Question 1

In a demand-pull inflation, if the Fed stops expanding the quantity of money,

Accepted Answer

A) a cost-push inflation will occur. 
B) the demand-pull inflation ends. 
C) a deflation will occur. 
D) government expenditure will cause the demand-pull inflation to continue. 
E) None of the above answers is correct. 
A) a cost-push inflation will occur. 
B) the demand-pull inflation ends. 
C) a deflation will occur. 
D) government expenditure will cause the demand-pull inflation to continue. 
E) None of the above answers is correct. B

Question 2

When the price level falls,

Accepted Answer

A) there is a movement downward along the AS curve. 
B) both the potential GDP line and the AS curve shift leftward. 
C) there is a movement upward along the AS curve. 
D) the AS curve shifts rightward but the potential GDP line does not shift. 
E) the AS curve shifts leftward but the potential GDP line does not shift. 
A) there is a movement downward along the AS curve. 
B) both the potential GDP line and the AS curve shift leftward. 
C) there is a movement upward along the AS curve. 
D) the AS curve shifts rightward but the potential GDP line does not shift. 
E) the AS curve shifts leftward but the potential GDP line does not shift. A

Question 3

During the late 1960s, U.S. defense spending increased as the United States fought in Vietnam. This
Increase in government expenditure on goods and services most likely created

Accepted Answer

A) an increase in potential GDP. 
B) a decrease in aggregate supply. 
C) a recessionary gap. 
D) a decrease in aggregate demand because consumers' expenditures decreased. 
E) an inflationary gap. 
A) an increase in potential GDP. 
B) a decrease in aggregate supply. 
C) a recessionary gap. 
D) a decrease in aggregate demand because consumers' expenditures decreased. 
E) an inflationary gap. E

Question 4

-
The aggregate demand curve in the figure above shifts rightward if

Accepted Answer

A) taxes are cut. 
B) government expenditure decreases. 
C) the money wage rate falls. 
D) potential GDP increases. 
E) the Federal Reserve raises the interest rate. 
A) taxes are cut. 
B) government expenditure decreases. 
C) the money wage rate falls. 
D) potential GDP increases. 
E) the Federal Reserve raises the interest rate.

Question 5

The aggregate demand curve shifts when any of the following factors change EXCEPT

Accepted Answer

A) the price level. 
B) foreign income. 
C) fiscal policy. 
D) monetary policy. 
E) expectations about the future. 
A) the price level. 
B) foreign income. 
C) fiscal policy. 
D) monetary policy. 
E) expectations about the future.

Question 6

As the money wage rate increases,

Accepted Answer

A) potential GDP decreases. 
B) aggregate supply increases. 
C) aggregate supply and potential GDP do not change. 
D) aggregate supply decreases. 
E) potential GDP increases. 
A) potential GDP decreases. 
B) aggregate supply increases. 
C) aggregate supply and potential GDP do not change. 
D) aggregate supply decreases. 
E) potential GDP increases.

Question 7

In the figure above, the economy is at an equilibrium with real GDP of $13 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the -------------------- curve shifts-------------------- .

Accepted Answer

A) aggregate supply; leftward 
B) potential GDP; leftward 
C) aggregate demand; rightward 
D) aggregate supply; rightward 
E) aggregate demand; leftward 
A) aggregate supply; leftward 
B) potential GDP; leftward 
C) aggregate demand; rightward 
D) aggregate supply; rightward 
E) aggregate demand; leftward

Question 8

Over a business cycle, the quantities of capital, human capital, and entrepreneurial talent

Accepted Answer

A) change gradually and do not fluctuate much. 
B) are completely unpredictable and cannot be forecast. 
C) cycle more than real GDP. 
D) are constant and do not change. 
E) cycle alongside real GDP. 
A) change gradually and do not fluctuate much. 
B) are completely unpredictable and cannot be forecast. 
C) cycle more than real GDP. 
D) are constant and do not change. 
E) cycle alongside real GDP.

Question 9

If the price of oil rises, the

Accepted Answer

A) AD curve and the AS curve shift rightward, the price level rises, and real GDP decreases. 
B) AS curve shifts leftward, the price level rises, and real GDP decreases. 
C) AS curve shifts leftward, the price level rises, and real GDP increases. 
D) AD curve and the AS curve shift leftward, real GDP decreases, and the price level rises. 
E) AD curve shifts rightward, real GDP increases, and the price level rises. 
A) AD curve and the AS curve shift rightward, the price level rises, and real GDP decreases. 
B) AS curve shifts leftward, the price level rises, and real GDP decreases. 
C) AS curve shifts leftward, the price level rises, and real GDP increases. 
D) AD curve and the AS curve shift leftward, real GDP decreases, and the price level rises. 
E) AD curve shifts rightward, real GDP increases, and the price level rises.

