Question 1

Raising taxes shifts the _____ curve to the _____.

Accepted Answer

A)  aggregate demand; left 
B)  long-run aggregate supply; left 
C)  aggregate demand; right 
D)  short-run aggregate supply; left 
A)  aggregate demand; left 
B)  long-run aggregate supply; left 
C)  aggregate demand; right 
D)  short-run aggregate supply; left

Question 2

Changes in _____ will not shift the aggregate demand curve.

Accepted Answer

A)  expectations 
B)  wealth 
C)  the existing stock of physical capital 
D)  the price level 
A)  expectations 
B)  wealth 
C)  the existing stock of physical capital 
D)  the price level

Question 3

Changes in short-run aggregate supply can be caused by changes in:

Accepted Answer

A)  wages. 
B)  wealth. 
C)  government spending. 
D)  consumption spending. 
A)  wages. 
B)  wealth. 
C)  government spending. 
D)  consumption spending.

Question 4

Use the following to answer questions:
Figure: Shifts of the AD-AS Curves  
-(Figure: Shifts of the AD-AS Curves) Refer to Figure: Shifts of the AD-AS Curves. A short run increase in net exports is illustrated by panel:

Accepted Answer

A)  (a). 
B)  (b). 
C)  (c). 
D)  (d). 
A)  (a). 
B)  (b). 
C)  (c). 
D)  (d).

Question 5

A decrease in the money supply is likely to cause a(n) _____ in borrowing, a(n) _____ interest rates and a(n) _____ in aggregate demand.

Accepted Answer

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

Question 6

A change in _____ would cause a shift of the short-run aggregate supply curve.

Accepted Answer

A)  the quantity of real output supplied 
B)  the price level 
C)  commodity prices 
D)  aggregate demand 
A)  the quantity of real output supplied 
B)  the price level 
C)  commodity prices 
D)  aggregate demand

Question 7

The interest rate effect of a change in the aggregate price level causes the:

Accepted Answer

A)  long-run aggregate supply curve to be vertical. 
B)  aggregate demand curve to be negatively sloped. 
C)  short-run aggregate supply curve to be positively sloped. 
D)  aggregate demand curve to be positively sloped. 
A)  long-run aggregate supply curve to be vertical. 
B)  aggregate demand curve to be negatively sloped. 
C)  short-run aggregate supply curve to be positively sloped. 
D)  aggregate demand curve to be positively sloped.

Question 8

A general decrease in wages will result primarily in the _____ curve shifting to the _____.

Accepted Answer

A)  aggregate demand; right 
B)  aggregate demand; left 
C)  short-run aggregate supply; right 
D)  short-run aggregate supply; left 
A)  aggregate demand; right 
B)  aggregate demand; left 
C)  short-run aggregate supply; right 
D)  short-run aggregate supply; left

Question 9

When the economy is in stagflation, the price level is falling.

Accepted Answer

A) True 
 B)False

Question 10

Changes in aggregate demand can be caused by changes in:

Accepted Answer

A)  the stock of physical capital. 
B)  business costs. 
C)  raw materials costs. 
D)  the expenses of complying with government regulations. 
A)  the stock of physical capital. 
B)  business costs. 
C)  raw materials costs. 
D)  the expenses of complying with government regulations.

Question 11

Use the following to answer questions:
Figure: AD-AS Model II  
-(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. If there is a significant increase in government spending, in the short run the _____ curve will shift to the _____.

Accepted Answer

A)  SRAS; left 
B)  SRAS; right 
C)  AD; left 
D)  AD; right 
A)  SRAS; left 
B)  SRAS; right 
C)  AD; left 
D)  AD; right

Question 12

Use the following to answer questions:
Figure: The Multiplier  
-(Figure: The Multiplier) Refer to Figure: The Multiplier. If this economy is at Y1 and investment spending increases:

Accepted Answer

A)  AD1 will shift to the left, reflecting a multiplied decrease in real GDP at every price level. 
B)  AD1 will shift to the right, reflecting a multiplied increase in real GDP at every price level. 
C)  an upward movement along the AD1 will take place, reflecting an increase in the price level. 
D)  a downward movement along the AD1 will take place, reflecting a decrease in the price level. 
A)  AD1 will shift to the left, reflecting a multiplied decrease in real GDP at every price level. 
B)  AD1 will shift to the right, reflecting a multiplied increase in real GDP at every price level. 
C)  an upward movement along the AD1 will take place, reflecting an increase in the price level. 
D)  a downward movement along the AD1 will take place, reflecting a decrease in the price level.

