Answer

A)  a decrease in aggregate quantity supplied. 
B)  an increase in aggregate quantity supplied. 
C)  a decrease in aggregate demand. 
D)  an increase in aggregate demand. 
A)  a decrease in aggregate quantity supplied. 
B)  an increase in aggregate quantity supplied. 
C)  a decrease in aggregate demand. 
D)  an increase in aggregate demand.

When the monopoly power of firms increases, short-run aggregate supply shifts to the left.

The short-run aggregate supply curve:

Increased consumer confidence will shift the aggregate demand curve to the _ and _ output demanded.

_____ occurs when a negative supply shock hits the economy, shifting the short-run aggregate supply curve leftward.

Which of the following events will shift the aggregate demand curve to the right?

According to the figure of ADAS and assuming the economy begins at point C, an increase in consumer confidence leads to what changes in the short run?

If you know the marginal propensity to consume, you can calculate the marginal propensity to save.

Assume that Macroland is a country that imports 70% of the inputs used in its production and 40% of the products consumed. It has an overall trade balance. Which of the following events would cause Macroland's short-run aggregate supply curve to shift to the left?

John Maynard Keynes's analysis was based on an economy whose resources were underutilized.

Which of the following would NOT cause a shift in the short-run aggregate supply curve?

Suppose energy prices spike. In the short run, output will _; in the long run, output will _ from its starting point.

If the marginal propensity to consume is 0.5, then $50 of every additional $100 of income will be spent.

What happens if business expectations improve?

Which of the following factors will cause the aggregate demand curve to shift to the left?

Which of the following will shift the short-run aggregate supply curve to the left?

Cost-push inflation is a result of too much spending on goods and services.

(Figure: Determining SRAS Shifts) If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS₀ to _ and the price level will be at _.

Which of the following statements regarding the short-run aggregate supply curve is true?

A falling aggregate price level _ demand for a country's exports and therefore _ output demanded.

(Figure: Interpreting Aggregate Shifts) The graph shows:

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

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Exam 9: Aggregate Demand and Supply

When the monopoly power of firms increases, short-run aggregate supply shifts to the left.

The short-run aggregate supply curve:

Increased consumer confidence will shift the aggregate demand curve to the _____ and _____ output demanded.

_____ occurs when a negative supply shock hits the economy, shifting the short-run aggregate supply curve leftward.

Which of the following events will shift the aggregate demand curve to the right?

According to the figure of ADAS and assuming the economy begins at point C, an increase in consumer confidence leads to what changes in the short run?

If you know the marginal propensity to consume, you can calculate the marginal propensity to save.

Assume that Macroland is a country that imports 70% of the inputs used in its production and 40% of the products consumed. It has an overall trade balance. Which of the following events would cause Macroland's short-run aggregate supply curve to shift to the left?

John Maynard Keynes's analysis was based on an economy whose resources were underutilized.

Which of the following would NOT cause a shift in the short-run aggregate supply curve?

Suppose energy prices spike. In the short run, output will _____; in the long run, output will _____ from its starting point.

If the marginal propensity to consume is 0.5, then $50 of every additional $100 of income will be spent.

What happens if business expectations improve?

Which of the following factors will cause the aggregate demand curve to shift to the left?

Which of the following will shift the short-run aggregate supply curve to the left?

Cost-push inflation is a result of too much spending on goods and services.

(Figure: Determining SRAS Shifts) If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS0 to _____ and the price level will be at _____.

Which of the following statements regarding the short-run aggregate supply curve is true?

A falling aggregate price level _____ demand for a country's exports and therefore _____ output demanded.

(Figure: Interpreting Aggregate Shifts) The graph shows:

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Increased consumer confidence will shift the aggregate demand curve to the _ and _ output demanded.

Suppose energy prices spike. In the short run, output will _; in the long run, output will _ from its starting point.

(Figure: Determining SRAS Shifts) If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS₀ to _ and the price level will be at _.

A falling aggregate price level _ demand for a country's exports and therefore _ output demanded.