Question 1

Which of the following would NOT cause an increase in long-run aggregate supply?

Accepted Answer

A)  an increase in government expenditures on infrastructure 
B)  a free trade agreement that significantly reduces previous trade barriers 
C)  an increase in the average education level in the labor force 
D)  a reduction in poverty due to new income redistribution programs 
A)  an increase in government expenditures on infrastructure 
B)  a free trade agreement that significantly reduces previous trade barriers 
C)  an increase in the average education level in the labor force 
D)  a reduction in poverty due to new income redistribution programs

Question 2

If the U.S. aggregate price level rises:

Accepted Answer

A)  net exports will also rise. 
B)  interest rates will decline. 
C)  the aggregate demand curve will shift to the left. 
D)  the purchasing power of wealth will decrease. 
A)  net exports will also rise. 
B)  interest rates will decline. 
C)  the aggregate demand curve will shift to the left. 
D)  the purchasing power of wealth will decrease.

Question 3

Consumer spending is NOT affected by:

Accepted Answer

A)  wealth. 
B)  consumer confidence. 
C)  taxes. 
D)  inventories. 
A)  wealth. 
B)  consumer confidence. 
C)  taxes. 
D)  inventories.

Question 4

Aggregate supply is:

Accepted Answer

A)  the real GDP that firms will produce at varying price levels. 
B)  the total supply over a span of several years. 
C)  the amount of goods, but not services, firms supply at various price levels. 
D)  the amount of output that is sold at each price level. 
A)  the real GDP that firms will produce at varying price levels. 
B)  the total supply over a span of several years. 
C)  the amount of goods, but not services, firms supply at various price levels. 
D)  the amount of output that is sold at each price level.

Question 5

Economic growth is shown as a:

Accepted Answer

A)  shift to the left of the long-run aggregate supply curve. 
B)  movement up along the short-run aggregate supply curve. 
C)  shift to the right of the long-run aggregate supply curve. 
D)  shift to the left of the short-run aggregate supply curve. 
A)  shift to the left of the long-run aggregate supply curve. 
B)  movement up along the short-run aggregate supply curve. 
C)  shift to the right of the long-run aggregate supply curve. 
D)  shift to the left of the short-run aggregate supply curve.

Question 6

According to John Maynard Keynes, what determines employment and income?

Accepted Answer

A)  aggregate supply 
B)  government spending alone 
C)  aggregate expenditures 
D)  wages, prices, and interest rates 
A)  aggregate supply 
B)  government spending alone 
C)  aggregate expenditures 
D)  wages, prices, and interest rates

Question 7

A decrease in regulation would cause aggregate:

Accepted Answer

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

Question 8

The short-run aggregate supply curve is positively sloped, since many input costs are slow to change in the short run.

Accepted Answer

A) True 
 B)False

Question 9

Demand-pull inflation results when consumers, businesses, and the government want to buy more than the full-employment level of output.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following factors is NOT a determinant of aggregate supply?

Accepted Answer

A)  income 
B)  taxes on business 
C)  input prices 
D)  regulation 
A)  income 
B)  taxes on business 
C)  input prices 
D)  regulation

Question 11

If the amount of regulation in an economy increases, the aggregate supply curve shifts _____ and output supplied will _____.

Accepted Answer

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

Question 12

According to the figure of ADAS curves and assuming the country begins on AD1 and SRAS1, what will happen in the short and long run if the government begins a sustained period of increased spending?

Accepted Answer

A)  The economy moves from point C to E to B. 
B)  The economy moves from point D to C to A. 
C)  The economy moves from point D to C to E. 
D)  The economy moves from point C to A to B. 
A)  The economy moves from point C to E to B. 
B)  The economy moves from point D to C to A. 
C)  The economy moves from point D to C to E. 
D)  The economy moves from point C to A to B.

Question 13

The aggregate demand curve:

Accepted Answer

A)  is upward sloping because a higher price level is necessary to make production profitable as production costs rise. 
B)  is downward sloping because production costs decline as real GDP increases. 
C)  shows the amount of expenditures required to induce the production of each possible level of real GDP. 
D)  shows the amount of real GDP that will be demanded at each possible price level. 
A)  is upward sloping because a higher price level is necessary to make production profitable as production costs rise. 
B)  is downward sloping because production costs decline as real GDP increases. 
C)  shows the amount of expenditures required to induce the production of each possible level of real GDP. 
D)  shows the amount of real GDP that will be demanded at each possible price level.

Question 14

If mergers between firms increase throughout the economy, what would happen to the SRAS curve?

Accepted Answer

A)  SRAS shifts left. 
B)  SRAS shifts right. 
C)  SRAS would not change. 
D)  SRAS would disappear. 
A)  SRAS shifts left. 
B)  SRAS shifts right. 
C)  SRAS would not change. 
D)  SRAS would disappear.