Question 13

If the price level increases by 20%, the purchasing power of $1,000 will increase to $1,200.

Accepted Answer

A) True 
 B)False

Question 14

When short-run aggregate supply increases, it means that the short-run aggregate supply curve shifts to the _____ and the quantity of aggregate output that producers are willing to supply _____.

Accepted Answer

A)  right; decreases 
B)  right; increases 
C)  left; decreases 
D)  left; increases 
A)  right; decreases 
B)  right; increases 
C)  left; decreases 
D)  left; increases

Question 15

A positive demand shock leads to:

Accepted Answer

A)  higher prices and higher employment. 
B)  higher prices and higher unemployment. 
C)  higher prices and lower output. 
D)  lower prices and lower output. 
A)  higher prices and higher employment. 
B)  higher prices and higher unemployment. 
C)  higher prices and lower output. 
D)  lower prices and lower output.

Question 16

According to the interest rate effect, a decrease in the price level causes people to _____ their money holdings, which _____ interest rates and _____ investment spending.

Accepted Answer

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

Question 17

Besides consumption, the component(s) of aggregate demand is/are:

Accepted Answer

A)  investment expenditures. 
B)  investment expenditures and government expenditures. 
C)  investment expenditures and net exports. 
D)  investment expenditures, government expenditures, and net exports. 
A)  investment expenditures. 
B)  investment expenditures and government expenditures. 
C)  investment expenditures and net exports. 
D)  investment expenditures, government expenditures, and net exports.

Question 18

Which curve is easiest to shift with government policy?

Accepted Answer

A)  the short-run aggregate supply curve 
B)  the long-run aggregate supply curve 
C)  the aggregate demand curve 
D)  the short-run and long-run aggregate supply curves are both easy to shift 
A)  the short-run aggregate supply curve 
B)  the long-run aggregate supply curve 
C)  the aggregate demand curve 
D)  the short-run and long-run aggregate supply curves are both easy to shift

Question 19

Use the following to answer questions:
Figure: AD-AS Model I  
-(Figure: AD-AS Model I) Refer to Figure: AD-AS Model I. If the economy is at point X, nominal wages _____, and the _____ curve shifts _____ until the economy reaches long-run equilibrium.

Accepted Answer

A)  fall; aggregate demand; left 
B)  rise; aggregate demand; right 
C)  fall; short-run aggregate supply; right 
D)  fall; short-run aggregate supply; left 
A)  fall; aggregate demand; left 
B)  rise; aggregate demand; right 
C)  fall; short-run aggregate supply; right 
D)  fall; short-run aggregate supply; left

Question 20

The _____ curve shows the negative relationship between the aggregate price level and the quantity of aggregate output demanded in the economy.

Accepted Answer

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

Raising taxes shifts the _ curve to the _.

Changes in _____ will not shift the aggregate demand curve.

Changes in short-run aggregate supply can be caused by changes in:

Use the following to answer questions: Figure: Shifts of the AD-AS Curves -(Figure: Shifts of the AD-AS Curves) Refer to Figure: Shifts of the AD-AS Curves. A short run increase in net exports is illustrated by panel:

A decrease in the money supply is likely to cause a(n) ___ in borrowing, a(n) _ interest rates and a(n) ___ in aggregate demand.

A change in _____ would cause a shift of the short-run aggregate supply curve.

The interest rate effect of a change in the aggregate price level causes the:

A general decrease in wages will result primarily in the _ curve shifting to the _.

When the economy is in stagflation, the price level is falling.

Changes in aggregate demand can be caused by changes in:

Use the following to answer questions: Figure: AD-AS Model II -(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. If there is a significant increase in government spending, in the short run the _ curve will shift to the _.

