Question 1

A change in any of the following factors EXCEPT
 -------------------- shifts the aggregate demand curve.

Accepted Answer

A) foreign income 
B) monetary and fiscal policy 
C) the foreign exchange rate 
D) the money wage rate 
E) expectations about the future 
A) foreign income 
B) monetary and fiscal policy 
C) the foreign exchange rate 
D) the money wage rate 
E) expectations about the future

Question 2

A rise in the price level brings a --------------------in the buying power of money that consumption expenditures and causes the quantity of real GDP demanded to --------------------.

Accepted Answer

A) fall; decreases; decrease 
B) rise; increases; increase 
C) fall; increases; increase 
D) rise; decreases; decrease 
E) fall; decreases; increases 
A) fall; decreases; decrease 
B) rise; increases; increase 
C) fall; increases; increase 
D) rise; decreases; decrease 
E) fall; decreases; increases

Question 3

If the money wage rate rises,

Accepted Answer

A) there is neither a movement along or a shift in the AS curve. 
B) the AS curve shifts leftward. 
C) there is a movement down along the AS curve. 
D) the AS curve shifts rightward. 
E) there is a movement up along the AS curve. 
A) there is neither a movement along or a shift in the AS curve. 
B) the AS curve shifts leftward. 
C) there is a movement down along the AS curve. 
D) the AS curve shifts rightward. 
E) there is a movement up along the AS curve.

Question 4

An increase in government expenditure on goods and services-------------------- aggregate demand, shifting the aggregate demand curve-------------------- and potentially bringing the -------------------- phase of the business cycle.

Accepted Answer

A) increases; leftward; recession 
B) decreases; rightward; expansion 
C) decreases; leftward; recession 
D) increases; rightward; recession 
E) increases; rightward; expansion 
A) increases; leftward; recession 
B) decreases; rightward; expansion 
C) decreases; leftward; recession 
D) increases; rightward; recession 
E) increases; rightward; expansion

Question 5

In a persisting demand-pull inflation

Accepted Answer

A) aggregate demand decreases and aggregate supply decreases. 
B) aggregate supply increases and aggregate demand increases. 
C) aggregate supply decreases and aggregate demand increases. 
D) aggregate demand increases and potential GDP decreases. 
E) None of the above answers are correct. 
A) aggregate demand decreases and aggregate supply decreases. 
B) aggregate supply increases and aggregate demand increases. 
C) aggregate supply decreases and aggregate demand increases. 
D) aggregate demand increases and potential GDP decreases. 
E) None of the above answers are correct.

Question 6

The slope of the aggregate supply curve shows that the--------------------the price level, the--------------------

Accepted Answer

A) higher; smaller is the quantity of real GDP supplied 
B) higher; is the quantity of potential GDP supplied 
C) lower; is the quantity of potential GDP supplied 
D) higher; greater is the quantity of real GDP supplied 
E) lower; greater is the quantity of real GDP supplied 
A) higher; smaller is the quantity of real GDP supplied 
B) higher; is the quantity of potential GDP supplied 
C) lower; is the quantity of potential GDP supplied 
D) higher; greater is the quantity of real GDP supplied 
E) lower; greater is the quantity of real GDP supplied

Question 7

Which of the following factors could start a demand-pull inflation?

Accepted Answer

A) a decrease in the money wage rate 
B) an increase in the quantity of money 
C) an increase in tax rates 
D) a decrease in government expenditure 
E) an increase in the money wage rate 
A) a decrease in the money wage rate 
B) an increase in the quantity of money 
C) an increase in tax rates 
D) a decrease in government expenditure 
E) an increase in the money wage rate

Question 8

In the short run, a rise in the price level brings a-------------------- in the real interest rate that-------------------- Investment, bringing-------------------- in the quantity of real GDP demanded.

Accepted Answer

A) rise; decreases; a decrease 
B) fall; decreases ; a decrease 
C) rise; increases ; an increase 
D) rise; decreases; an increase 
E) fall; increases ; an increase 
A) rise; decreases; a decrease 
B) fall; decreases ; a decrease 
C) rise; increases ; an increase 
D) rise; decreases; an increase 
E) fall; increases ; an increase

Question 9

Cost-push inflation can be started by

Accepted Answer

A) an increase in government expenditure on goods and services. 
B) an increase in the money prices of raw materials. 
C) a decrease in the money wage rate. 
D) a decrease in government expenditure on goods and services. 
E) an increase in the quantity of money. 
A) an increase in government expenditure on goods and services. 
B) an increase in the money prices of raw materials. 
C) a decrease in the money wage rate. 
D) a decrease in government expenditure on goods and services. 
E) an increase in the quantity of money.

Question 10

Aggregate demand--------------------and shifts the AD curve --------------------when --------------------.