Question 10

If real GDP is less than potential GDP, then the --------------------and the price level  --------------------

Accepted Answer

A) aggregate supply curve shifts rightward; falls 
B) aggregate demand curve shifts leftward; rises 
C) aggregate demand curve shifts rightward; falls 
D) amount of potential GDP increases; falls 
E) aggregate supply curve shifts leftward; rises 
A) aggregate supply curve shifts rightward; falls 
B) aggregate demand curve shifts leftward; rises 
C) aggregate demand curve shifts rightward; falls 
D) amount of potential GDP increases; falls 
E) aggregate supply curve shifts leftward; rises

Question 11

According to the AS-AD model,

Accepted Answer

A) the AS curve is always equal to potential GDP. 
B) the aggregate quantity demanded is typically greater than the aggregate quantity supplied, thereby leading to inflation. 
C) the equilibrium is where the AS curve crosses the AD curve but the amount of real GDP at this point is not always equal to potential GDP. 
D) changes in the amount of potential GDP is the only factor that shifts both the aggregate supply curve and the aggregate demand curve. 
E) the aggregate quantity supplied is typically greater than the aggregate quantity demanded, thereby leading to unemployment. 
A) the AS curve is always equal to potential GDP. 
B) the aggregate quantity demanded is typically greater than the aggregate quantity supplied, thereby leading to inflation. 
C) the equilibrium is where the AS curve crosses the AD curve but the amount of real GDP at this point is not always equal to potential GDP. 
D) changes in the amount of potential GDP is the only factor that shifts both the aggregate supply curve and the aggregate demand curve. 
E) the aggregate quantity supplied is typically greater than the aggregate quantity demanded, thereby leading to unemployment.

Question 12

If European economies enter a recession,

Accepted Answer

A) the quantity of real GDP demanded in the United States increases and there is a movement up along the U.S. AD curve. 
B) U.S. aggregate demand decreases and the U.S. AD curve shifts leftward. 
C) U.S. aggregate demand increases and the U.S. AD curve shifts rightward. 
D) U.S. aggregate demand decreases and the U.S. AD curve shifts rightward. 
E) the quantity of real GDP demanded in the United States decreases and there is a movement down along the U.S. AD curve. 
A) the quantity of real GDP demanded in the United States increases and there is a movement up along the U.S. AD curve. 
B) U.S. aggregate demand decreases and the U.S. AD curve shifts leftward. 
C) U.S. aggregate demand increases and the U.S. AD curve shifts rightward. 
D) U.S. aggregate demand decreases and the U.S. AD curve shifts rightward. 
E) the quantity of real GDP demanded in the United States decreases and there is a movement down along the U.S. AD curve.

Question 13

The slope of the aggregate supply curve shows that, all else the same, the

Accepted Answer

A) quantity of real GDP supplied decreases as the price level increases. 
B) price level remains constant as real GDP increases. 
C) price level remains constant as potential GDP increases. 
D) quantity of real GDP supplied increases as the price level increases. 
E) quantity of real GDP supplied remains constant as the price level increases. 
A) quantity of real GDP supplied decreases as the price level increases. 
B) price level remains constant as real GDP increases. 
C) price level remains constant as potential GDP increases. 
D) quantity of real GDP supplied increases as the price level increases. 
E) quantity of real GDP supplied remains constant as the price level increases.

Question 14

The aggregate supply curve slopes --------------------because a-------------------- in the price level brings a --------------------In the real wage rate.

Accepted Answer

A) downward; rise; rise 
B) upward; fall; fall 
C) downward; fall; rise 
D) upward; rise; fall 
E) upward; rise; rise 
A) downward; rise; rise 
B) upward; fall; fall 
C) downward; fall; rise 
D) upward; rise; fall 
E) upward; rise; rise

Question 15

If the AD curve shifts rightward, then

Accepted Answer

A) the price level will not change, but real GDP will increase. 
B) both the price level and real GDP will decrease. 
C) both the price level and real GDP will increase. 
D) the price level will increase, but no change will occur in real GDP. 
E) potential GDP increases. 
A) the price level will not change, but real GDP will increase. 
B) both the price level and real GDP will decrease. 
C) both the price level and real GDP will increase. 
D) the price level will increase, but no change will occur in real GDP. 
E) potential GDP increases.

Question 16

If oil prices increase, then in the short run, real GDP will --------------------and the price level will--------------------
.

Accepted Answer

A) increase; fall 
B) not change; rise 
C) decrease; rise 
D) decrease; fall 
E) increase; rise 
A) increase; fall 
B) not change; rise 
C) decrease; rise 
D) decrease; fall 
E) increase; rise

Question 17

Which of the following decreases aggregate demand and shifts the AD curve leftward?

