Question 1

The change reflected in the above figure might be a result of

Accepted Answer

A) a decrease in the money prices of resources other than labor. 
B) an increase in the quantity of labor. 
C) a fall in the price level. 
D) a decrease in the quantity of capital. 
E) a rise in the money wage rate. 
A) a decrease in the money prices of resources other than labor. 
B) an increase in the quantity of labor. 
C) a fall in the price level. 
D) a decrease in the quantity of capital. 
E) a rise in the money wage rate.

Question 2

Stagflation is a combination of--------------------real GDP and a  --------------------price level.

Accepted Answer

A) increasing; falling 
B) decreasing; falling 
C) no change in; rising 
D) decreasing; rising 
E) increasing; rising 
A) increasing; falling 
B) decreasing; falling 
C) no change in; rising 
D) decreasing; rising 
E) increasing; rising

Question 3

An increase in the money wage rate leads to

Accepted Answer

A) an upward movement along the aggregate supply curve. 
B) a rightward shift of the aggregate supply curve. 
C) a leftward shift of the aggregate supply curve. 
D) a leftward shift of the aggregate demand curve. 
E) a downward movement along the aggregate supply curve. 
A) an upward movement along the aggregate supply curve. 
B) a rightward shift of the aggregate supply curve. 
C) a leftward shift of the aggregate supply curve. 
D) a leftward shift of the aggregate demand curve. 
E) a downward movement along the aggregate supply curve.

Question 4

If the equilibrium price level is 135 but the actual price level is 120, then

Accepted Answer

A) firms decrease their production because they cannot sell the output they produce. 
B) the quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
C) aggregate demand will increase to restore equilibrium. 
D) the quantity of real GDP demanded is less than the quantity of real GDP supplied. 
E) aggregate demand will decrease to restore equilibrium. 
A) firms decrease their production because they cannot sell the output they produce. 
B) the quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
C) aggregate demand will increase to restore equilibrium. 
D) the quantity of real GDP demanded is less than the quantity of real GDP supplied. 
E) aggregate demand will decrease to restore equilibrium.

Question 5

As the price level rises relative to costs and the real wage rate falls, profits --------------------and the number of firms in business --------------------.

Accepted Answer

A) decrease; decreases 
B) decrease; increases 
C) do not change; do not change 
D) increase; increases 
E) increase; decreases 
A) decrease; decreases 
B) decrease; increases 
C) do not change; do not change 
D) increase; increases 
E) increase; decreases

Question 6

$\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Price level } \
\text { (GDP deflator) }
\end{array} & \begin{array} { c } 
\text { Real GDP demanded } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP supplied } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} \
\hline 80 & 10 & 2 \
90 & 9 & 4 \
100 & 8 & 6 \
110 & 7 & 7 \
120 & 6 & 8 \
130 & 4 & 9 \
\hline
\end{array}$
-
The equilibrium price level is

Accepted Answer

A) 130. 
B) 120. 
C) 100. 
D) 110. 
E) 90. 
A) 130. 
B) 120. 
C) 100. 
D) 110. 
E) 90.

Question 7

When OPEC nearly tripled the price of oil in late 1973,

Accepted Answer

A) U.S. real GDP did not change although the price level rose. 
B) both U.S. real GDP and the price level increased. 
C) the U.S. price level fell because production became too expensive. 
D) the U.S. price level rose and real GDP decreased. 
E) U.S. real GDP increased as profits by oil producers increased. 
A) U.S. real GDP did not change although the price level rose. 
B) both U.S. real GDP and the price level increased. 
C) the U.S. price level fell because production became too expensive. 
D) the U.S. price level rose and real GDP decreased. 
E) U.S. real GDP increased as profits by oil producers increased.

Question 8

A fall in the price level produces a--------------------the aggregate demand curve.

Accepted Answer

A) rightward shift of 
B) movement upward along 
C) movement downward along 
D) change in the slope of 
E) leftward shift of 
A) rightward shift of 
B) movement upward along 
C) movement downward along 
D) change in the slope of 
E) leftward shift of

Question 9

A crisis in the Middle East drastically raises the price of petroleum. If the aggregate demand curve does not shift, then aggregate supply will --------------------, real GDP will-------------------- , and the price level will--------------------
.