Accepted Answer

A) increases; rightward; future expected profit decreases 
B) decreases; leftward; foreign income increases 
C) increases; leftward; government expenditure increases 
D) increases; rightward; government expenditure increases 
E) increases; rightward; taxes increase 
A) increases; rightward; future expected profit decreases 
B) decreases; leftward; foreign income increases 
C) increases; leftward; government expenditure increases 
D) increases; rightward; government expenditure increases 
E) increases; rightward; taxes increase

Question 11

$\begin{array} { c c c c } 
\hline \begin{array} { c } 
\text { Price level } \
\text { (GDP deflator) }
\end{array} & \begin{array} { c } 
\text { Potential GDP } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP supplied } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP demanded } \
\text { (billions of 2005 dollars) }
\end{array} \
\hline 150 & 25 & 34 & 16 \
140 & 25 & 31 & 19 \
130 & 25 & 28 & 22 \
120 & 25 & 25 & 25 \
110 & 25 & 23 & 28 \
\hline
\end{array}$
The table above gives data for the nation of Pearl, a small island in the South Pacific.
- The economy is at full employment when real GDP is

Accepted Answer

A) $28 billion. 
B) $25 billion. 
C) $34 billion. 
D) $31 billion. 
E) $22 billion. 
A) $28 billion. 
B) $25 billion. 
C) $34 billion. 
D) $31 billion. 
E) $22 billion.

Question 12

If investment spending increases by $1 million, then the aggregate demand curve shifts

Accepted Answer

A) leftward by more than $1 million. 
B) rightward by $1 million. 
C) rightward by more than $1 million. 
D) leftward by less than $1 million. 
E) rightward by less than $1 million. 
A) leftward by more than $1 million. 
B) rightward by $1 million. 
C) rightward by more than $1 million. 
D) leftward by less than $1 million. 
E) rightward by less than $1 million.

Question 13

A tax cut
--------------------aggregate demand and --------------------

Accepted Answer

A) increases; shifts the AD curve leftward 
B) decreases; shifts the AD curve rightward 
C) decreases; shifts the AD curve leftward 
D) increases; shifts the AD curve rightward 
E) does not change; does not shift the AD curve 
A) increases; shifts the AD curve leftward 
B) decreases; shifts the AD curve rightward 
C) decreases; shifts the AD curve leftward 
D) increases; shifts the AD curve rightward 
E) does not change; does not shift the AD curve

Question 14

-
If potential GDP increases, then in the figure above the potential GDP line-------------------- , and the aggregate supply curve-------------------- .

Accepted Answer

A) shifts rightward; does not shift 
B) shifts rightward; shifts leftward 
C) does not shift; does not shift 
D) does not shift; shifts rightward 
E) shifts rightward; shifts rightward 
A) shifts rightward; does not shift 
B) shifts rightward; shifts leftward 
C) does not shift; does not shift 
D) does not shift; shifts rightward 
E) shifts rightward; shifts rightward

Question 15

$\begin{array} { c c c c } 
\hline \begin{array} { c } 
\text { Price level } \
\text { (GDP deflator) }
\end{array} & \begin{array} { c } 
\text { Potential GDP } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP supplied } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP demanded } \
\text { (billions of 2005 dollars) }
\end{array} \
\hline 150 & 25 & 34 & 16 \
140 & 25 & 31 & 19 \
130 & 25 & 28 & 22 \
120 & 25 & 25 & 25 \
110 & 25 & 23 & 28 \
\hline
\end{array}$
The table above gives data for the nation of Pearl, a small island in the South Pacific.
- When the economy is at full employment the price level is

Accepted Answer

A) 130. 
B) 120. 
C) 140. 
D) 110. 
E) 150. 
A) 130. 
B) 120. 
C) 140. 
D) 110. 
E) 150.

Question 16

In a demand-pull inflation, money wage rates rise because

Accepted Answer

A) a decrease in aggregate demand creates a labor surplus. 
B) a decrease in aggregate demand creates a labor shortage. 
C) an increase in aggregate demand creates a labor shortage. 
D) an increase in aggregate demand creates a labor surplus. 
E) an increase in aggregate supply creates a labor shortage. 
A) a decrease in aggregate demand creates a labor surplus. 
B) a decrease in aggregate demand creates a labor shortage. 
C) an increase in aggregate demand creates a labor shortage. 
D) an increase in aggregate demand creates a labor surplus. 
E) an increase in aggregate supply creates a labor shortage.

Question 17

A rise in the money wage rate shifts the

Accepted Answer

A) AD curve rightward. 
B) AS curve leftward. 
C) AD curve leftward. 
D) potential GDP curve rightward. 
E) AS curve rightward. 
A) AD curve rightward. 
B) AS curve leftward. 
C) AD curve leftward. 
D) potential GDP curve rightward. 
E) AS curve rightward.

Question 18

--------------------decreases aggregate supply.

