Question 1

Simultaneous recession and deflation can be explained by a(n)

Accepted Answer

A)  increase in aggregate supply. 
B)  increase in aggregate demand. 
C)  decrease in aggregate demand. 
D)  decrease in aggregate supply. 
A)  increase in aggregate supply. 
B)  increase in aggregate demand. 
C)  decrease in aggregate demand. 
D)  decrease in aggregate supply.

Question 2

Which of these would cause cost-push inflation?

Accepted Answer

A)  Optimism leads consumers to spend more. 
B)  Firms cut back on investments to cut costs. 
C)  Strict new environmental regulations require that firms change their production methods. 
D)  Consumers face rising costs when purchasing food and using transportation. 
A)  Optimism leads consumers to spend more. 
B)  Firms cut back on investments to cut costs. 
C)  Strict new environmental regulations require that firms change their production methods. 
D)  Consumers face rising costs when purchasing food and using transportation.

Question 3

Ceteris paribus, the multiplier effect would be largest in which situation?

Accepted Answer

A)  when prices are fixed 
B)  when prices are flexible 
C)  when the government borrows from its citizens to cover increased deficit spending 
D)  when the government has a balanced budget 
A)  when prices are fixed 
B)  when prices are flexible 
C)  when the government borrows from its citizens to cover increased deficit spending 
D)  when the government has a balanced budget

Question 4

The aggregate demand curve displays

Accepted Answer

A)  real GDP demanded at various price levels. 
B)  nominal GDP versus real GDP. 
C)  GDP demanded at various investment levels. 
D)  the business cycle. 
A)  real GDP demanded at various price levels. 
B)  nominal GDP versus real GDP. 
C)  GDP demanded at various investment levels. 
D)  the business cycle.

Question 5

Which event will NOT cause a rightward shift of the aggregate demand curve?

Accepted Answer

A)  Consumers expect an economic contraction will soon occur. 
B)  A decrease in interest rates leads to an increase in investment. 
C)  The dollar depreciates. 
D)  The government decides to spend more money on goods. 
A)  Consumers expect an economic contraction will soon occur. 
B)  A decrease in interest rates leads to an increase in investment. 
C)  The dollar depreciates. 
D)  The government decides to spend more money on goods.

Question 6

The determinants of aggregate demand include the components of GDP: consumption, investment, government spending, and net exports.

Accepted Answer

A) True 
 B)False

Question 7

The aggregate demand curve

Accepted Answer

A)  is upward sloping because a higher price level is necessary to make production profitable as production costs rise. 
B)  is downward sloping because production costs decline as real GDP increases. 
C)  shows the amount of expenditures required to induce the production of each possible level of real GDP. 
D)  shows the amount of real GDP that will be demanded at each possible price level. 
A)  is upward sloping because a higher price level is necessary to make production profitable as production costs rise. 
B)  is downward sloping because production costs decline as real GDP increases. 
C)  shows the amount of expenditures required to induce the production of each possible level of real GDP. 
D)  shows the amount of real GDP that will be demanded at each possible price level.

Question 8

Which of these would NOT cause a shift in the aggregate demand curve?

Accepted Answer

A)  change in consumption spending 
B)  change in the price level 
C)  change in investment 
D)  change in net exports 
A)  change in consumption spending 
B)  change in the price level 
C)  change in investment 
D)  change in net exports

Question 9

Which of these provides an accurate description regarding the slope of the short-run aggregate supply curve?

Accepted Answer

A)  The negative slope of the short-run aggregate supply curve is flatter the more flexible prices are or steeper the more rigid prices are. 
B)  The negative slope of the short-run aggregate supply curve is steeper the more flexible prices are or flatter the more rigid prices are. 
C)  The positive slope of the short-run aggregate supply curve is flatter the more flexible prices are or steeper the more rigid prices are. 
D)  The positive slope of the short-run aggregate supply curve is steeper the more flexible prices are or flatter the more rigid prices are. 
A)  The negative slope of the short-run aggregate supply curve is flatter the more flexible prices are or steeper the more rigid prices are. 
B)  The negative slope of the short-run aggregate supply curve is steeper the more flexible prices are or flatter the more rigid prices are. 
C)  The positive slope of the short-run aggregate supply curve is flatter the more flexible prices are or steeper the more rigid prices are. 
D)  The positive slope of the short-run aggregate supply curve is steeper the more flexible prices are or flatter the more rigid prices are.

Question 10

Short-run macroeconomic equilibrium has NOT occurred if

Accepted Answer

A)  inflation rates are low. 
B)  the short-run aggregate supply and aggregate demand curves intersect. 
C)  the short-run aggregate supply quantity exceeds the aggregate demand quantity. 
D)  inflation rates are high. 
A)  inflation rates are low. 
B)  the short-run aggregate supply and aggregate demand curves intersect. 
C)  the short-run aggregate supply quantity exceeds the aggregate demand quantity. 
D)  inflation rates are high.

Question 11

Aggregate supply increases when

Accepted Answer

A)  input prices rise. 
B)  subsidies are reduced. 
C)  there is a decrease in firms' market power. 
D)  business expectations are pessimistic. 
A)  input prices rise. 
B)  subsidies are reduced. 
C)  there is a decrease in firms' market power. 
D)  business expectations are pessimistic.