Accepted Answer

A) increase; increase; increase 
B) increase; remain the same; increase 
C) remain the same; increase; increase 
D) decrease; decrease; increase 
E) decrease; remain the same; decrease 
A) increase; increase; increase 
B) increase; remain the same; increase 
C) remain the same; increase; increase 
D) decrease; decrease; increase 
E) decrease; remain the same; decrease

Question 10

If there is an increase in expected future income, then

Accepted Answer

A) there is a downward movement along the aggregate demand curve. 
B) there is an upward movement along the aggregate demand curve. 
C) the aggregate demand curve becomes steeper. 
D) the aggregate demand curve shifts leftward. 
E) the aggregate demand curve shifts rightward. 
A) there is a downward movement along the aggregate demand curve. 
B) there is an upward movement along the aggregate demand curve. 
C) the aggregate demand curve becomes steeper. 
D) the aggregate demand curve shifts leftward. 
E) the aggregate demand curve shifts rightward.

Question 11

A combination of declining real GDP and rising price level is referred to as

Accepted Answer

A) a depression. 
B) stagflation. 
C) a trough. 
D) deflation. 
E) an expansion. 
A) a depression. 
B) stagflation. 
C) a trough. 
D) deflation. 
E) an expansion.

Question 12

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

Accepted Answer

A) a change in monetary policy 
B) a change in foreign income 
C) a change in fiscal policy 
D) a change in expectations about the future 
E) a change in the money wage 
A) a change in monetary policy 
B) a change in foreign income 
C) a change in fiscal policy 
D) a change in expectations about the future 
E) a change in the money wage

Question 13

The economy is at full employment. If aggregate demand increases,

Accepted Answer

A) an inflationary gap is created and potential GDP increases to close the gap. 
B) an inflationary gap is created and the AS curve shifts leftward as the money wage rate rises. 
C) an inflationary gap is created and the AD curve shifts leftward. 
D) a recessionary gap is created and the AS curve shifts leftward as the money wage rate falls. 
E) a recessionary gap is created and the AS curve shifts leftward as the money wage rate rises. 
A) an inflationary gap is created and potential GDP increases to close the gap. 
B) an inflationary gap is created and the AS curve shifts leftward as the money wage rate rises. 
C) an inflationary gap is created and the AD curve shifts leftward. 
D) a recessionary gap is created and the AS curve shifts leftward as the money wage rate falls. 
E) a recessionary gap is created and the AS curve shifts leftward as the money wage rate rises.

Question 14

Reasons that the recession of 2008-2009 did not become a depression include i. The Fed bailed out troubled financial institutions
Ii. The government aggressively balanced its budget
Iii. The government increased its expenditures, which increased aggregate demand

Accepted Answer

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

Question 15

-
Based on the figure above, the aggregate supply curve shifts rightward and the potential GDP line does not change when

Accepted Answer

A) the price level rises. 
B) the money wage rate falls. 
C) the price level falls. 
D) the money wage rate rises. 
E) both the price level and money wage rate rise by the same proportion. 
A) the price level rises. 
B) the money wage rate falls. 
C) the price level falls. 
D) the money wage rate rises. 
E) both the price level and money wage rate rise by the same proportion.

Question 16

When potential GDP increases,

Accepted Answer

A) there is neither a movement along nor a shift in the AS curve. 
B) there is a movement down along the AS curve. 
C) the AS curve shifts rightward. 
D) the AS curve shifts leftward. 
E) there is a movement up along the AS curve. 
A) there is neither a movement along nor a shift in the AS curve. 
B) there is a movement down along the AS curve. 
C) the AS curve shifts rightward. 
D) the AS curve shifts leftward. 
E) there is a movement up along the AS curve.

Question 17

The money wage rate is constant when moving along

Accepted Answer

A) only the aggregate supply curve and the potential GDP line. 
B) only the potential GDP line. 
C) the aggregate supply curve, the potential GDP line, and the aggregate demand curve. 
D) only the aggregate supply curve. 
E) neither the aggregate supply curve nor the potential GDP line. 
A) only the aggregate supply curve and the potential GDP line. 
B) only the potential GDP line. 
C) the aggregate supply curve, the potential GDP line, and the aggregate demand curve. 
D) only the aggregate supply curve. 
E) neither the aggregate supply curve nor the potential GDP line.

Question 18

Which of the following changes aggregate supply and shifts the AS curve?
I. a change in the price of a major resource
Ii. increases in the amount of capital
Iii. a change in the money income of consumers

Accepted Answer

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

Question 19

A change in the price level brings a --------------------the aggregate supply curve, NOT a-------------------- the aggregate supply curve.

Accepted Answer

A) shift in; movement along 
B) shift in; change in the slope of 
C) movement along; shift in 
D) vertical displacement of; change in the slope of 
E) change in the slope of; horizontal displacement of 
A) shift in; movement along 
B) shift in; change in the slope of 
C) movement along; shift in 
D) vertical displacement of; change in the slope of 
E) change in the slope of; horizontal displacement of

Question 20

A fall in the price level brings a -------------------- in the real wage rate that
-------------------- profits and can lead to --------------------
.