Accepted Answer

A) a decrease in price level 
B) a decrease in potential GDP 
C) a decrease in the price of exported goods and services 
D) a tax cut 
E) a decrease in government expenditures 
A) a decrease in price level 
B) a decrease in potential GDP 
C) a decrease in the price of exported goods and services 
D) a tax cut 
E) a decrease in government expenditures

Question 18

Changes in which of the following shifts the aggregate supply curve?
I. the price level.
Ii. the money wage rate. iii. potential GDP.

Accepted Answer

A) i only 
B) ii and iii 
C) ii only 
D) i, ii, and iii 
E) iii only 
A) i only 
B) ii and iii 
C) ii only 
D) i, ii, and iii 
E) iii only

Question 19

Cost-push inflation can start with

Accepted Answer

A) an increase in oil prices. 
B) an increase in government expenditure. 
C) a decrease in the quantity of money. 
D) a decrease in investment. 
E) a decrease in government expenditure. 
A) an increase in oil prices. 
B) an increase in government expenditure. 
C) a decrease in the quantity of money. 
D) a decrease in investment. 
E) a decrease in government expenditure.

Question 20

When the price level rises there is a--------------------the aggregate demand curve.

Accepted Answer

A) movement down along 
B) rightward shift of 
C) leftward shift of 
D) rotation of 
E) movement up along 
A) movement down along 
B) rightward shift of 
C) leftward shift of 
D) rotation of 
E) movement up along

In a demand-pull inflation, if the Fed stops expanding the quantity of money,

When the price level falls,

During the late 1960s, U.S. defense spending increased as the United States fought in Vietnam. This Increase in government expenditure on goods and services most likely created

- The aggregate demand curve in the figure above shifts rightward if

The aggregate demand curve shifts when any of the following factors change EXCEPT

As the money wage rate increases,

In the figure above, the economy is at an equilibrium with real GDP of $13 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the _{--------------------} curve shifts_{--------------------} .

Over a business cycle, the quantities of capital, human capital, and entrepreneurial talent

If the price of oil rises, the

If real GDP is less than potential GDP, then the _{--------------------}and the price level _{--------------------}

According to the AS-AD model,

If European economies enter a recession,

The slope of the aggregate supply curve shows that, all else the same, the

The aggregate supply curve slopes _{--------------------}because a_{--------------------} in the price level brings a _{--------------------}In the real wage rate.

If the AD curve shifts rightward, then

If oil prices increase, then in the short run, real GDP will _{--------------------}and the price level will_{--------------------} .

Which of the following decreases aggregate demand and shifts the AD curve leftward?

Changes in which of the following shifts the aggregate supply curve? I. the price level. Ii. the money wage rate. iii. potential GDP.

Cost-push inflation can start with

When the price level rises there is a_{--------------------}the aggregate demand curve.

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

GDP: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 13: Aggregate Supply Ad Aggregate Demand

In a demand-pull inflation, if the Fed stops expanding the quantity of money,

When the price level falls,

During the late 1960s, U.S. defense spending increased as the United States fought in Vietnam. This Increase in government expenditure on goods and services most likely created

- The aggregate demand curve in the figure above shifts rightward if

The aggregate demand curve shifts when any of the following factors change EXCEPT

As the money wage rate increases,

In the figure above, the economy is at an equilibrium with real GDP of $13 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the -------------------- curve shifts-------------------- .

Over a business cycle, the quantities of capital, human capital, and entrepreneurial talent

If the price of oil rises, the

If real GDP is less than potential GDP, then the --------------------and the price level --------------------

According to the AS-AD model,

If European economies enter a recession,

The slope of the aggregate supply curve shows that, all else the same, the

The aggregate supply curve slopes --------------------because a-------------------- in the price level brings a --------------------In the real wage rate.

If the AD curve shifts rightward, then

If oil prices increase, then in the short run, real GDP will --------------------and the price level will-------------------- .

Which of the following decreases aggregate demand and shifts the AD curve leftward?

Changes in which of the following shifts the aggregate supply curve? I. the price level. Ii. the money wage rate. iii. potential GDP.

Cost-push inflation can start with

When the price level rises there is a--------------------the aggregate demand curve.

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

GDP: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

In the figure above, the economy is at an equilibrium with real GDP of $13 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the _{--------------------} curve shifts_{--------------------} .

If real GDP is less than potential GDP, then the _{--------------------}and the price level _{--------------------}

The aggregate supply curve slopes _{--------------------}because a_{--------------------} in the price level brings a _{--------------------}In the real wage rate.

If oil prices increase, then in the short run, real GDP will _{--------------------}and the price level will_{--------------------} .

When the price level rises there is a_{--------------------}the aggregate demand curve.