Question 1

Which of the following directly shifts the short- run aggregate supply curve?

Accepted Answer

A) A change in resource prices 
B) A change in the price level 
C) A change in aggregate demand 
D) All of the above 
A) A change in resource prices 
B) A change in the price level 
C) A change in aggregate demand 
D) All of the above

Question 2

Which of the following does NOT shift the aggregate demand curve?

Accepted Answer

A) An increase in investment 
B) An increase in the price level 
C) A decrease in taxes 
D) A decrease in the quantity of money 
A) An increase in investment 
B) An increase in the price level 
C) A decrease in taxes 
D) A decrease in the quantity of money

Question 3

For movements along the short- run aggregate supply curve,

Accepted Answer

A) potential GDP remains constant. 
B) the real wage rate changes. 
C) the money wage rate is constant. 
D) All of the above are correct. 
A) potential GDP remains constant. 
B) the real wage rate changes. 
C) the money wage rate is constant. 
D) All of the above are correct.

Question 4

In a long- run equilibrium, an increase in the quantity of capital leads to

Accepted Answer

A) a decrease in the equilibrium price level and an increase in equilibrium real GDP. 
B) no change in the equilibrium price level, but an increase in equilibrium real GDP. 
C) a decrease in the equilibrium price level, but no change in equilibrium real GDP. 
D) an increase in the equilibrium price level and an increase in equilibrium real GDP. 
A) a decrease in the equilibrium price level and an increase in equilibrium real GDP. 
B) no change in the equilibrium price level, but an increase in equilibrium real GDP. 
C) a decrease in the equilibrium price level, but no change in equilibrium real GDP. 
D) an increase in the equilibrium price level and an increase in equilibrium real GDP.

Question 5

Inflation occurs over time as a result of

Accepted Answer

A) long- run aggregate supply increasing faster than short- run aggregate supply. 
B) long- run aggregate supply increasing faster than aggregate demand. 
C) decreases in aggregate demand. 
D) aggregate demand increasing faster than long- run aggregate supply. 
A) long- run aggregate supply increasing faster than short- run aggregate supply. 
B) long- run aggregate supply increasing faster than aggregate demand. 
C) decreases in aggregate demand. 
D) aggregate demand increasing faster than long- run aggregate supply.

Question 6

The SAS curve and the LAS curve

Accepted Answer

A) intersect at potential GDP. 
B) are perpendicular to one another at potential GDP. 
C) are parallel at potential GDP. 
D) None of the above answers is correct. 
A) intersect at potential GDP. 
B) are perpendicular to one another at potential GDP. 
C) are parallel at potential GDP. 
D) None of the above answers is correct.

Question 7

The positive relationship between short- run aggregate supply and the price level indicates that, in the short run,

Accepted Answer

A) firms produce more output as the price level rises. 
B) the money wage rate increases when moving along the short- run aggregate supply curve. 
C) firms produce more output as the price level falls. 
D) lower price levels are more profitable for firms. 
A) firms produce more output as the price level rises. 
B) the money wage rate increases when moving along the short- run aggregate supply curve. 
C) firms produce more output as the price level falls. 
D) lower price levels are more profitable for firms.

Question 8

-In the above figure, the short- run aggregate supply curve is SAS1. If the prices of resources fall, there is

Accepted Answer

A) a shift to SAS0. 
B) a shift to SAS2. 
C) an upward movement along SAS1. 
D) a downward movement along SAS1. 
A) a shift to SAS0. 
B) a shift to SAS2. 
C) an upward movement along SAS1. 
D) a downward movement along SAS1.

Question 9

According to the intertemporal substitution effect, a fall in the price level will

Accepted Answer

A) increase the real value of wealth, which raises the interest rate so that the quantity of real GDP demanded decreases. 
B) increase net exports, which causes the quantity of real GDP demanded to increase. 
C) decrease the real value of wealth, which increases the quantity of real GDP demanded. 
D) cause the interest rate to fall so that investment increases and the quantity of real GDP demanded increases. 
A) increase the real value of wealth, which raises the interest rate so that the quantity of real GDP demanded decreases. 
B) increase net exports, which causes the quantity of real GDP demanded to increase. 
C) decrease the real value of wealth, which increases the quantity of real GDP demanded. 
D) cause the interest rate to fall so that investment increases and the quantity of real GDP demanded increases.

Question 10

At long-run macroeconomic equilibrium, ________.

Accepted Answer

A) real GDP is less than potential GDP but is as close as it is possible to be 
B) real GDP equals potential GDP 
C) a recessionary gap exists 
D) an inflationary gap exists 
A) real GDP is less than potential GDP but is as close as it is possible to be 
B) real GDP equals potential GDP 
C) a recessionary gap exists 
D) an inflationary gap exists

Question 11

As the price level falls and other things remain the same, real wealth ________ and ________.

Accepted Answer

A) increases; the quantity of real GDP demanded increases 
B) increases; aggregate demand increases 
C) decreases; the quantity of real GDP demanded decreases 
D) decreases; short- run aggregate supply decreases 
A) increases; the quantity of real GDP demanded increases 
B) increases; aggregate demand increases 
C) decreases; the quantity of real GDP demanded decreases 
D) decreases; short- run aggregate supply decreases

Question 12

Suppose the Australian exchange rate falls from 90 yen per dollar to 80 yen per dollar. Australian exports will ________, Australian imports will ________, and Australian aggregate demand will________.