Accepted Answer

A) fall; increases; firms going out of business 
B) fall; decreases; new firms entering business 
C) rise; reduces; new firms entering business 
D) rise; reduces; firms going out of business 
E) rise; increases; new firms entering business 
A) fall; increases; firms going out of business 
B) fall; decreases; new firms entering business 
C) rise; reduces; new firms entering business 
D) rise; reduces; firms going out of business 
E) rise; increases; new firms entering business

The change reflected in the above figure might be a result of

Stagflation is a combination of_{--------------------}real GDP and a _{--------------------}price level.

An increase in the money wage rate leads to

If the equilibrium price level is 135 but the actual price level is 120, then

As the price level rises relative to costs and the real wage rate falls, profits _{--------------------}and the number of firms in business _{--------------------}.

Price level (GDP deflator) Real GDP demanded (trillions of 2005 dollars) Real GDP supplied (trillions of 2005 dollars) 80 10 2 90 9 4 100 8 6 110 7 7 120 6 8 130 4 9 - The equilibrium price level is

When OPEC nearly tripled the price of oil in late 1973,

A fall in the price level produces a_{--------------------}the aggregate demand curve.

A crisis in the Middle East drastically raises the price of petroleum. If the aggregate demand curve does not shift, then aggregate supply will _{--------------------}, real GDP will_{--------------------} , and the price level will_{--------------------} .

If there is an increase in expected future income, then

A combination of declining real GDP and rising price level is referred to as

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

The economy is at full employment. If aggregate demand increases,

Reasons that the recession of 2008-2009 did not become a depression include i. The Fed bailed out troubled financial institutions Ii. The government aggressively balanced its budget Iii. The government increased its expenditures, which increased aggregate demand

- Based on the figure above, the aggregate supply curve shifts rightward and the potential GDP line does not change when

When potential GDP increases,

The money wage rate is constant when moving along

Which of the following changes aggregate supply and shifts the AS curve? I. a change in the price of a major resource Ii. increases in the amount of capital Iii. a change in the money income of consumers

A change in the price level brings a _{--------------------}the aggregate supply curve, NOT a_{--------------------} the aggregate supply curve.

A fall in the price level brings a _{--------------------} in the real wage rate that _{--------------------} profits and can lead to _{--------------------} .

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

The change reflected in the above figure might be a result of

Stagflation is a combination of--------------------real GDP and a --------------------price level.

An increase in the money wage rate leads to

If the equilibrium price level is 135 but the actual price level is 120, then

As the price level rises relative to costs and the real wage rate falls, profits --------------------and the number of firms in business --------------------.

Price level (GDP deflator) Real GDP demanded (trillions of 2005 dollars) Real GDP supplied (trillions of 2005 dollars) 80 10 2 90 9 4 100 8 6 110 7 7 120 6 8 130 4 9 - The equilibrium price level is

When OPEC nearly tripled the price of oil in late 1973,

A fall in the price level produces a--------------------the aggregate demand curve.

A crisis in the Middle East drastically raises the price of petroleum. If the aggregate demand curve does not shift, then aggregate supply will --------------------, real GDP will-------------------- , and the price level will-------------------- .

If there is an increase in expected future income, then

A combination of declining real GDP and rising price level is referred to as

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

The economy is at full employment. If aggregate demand increases,

Reasons that the recession of 2008-2009 did not become a depression include i. The Fed bailed out troubled financial institutions Ii. The government aggressively balanced its budget Iii. The government increased its expenditures, which increased aggregate demand

- Based on the figure above, the aggregate supply curve shifts rightward and the potential GDP line does not change when

When potential GDP increases,

The money wage rate is constant when moving along

Which of the following changes aggregate supply and shifts the AS curve? I. a change in the price of a major resource Ii. increases in the amount of capital Iii. a change in the money income of consumers

A change in the price level brings a --------------------the aggregate supply curve, NOT a-------------------- the aggregate supply curve.

A fall in the price level brings a -------------------- in the real wage rate that -------------------- profits and can lead to -------------------- .

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

Stagflation is a combination of_{--------------------}real GDP and a _{--------------------}price level.

As the price level rises relative to costs and the real wage rate falls, profits _{--------------------}and the number of firms in business _{--------------------}.

A fall in the price level produces a_{--------------------}the aggregate demand curve.

A crisis in the Middle East drastically raises the price of petroleum. If the aggregate demand curve does not shift, then aggregate supply will _{--------------------}, real GDP will_{--------------------} , and the price level will_{--------------------} .

A change in the price level brings a _{--------------------}the aggregate supply curve, NOT a_{--------------------} the aggregate supply curve.

A fall in the price level brings a _{--------------------} in the real wage rate that _{--------------------} profits and can lead to _{--------------------} .