Question 15

High taxes and/or heavy regulation:

Accepted Answer

A)  can cause firms to boost production so they can cover the added costs. 
B)  raise costs of production so that the aggregate supply curve shifts to the left. 
C)  are not likely to affect firms' behavior, since they are more concerned about profits than taxes or regulation . 
D)  are likely to shift aggregate supply to the right. 
A)  can cause firms to boost production so they can cover the added costs. 
B)  raise costs of production so that the aggregate supply curve shifts to the left. 
C)  are not likely to affect firms' behavior, since they are more concerned about profits than taxes or regulation . 
D)  are likely to shift aggregate supply to the right.

Question 16

Which of the following curves is vertical?

Accepted Answer

A)  aggregate demand 
B)  short-run aggregate supply 
C)  long-run aggregate supply 
D)  aggregate expenditures line 
A)  aggregate demand 
B)  short-run aggregate supply 
C)  long-run aggregate supply 
D)  aggregate expenditures line

Question 17

A stronger dollar will shift the U.S. 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 18

The idea behind the spending multiplier is that new spending causes more spending, income, and output than just an amount equal to the new spending itself.

Accepted Answer

A) True 
 B)False

Question 19

A vertical aggregate supply curve represents full employment in the long run.

Accepted Answer

A) True 
 B)False

Question 20

If Europe has a large increase in income, what will happen in the United States?

Accepted Answer

A)  The aggregate demand curve will shift to the right. 
B)  The aggregate demand curve will shift to the left. 
C)  The aggregate demand curve will not change. 
D)  The aggregate demand curve will shift to the left in the short run and then to the right in the long run. 
A)  The aggregate demand curve will shift to the right. 
B)  The aggregate demand curve will shift to the left. 
C)  The aggregate demand curve will not change. 
D)  The aggregate demand curve will shift to the left in the short run and then to the right in the long run.

Which of the following would NOT cause an increase in long-run aggregate supply?

If the U.S. aggregate price level rises:

Consumer spending is NOT affected by:

Aggregate supply is:

Economic growth is shown as a:

According to John Maynard Keynes, what determines employment and income?

A decrease in regulation would cause aggregate:

The short-run aggregate supply curve is positively sloped, since many input costs are slow to change in the short run.

Demand-pull inflation results when consumers, businesses, and the government want to buy more than the full-employment level of output.

Which of the following factors is NOT a determinant of aggregate supply?

If the amount of regulation in an economy increases, the aggregate supply curve shifts _ and output supplied will _.

According to the figure of ADAS curves and assuming the country begins on AD₁ and SRAS₁, what will happen in the short and long run if the government begins a sustained period of increased spending?

The aggregate demand curve:

If mergers between firms increase throughout the economy, what would happen to the SRAS curve?

High taxes and/or heavy regulation:

Which of the following curves is vertical?

A stronger dollar will shift the U.S. aggregate demand curve to the _ and _ output demanded.

The idea behind the spending multiplier is that new spending causes more spending, income, and output than just an amount equal to the new spending itself.

A vertical aggregate supply curve represents full employment in the long run.

If Europe has a large increase in income, what will happen in the United States?

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

Exam 9: Aggregate Demand and Supply

Which of the following would NOT cause an increase in long-run aggregate supply?

If the U.S. aggregate price level rises:

Consumer spending is NOT affected by:

Aggregate supply is:

Economic growth is shown as a:

According to John Maynard Keynes, what determines employment and income?

A decrease in regulation would cause aggregate:

The short-run aggregate supply curve is positively sloped, since many input costs are slow to change in the short run.

Demand-pull inflation results when consumers, businesses, and the government want to buy more than the full-employment level of output.

Which of the following factors is NOT a determinant of aggregate supply?

If the amount of regulation in an economy increases, the aggregate supply curve shifts _____ and output supplied will _____.

According to the figure of ADAS curves and assuming the country begins on AD1 and SRAS1, what will happen in the short and long run if the government begins a sustained period of increased spending?

The aggregate demand curve:

If mergers between firms increase throughout the economy, what would happen to the SRAS curve?

High taxes and/or heavy regulation:

Which of the following curves is vertical?

A stronger dollar will shift the U.S. aggregate demand curve to the _____ and _____ output demanded.

The idea behind the spending multiplier is that new spending causes more spending, income, and output than just an amount equal to the new spending itself.

A vertical aggregate supply curve represents full employment in the long run.

If Europe has a large increase in income, what will happen in the United States?

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

If the amount of regulation in an economy increases, the aggregate supply curve shifts _ and output supplied will _.

According to the figure of ADAS curves and assuming the country begins on AD₁ and SRAS₁, what will happen in the short and long run if the government begins a sustained period of increased spending?

A stronger dollar will shift the U.S. aggregate demand curve to the _ and _ output demanded.