Accepted Answer

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

Question 13

If the full- employment quantity of labour increases, then the

Accepted Answer

A) SAS curve shifts rightward and the LAS curve does not shift. 
B) SAS curve shifts rightward and the LAS curve does shifts leftward. 
C) LAS curve shifts rightward and the SAS curve does not shift. 
D) SAS curve shifts rightward and the LAS curve shifts rightward. 
A) SAS curve shifts rightward and the LAS curve does not shift. 
B) SAS curve shifts rightward and the LAS curve does shifts leftward. 
C) LAS curve shifts rightward and the SAS curve does not shift. 
D) SAS curve shifts rightward and the LAS curve shifts rightward.

Question 14

Economic growth

Accepted Answer

A) is an increase in potential GDP as the long- run aggregate supply curve shifts rightward. 
B) occurs when the long- run aggregate supply curve shifts upward. 
C) requires a compensating decrease in aggregate demand to offset the increase in aggregate supply. 
D) All of the above answers are correct. 
A) is an increase in potential GDP as the long- run aggregate supply curve shifts rightward. 
B) occurs when the long- run aggregate supply curve shifts upward. 
C) requires a compensating decrease in aggregate demand to offset the increase in aggregate supply. 
D) All of the above answers are correct.

Question 15

-In the above figure, the economy is initially at point B. If the Reserve Bank decreases the quantity of money, there is

Accepted Answer

A) a movement to point A. 
B) a shift to AD2. 
C) a shift to AD1. 
D) a movement to point C. 
A) a movement to point A. 
B) a shift to AD2. 
C) a shift to AD1. 
D) a movement to point C.

Question 16

Which of the following helps determine the growth rate of potential GDP?
I. Capital accumulation
II. Technology advances
III. Growth in the quantity of money

Accepted Answer

A) I 
B) I and II 
C) I and III 
D) I, II and III 
A) I 
B) I and II 
C) I and III 
D) I, II and III

Question 17

Aggregate demand increases when

Accepted Answer

A) interest rates rise. 
B) foreign incomes fall. 
C) the exchange rate rises. 
D) None of the above answers is correct. 
A) interest rates rise. 
B) foreign incomes fall. 
C) the exchange rate rises. 
D) None of the above answers is correct.

Question 18

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

Question 19

Suppose the price level, the money wage, and the price of all other resources rise by 10 per cent. This set of changes leads to

Accepted Answer

A) an upward movement along the LAS curve. 
B) a downward movement along the LAS curve. 
C) a leftward shift of the LAS curve. 
D) an upward movement along the SAS curve. 
A) an upward movement along the LAS curve. 
B) a downward movement along the LAS curve. 
C) a leftward shift of the LAS curve. 
D) an upward movement along the SAS curve.

Question 20

Your real wealth is measured as the

Accepted Answer

A) amount of assets you have in dollar terms. 
B) amount of goods you have divided by the price level. 
C) amount of goods and services your wealth will buy. 
D) amount of money you have. 
A) amount of assets you have in dollar terms. 
B) amount of goods you have divided by the price level. 
C) amount of goods and services your wealth will buy. 
D) amount of money you have.

Which of the following directly shifts the short- run aggregate supply curve?

Which of the following does NOT shift the aggregate demand curve?

For movements along the short- run aggregate supply curve,

In a long- run equilibrium, an increase in the quantity of capital leads to

Inflation occurs over time as a result of

The SAS curve and the LAS curve

The positive relationship between short- run aggregate supply and the price level indicates that, in the short run,

-In the above figure, the short- run aggregate supply curve is SAS₁. If the prices of resources fall, there is

According to the intertemporal substitution effect, a fall in the price level will

At long-run macroeconomic equilibrium, ________.

As the price level falls and other things remain the same, real wealth and .

Suppose the Australian exchange rate falls from 90 yen per dollar to 80 yen per dollar. Australian exports will , Australian imports will , and Australian aggregate demand will.

If the full- employment quantity of labour increases, then the

Economic growth

-In the above figure, the economy is initially at point B. If the Reserve Bank decreases the quantity of money, there is

Which of the following helps determine the growth rate of potential GDP? I. Capital accumulation II. Technology advances III. Growth in the quantity of money

Aggregate demand increases when

A classical economist believes that

Suppose the price level, the money wage, and the price of all other resources rise by 10 per cent. This set of changes leads to

Your real wealth is measured as the

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

Which of the following directly shifts the short- run aggregate supply curve?

Which of the following does NOT shift the aggregate demand curve?

For movements along the short- run aggregate supply curve,

In a long- run equilibrium, an increase in the quantity of capital leads to

Inflation occurs over time as a result of

The SAS curve and the LAS curve

The positive relationship between short- run aggregate supply and the price level indicates that, in the short run,

-In the above figure, the short- run aggregate supply curve is SAS1. If the prices of resources fall, there is

According to the intertemporal substitution effect, a fall in the price level will

At long-run macroeconomic equilibrium, ________.

As the price level falls and other things remain the same, real wealth ________ and ________.

Suppose the Australian exchange rate falls from 90 yen per dollar to 80 yen per dollar. Australian exports will ________, Australian imports will ________, and Australian aggregate demand will________.

If the full- employment quantity of labour increases, then the

Economic growth

-In the above figure, the economy is initially at point B. If the Reserve Bank decreases the quantity of money, there is

Which of the following helps determine the growth rate of potential GDP? I. Capital accumulation II. Technology advances III. Growth in the quantity of money

Aggregate demand increases when

A classical economist believes that

Suppose the price level, the money wage, and the price of all other resources rise by 10 per cent. This set of changes leads to

Your real wealth is measured as the

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, the short- run aggregate supply curve is SAS₁. If the prices of resources fall, there is

As the price level falls and other things remain the same, real wealth and .

Suppose the Australian exchange rate falls from 90 yen per dollar to 80 yen per dollar. Australian exports will , Australian imports will , and Australian aggregate demand will.