Question 1

The supply of real GDP is a function of

Accepted Answer

A) the total expenditures of consumers, investors and government. 
B) the quantities of labour, capital and the state of technology. 
C) only the state of technology. 
D) the sum of wages, salaries, corporate profits, rents and interest. 
A) the total expenditures of consumers, investors and government. 
B) the quantities of labour, capital and the state of technology. 
C) only the state of technology. 
D) the sum of wages, salaries, corporate profits, rents and interest.

Question 2

An aggregate supply curve depicts the relationship between

Accepted Answer

A) the price level and nominal GDP. 
B) the price level and the aggregate quantity supplied. 
C) household expenditures and household income. 
D) the price level and the aggregate quantity demanded. 
A) the price level and nominal GDP. 
B) the price level and the aggregate quantity supplied. 
C) household expenditures and household income. 
D) the price level and the aggregate quantity demanded.

Question 3

Suppose there is an increase in short- run aggregate supply with no change in long- run aggregate supply. This situation could be the result of

Accepted Answer

A) an increase in the quantity of capital. 
B) a decrease in the money wage rate. 
C) an increase in the price of oil. 
D) a technological advancement. 
A) an increase in the quantity of capital. 
B) a decrease in the money wage rate. 
C) an increase in the price of oil. 
D) a technological advancement.

Question 4

One result of a decrease in aggregate demand and no change in aggregate supply is

Accepted Answer

A) an increase in employment levels. 
B) an economic expansion. 
C) a rise in the price level. 
D) a recession. 
A) an increase in employment levels. 
B) an economic expansion. 
C) a rise in the price level. 
D) a recession.

Question 5

The AS/AD model studies the relationship between

Accepted Answer

A) the price level and real GDP. 
B) the price level and unemployment. 
C) nominal GDP and inflation. 
D) unemployment and real GDP. 
A) the price level and real GDP. 
B) the price level and unemployment. 
C) nominal GDP and inflation. 
D) unemployment and real GDP.

Question 6

Which of the following shifts the short- run aggregate supply curve?
I. Changes in the size of the labour force
II. Changes in the money wage rate

Accepted Answer

A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II 
A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II

Question 7

Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded ________.

Accepted Answer

A) equals full- employment GDP 
B) equals the quantity of real GDP supplied 
C) does not equal full- employment GDP 
D) equals potential GDP 
A) equals full- employment GDP 
B) equals the quantity of real GDP supplied 
C) does not equal full- employment GDP 
D) equals potential GDP

Question 8

Which of the following does NOT shift the short- run aggregate supply curve?

Accepted Answer

A) A change in the money wage rate 
B) A change in the price level 
C) Technological progress 
D) A reduction in the price of a raw material 
A) A change in the money wage rate 
B) A change in the price level 
C) Technological progress 
D) A reduction in the price of a raw material

Question 9

-In the above figure, if the economy is at point a, an increase in ________ will move the economy to________.

Accepted Answer

A) expected future income; point c 
B) real wealth from the fall in the price level; point b 
C) expected future income; point d 
D) real wealth from the fall in the price level; point c 
A) expected future income; point c 
B) real wealth from the fall in the price level; point b 
C) expected future income; point d 
D) real wealth from the fall in the price level; point c

Question 10

Moving along the short-run aggregate supply curve, ________.

Accepted Answer

A) real GDP equals potential GDP 
B) real GDP equals nominal GDP 
C) the real wage rate is constant 
D) the money wage rate, the prices of other resources, and potential GDP remain constant 
A) real GDP equals potential GDP 
B) real GDP equals nominal GDP 
C) the real wage rate is constant 
D) the money wage rate, the prices of other resources, and potential GDP remain constant

Question 11

The aggregate demand curve

Accepted Answer

A) has a positive slope. 
B) has a negative slope. 
C) is horizontal. 
D) is vertical. 
A) has a positive slope. 
B) has a negative slope. 
C) is horizontal. 
D) is vertical.

Question 12

-In the above figure, the economy is initially at point B. Then the price level falls by 10. The wealth effect will help

Accepted Answer

A) move the economy to point C. 
B) keep the economy at point B. 
C) move the economy to point D. 
D) move the economy to point A. 
A) move the economy to point C. 
B) keep the economy at point B. 
C) move the economy to point D. 
D) move the economy to point A.

Question 13

In short- run macroeconomic equilibrium,

Accepted Answer

A) real GDP is less than potential GDP. 
B) the price level is fixed and short- run aggregate supply determines real GDP. 
C) real GDP equals potential GDP and aggregate demand determines the price level. 
D) real GDP and the price level are determined by short- run aggregate supply and aggregate demand. 
A) real GDP is less than potential GDP. 
B) the price level is fixed and short- run aggregate supply determines real GDP. 
C) real GDP equals potential GDP and aggregate demand determines the price level. 
D) real GDP and the price level are determined by short- run aggregate supply and aggregate demand.

Question 14

A monetarist economist believes that

Accepted Answer

A) the economy is self- regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic. 
B) the economy is self- regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
C) if the economy was left alone, it would rarely operate at full employment. 
D) the economy is self- regulating and always at full employment. 
A) the economy is self- regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic. 
B) the economy is self- regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
C) if the economy was left alone, it would rarely operate at full employment. 
D) the economy is self- regulating and always at full employment.