Use the following to answer questions: Figure: The Multiplier -(Figure: The Multiplier) Refer to Figure: The Multiplier. If this economy is at Y₁ and investment spending increases:

If the price level increases by 20%, the purchasing power of $1,000 will increase to $1,200.

When short-run aggregate supply increases, it means that the short-run aggregate supply curve shifts to the _ and the quantity of aggregate output that producers are willing to supply _.

A positive demand shock leads to:

According to the interest rate effect, a decrease in the price level causes people to ___ their money holdings, which _ interest rates and ___ investment spending.

Besides consumption, the component(s) of aggregate demand is/are:

Which curve is easiest to shift with government policy?

Use the following to answer questions: Figure: AD-AS Model I -(Figure: AD-AS Model I) Refer to Figure: AD-AS Model I. If the economy is at point X, nominal wages ___, and the _ curve shifts ___ until the economy reaches long-run equilibrium.

The _____ curve shows the negative relationship between the aggregate price level and the quantity of aggregate output demanded in the economy.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 12: Aggregate Demand and Aggregate Supply

Raising taxes shifts the _____ curve to the _____.

Changes in _____ will not shift the aggregate demand curve.

Changes in short-run aggregate supply can be caused by changes in:

Use the following to answer questions: Figure: Shifts of the AD-AS Curves -(Figure: Shifts of the AD-AS Curves) Refer to Figure: Shifts of the AD-AS Curves. A short run increase in net exports is illustrated by panel:

A decrease in the money supply is likely to cause a(n) _____ in borrowing, a(n) _____ interest rates and a(n) _____ in aggregate demand.

A change in _____ would cause a shift of the short-run aggregate supply curve.

The interest rate effect of a change in the aggregate price level causes the:

A general decrease in wages will result primarily in the _____ curve shifting to the _____.

When the economy is in stagflation, the price level is falling.

Changes in aggregate demand can be caused by changes in:

Use the following to answer questions: Figure: AD-AS Model II -(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. If there is a significant increase in government spending, in the short run the _____ curve will shift to the _____.

Use the following to answer questions: Figure: The Multiplier -(Figure: The Multiplier) Refer to Figure: The Multiplier. If this economy is at Y1 and investment spending increases:

If the price level increases by 20%, the purchasing power of $1,000 will increase to $1,200.

When short-run aggregate supply increases, it means that the short-run aggregate supply curve shifts to the _____ and the quantity of aggregate output that producers are willing to supply _____.

A positive demand shock leads to:

According to the interest rate effect, a decrease in the price level causes people to _____ their money holdings, which _____ interest rates and _____ investment spending.

Besides consumption, the component(s) of aggregate demand is/are:

Which curve is easiest to shift with government policy?

Use the following to answer questions: Figure: AD-AS Model I -(Figure: AD-AS Model I) Refer to Figure: AD-AS Model I. If the economy is at point X, nominal wages _____, and the _____ curve shifts _____ until the economy reaches long-run equilibrium.

The _____ curve shows the negative relationship between the aggregate price level and the quantity of aggregate output demanded in the economy.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Raising taxes shifts the _ curve to the _.

A decrease in the money supply is likely to cause a(n) ___ in borrowing, a(n) _ interest rates and a(n) ___ in aggregate demand.

A general decrease in wages will result primarily in the _ curve shifting to the _.

Use the following to answer questions: Figure: AD-AS Model II -(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. If there is a significant increase in government spending, in the short run the _ curve will shift to the _.

Use the following to answer questions: Figure: The Multiplier -(Figure: The Multiplier) Refer to Figure: The Multiplier. If this economy is at Y₁ and investment spending increases:

When short-run aggregate supply increases, it means that the short-run aggregate supply curve shifts to the _ and the quantity of aggregate output that producers are willing to supply _.

According to the interest rate effect, a decrease in the price level causes people to ___ their money holdings, which _ interest rates and ___ investment spending.

Use the following to answer questions: Figure: AD-AS Model I -(Figure: AD-AS Model I) Refer to Figure: AD-AS Model I. If the economy is at point X, nominal wages ___, and the _ curve shifts ___ until the economy reaches long-run equilibrium.