Accepted Answer

A) A rise in the price level 
B) A fall in the money wage rate 
C) A rise in the money wage rate 
D) An increase the quantity of capital 
E) An increase in potential GDP 
A) A rise in the price level 
B) A fall in the money wage rate 
C) A rise in the money wage rate 
D) An increase the quantity of capital 
E) An increase in potential GDP

Question 19

When cost-push inflation starts, real GDP--------------------and the unemployment rate--------------------

Accepted Answer

A) does not change; falls 
B) decreases; rises 
C) increases; falls 
D) decreases; falls 
E) does not change; does not change 
A) does not change; falls 
B) decreases; rises 
C) increases; falls 
D) decreases; falls 
E) does not change; does not change

Question 20

Demand-pull inflation starts with

Accepted Answer

A) a decrease in aggregate demand. 
B) an increase in aggregate demand. 
C) a decrease in aggregate supply. 
D) an increase in aggregate supply. 
E) an increase in potential GDP. 
A) a decrease in aggregate demand. 
B) an increase in aggregate demand. 
C) a decrease in aggregate supply. 
D) an increase in aggregate supply. 
E) an increase in potential GDP.

A change in any of the following factors EXCEPT _{--------------------} shifts the aggregate demand curve.

A rise in the price level brings a _{--------------------}in the buying power of money that consumption expenditures and causes the quantity of real GDP demanded to _{--------------------}.

If the money wage rate rises,

An increase in government expenditure on goods and services_{--------------------} aggregate demand, shifting the aggregate demand curve_{--------------------} and potentially bringing the _{--------------------} phase of the business cycle.

In a persisting demand-pull inflation

The slope of the aggregate supply curve shows that the_{--------------------}the price level, the_{--------------------}

Which of the following factors could start a demand-pull inflation?

In the short run, a rise in the price level brings a_{--------------------} in the real interest rate that_{--------------------} Investment, bringing_{--------------------} in the quantity of real GDP demanded.

Cost-push inflation can be started by

Aggregate demand_{--------------------}and shifts the AD curve _{--------------------}when _{--------------------}.

If investment spending increases by $1 million, then the aggregate demand curve shifts

A tax cut _{--------------------}aggregate demand and _{--------------------}

- If potential GDP increases, then in the figure above the potential GDP line_{--------------------} , and the aggregate supply curve_{--------------------} .

In a demand-pull inflation, money wage rates rise because

A rise in the money wage rate shifts the

_{--------------------}decreases aggregate supply.

When cost-push inflation starts, real GDP_{--------------------}and the unemployment rate_{--------------------}

Demand-pull inflation starts with

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

A change in any of the following factors EXCEPT -------------------- shifts the aggregate demand curve.

A rise in the price level brings a --------------------in the buying power of money that consumption expenditures and causes the quantity of real GDP demanded to --------------------.

If the money wage rate rises,

An increase in government expenditure on goods and services-------------------- aggregate demand, shifting the aggregate demand curve-------------------- and potentially bringing the -------------------- phase of the business cycle.

In a persisting demand-pull inflation

The slope of the aggregate supply curve shows that the--------------------the price level, the--------------------

Which of the following factors could start a demand-pull inflation?

In the short run, a rise in the price level brings a-------------------- in the real interest rate that-------------------- Investment, bringing-------------------- in the quantity of real GDP demanded.

Cost-push inflation can be started by

Aggregate demand--------------------and shifts the AD curve --------------------when --------------------.

If investment spending increases by $1 million, then the aggregate demand curve shifts

A tax cut --------------------aggregate demand and --------------------

- If potential GDP increases, then in the figure above the potential GDP line-------------------- , and the aggregate supply curve-------------------- .

In a demand-pull inflation, money wage rates rise because

A rise in the money wage rate shifts the

--------------------decreases aggregate supply.

When cost-push inflation starts, real GDP--------------------and the unemployment rate--------------------

Demand-pull inflation starts with

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

A change in any of the following factors EXCEPT _{--------------------} shifts the aggregate demand curve.

A rise in the price level brings a _{--------------------}in the buying power of money that consumption expenditures and causes the quantity of real GDP demanded to _{--------------------}.

An increase in government expenditure on goods and services_{--------------------} aggregate demand, shifting the aggregate demand curve_{--------------------} and potentially bringing the _{--------------------} phase of the business cycle.

The slope of the aggregate supply curve shows that the_{--------------------}the price level, the_{--------------------}

In the short run, a rise in the price level brings a_{--------------------} in the real interest rate that_{--------------------} Investment, bringing_{--------------------} in the quantity of real GDP demanded.

Aggregate demand_{--------------------}and shifts the AD curve _{--------------------}when _{--------------------}.

A tax cut _{--------------------}aggregate demand and _{--------------------}

- If potential GDP increases, then in the figure above the potential GDP line_{--------------------} , and the aggregate supply curve_{--------------------} .

_{--------------------}decreases aggregate supply.

When cost-push inflation starts, real GDP_{--------------------}and the unemployment rate_{--------------------}