Question 15

In the short run, the intersection of the aggregate demand and the short- run aggregate supply curves,

Accepted Answer

A) determines the equilibrium level of real GDP. 
B) is a point where there is neither a surplus nor a shortage of goods. 
C) determines the equilibrium price level. 
D) All of the above answers are correct. 
A) determines the equilibrium level of real GDP. 
B) is a point where there is neither a surplus nor a shortage of goods. 
C) determines the equilibrium price level. 
D) All of the above answers are correct.

Question 16

Other things being equal, along the aggregate demand curve, a higher price level is associated with

Accepted Answer

A) a decrease in the quantity of nominal GDP demanded. 
B) a decrease in the quantity of real GDP demanded. 
C) higher income levels. 
D) an increase in the quantity of real GDP demanded. 
A) a decrease in the quantity of nominal GDP demanded. 
B) a decrease in the quantity of real GDP demanded. 
C) higher income levels. 
D) an increase in the quantity of real GDP demanded.

Question 17

Which of the following statements is INCORRECT?

Accepted Answer

A) A monetarist believes that recessions are the result of erratic monetary policy. 
B) A classical macroeconomist believes that the money wage rate adjusts slowly. 
C) A new classical macroeconomist believes the business cycle is the efficient response to the uneven pace of technological change. 
D) A Keynesian believes the business cycle is mainly influenced by changes in people's expectations. 
A) A monetarist believes that recessions are the result of erratic monetary policy. 
B) A classical macroeconomist believes that the money wage rate adjusts slowly. 
C) A new classical macroeconomist believes the business cycle is the efficient response to the uneven pace of technological change. 
D) A Keynesian believes the business cycle is mainly influenced by changes in people's expectations.

Question 18

The long- run aggregate supply (LAS)curve

Accepted Answer

A) has a negative slope. 
B) is horizontal. 
C) has a positive slope. 
D) is vertical. 
A) has a negative slope. 
B) is horizontal. 
C) has a positive slope. 
D) is vertical.

Question 19

In the macroeconomic long run,

Accepted Answer

A) real GDP equals potential GDP. 
B) regardless of the price level, the economy is producing at potential GDP. 
C) the economy is at full employment. 
D) All of the above are correct. 
A) real GDP equals potential GDP. 
B) regardless of the price level, the economy is producing at potential GDP. 
C) the economy is at full employment. 
D) All of the above are correct.

Question 20

Which of the following news quotes BEST describes a Keynesian view of a recession?

Accepted Answer

A) "Businesses are very worried about future sales and have lowered their purchases of capital equipment." 
B) "The unexpectedly tight fiscal policy is raising spending and lowering unemployment." 
C) "The anti- inflationary policy of the Reserve Bank of Australia is increasing spending." 
D) "The cuts in government spending have helped lower consumer spending and created unemployment." 
A) "Businesses are very worried about future sales and have lowered their purchases of capital equipment." 
B) "The unexpectedly tight fiscal policy is raising spending and lowering unemployment." 
C) "The anti- inflationary policy of the Reserve Bank of Australia is increasing spending." 
D) "The cuts in government spending have helped lower consumer spending and created unemployment."

The supply of real GDP is a function of

An aggregate supply curve depicts the relationship between

Suppose there is an increase in short- run aggregate supply with no change in long- run aggregate supply. This situation could be the result of

One result of a decrease in aggregate demand and no change in aggregate supply is

The AS/AD model studies the relationship between

Which of the following shifts the short- run aggregate supply curve? I. Changes in the size of the labour force II. Changes in the money wage rate

Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded ________.

Which of the following does NOT shift the short- run aggregate supply curve?

-In the above figure, if the economy is at point a, an increase in will move the economy to.

Moving along the short-run aggregate supply curve, ________.

The aggregate demand curve

-In the above figure, the economy is initially at point B. Then the price level falls by 10. The wealth effect will help

In short- run macroeconomic equilibrium,

A monetarist economist believes that

In the short run, the intersection of the aggregate demand and the short- run aggregate supply curves,

Other things being equal, along the aggregate demand curve, a higher price level is associated with

Which of the following statements is INCORRECT?

The long- run aggregate supply (LAS)curve

In the macroeconomic long run,

Which of the following news quotes BEST describes a Keynesian view of a recession?

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers: the Keynesian Model

Australian Macroeconomic Fluctuations

Fiscal Policy

Monetary Policy

Filters

Exam 24: Aggregate Demand and Aggregate Supply

The supply of real GDP is a function of

An aggregate supply curve depicts the relationship between

Suppose there is an increase in short- run aggregate supply with no change in long- run aggregate supply. This situation could be the result of

One result of a decrease in aggregate demand and no change in aggregate supply is

The AS/AD model studies the relationship between

Which of the following shifts the short- run aggregate supply curve? I. Changes in the size of the labour force II. Changes in the money wage rate

Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded ________.

Which of the following does NOT shift the short- run aggregate supply curve?

-In the above figure, if the economy is at point a, an increase in ________ will move the economy to________.

Moving along the short-run aggregate supply curve, ________.

The aggregate demand curve

-In the above figure, the economy is initially at point B. Then the price level falls by 10. The wealth effect will help

In short- run macroeconomic equilibrium,

A monetarist economist believes that

In the short run, the intersection of the aggregate demand and the short- run aggregate supply curves,

Other things being equal, along the aggregate demand curve, a higher price level is associated with

Which of the following statements is INCORRECT?

The long- run aggregate supply (LAS)curve

In the macroeconomic long run,

Which of the following news quotes BEST describes a Keynesian view of a recession?

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers: the Keynesian Model

Australian Macroeconomic Fluctuations

Fiscal Policy

Monetary Policy

Filters

-In the above figure, if the economy is at point a, an increase in will move the economy to.