Question 12

Which event will NOT cause the aggregate demand curve to shift?

Accepted Answer

A)  Businesses are optimistic about the economy, investing heavily in new equipment. 
B)  Consumers' wealth declines because of a drop in the stock market. 
C)  A rise in the aggregate price level causes a decline in exports. 
D)  The government increases spending on national security in the wake of terrorist attacks. 
A)  Businesses are optimistic about the economy, investing heavily in new equipment. 
B)  Consumers' wealth declines because of a drop in the stock market. 
C)  A rise in the aggregate price level causes a decline in exports. 
D)  The government increases spending on national security in the wake of terrorist attacks.

Question 13

Cost-push inflation occurs when

Accepted Answer

A)  total spending expands so much that equilibrium output exceeds full-employment output. 
B)  a supply shock shifts the short-run aggregate supply curve to the right. 
C)  rising resource costs reduce short-run aggregate supply. 
D)  subsidies to businesses rise. 
A)  total spending expands so much that equilibrium output exceeds full-employment output. 
B)  a supply shock shifts the short-run aggregate supply curve to the right. 
C)  rising resource costs reduce short-run aggregate supply. 
D)  subsidies to businesses rise.

Question 14

What would cause the price level to rise and employment to increase?

Accepted Answer

A)  a shift to the left of the aggregate demand curve 
B)  a shift to the right of the aggregate demand curve 
C)  a shift to the left of the short-run aggregate supply curve 
D)  a shift to the right of the short-run aggregate supply curve 
A)  a shift to the left of the aggregate demand curve 
B)  a shift to the right of the aggregate demand curve 
C)  a shift to the left of the short-run aggregate supply curve 
D)  a shift to the right of the short-run aggregate supply curve

Question 15

Determinants of short-run aggregate supply include the components of GDP: consumption, investment, government spending, and net exports.

Accepted Answer

A) True 
 B)False

Question 16

The Great Depression was primarily the result of

Accepted Answer

A)  a decrease in aggregate demand. 
B)  an increase in aggregate demand. 
C)  disequilibrium. 
D)  an increase in aggregate supply. 
A)  a decrease in aggregate demand. 
B)  an increase in aggregate demand. 
C)  disequilibrium. 
D)  an increase in aggregate supply.

Question 17

Output increases if aggregate demand _____ and aggregate supply _____.

Accepted Answer

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

Question 18

Increased productivity leads to increased aggregate supply.

Accepted Answer

A) True 
 B)False

Question 19

The decline in aggregate demand that occurred during the Great Depression caused a drop in real GDP

Accepted Answer

A)  and deflation. 
B)  but an increase in the price level. 
C)  but a modest rise in inflation. 
D)  but no change in the price level. 
A)  and deflation. 
B)  but an increase in the price level. 
C)  but a modest rise in inflation. 
D)  but no change in the price level.

Question 20

Which factor causes a leftward shift of the aggregate demand curve?

Accepted Answer

A)  an increase in consumption 
B)  an increase in wealth 
C)  an increase in exports 
D)  a decrease in government spending 
A)  an increase in consumption 
B)  an increase in wealth 
C)  an increase in exports 
D)  a decrease in government spending

Simultaneous recession and deflation can be explained by a(n)

Which of these would cause cost-push inflation?

Ceteris paribus, the multiplier effect would be largest in which situation?

The aggregate demand curve displays

Which event will NOT cause a rightward shift of the aggregate demand curve?

The determinants of aggregate demand include the components of GDP: consumption, investment, government spending, and net exports.

The aggregate demand curve

Which of these would NOT cause a shift in the aggregate demand curve?

Which of these provides an accurate description regarding the slope of the short-run aggregate supply curve?

Short-run macroeconomic equilibrium has NOT occurred if

Aggregate supply increases when

Which event will NOT cause the aggregate demand curve to shift?

Cost-push inflation occurs when

What would cause the price level to rise and employment to increase?

Determinants of short-run aggregate supply include the components of GDP: consumption, investment, government spending, and net exports.

The Great Depression was primarily the result of

Output increases if aggregate demand _ and aggregate supply _.

Increased productivity leads to increased aggregate supply.

The decline in aggregate demand that occurred during the Great Depression caused a drop in real GDP

Which factor causes a leftward shift of the aggregate demand curve?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 9: Aggregate Demand and Supply

Simultaneous recession and deflation can be explained by a(n)

Which of these would cause cost-push inflation?

Ceteris paribus, the multiplier effect would be largest in which situation?

The aggregate demand curve displays

Which event will NOT cause a rightward shift of the aggregate demand curve?

The determinants of aggregate demand include the components of GDP: consumption, investment, government spending, and net exports.

The aggregate demand curve

Which of these would NOT cause a shift in the aggregate demand curve?

Which of these provides an accurate description regarding the slope of the short-run aggregate supply curve?

Short-run macroeconomic equilibrium has NOT occurred if

Aggregate supply increases when

Which event will NOT cause the aggregate demand curve to shift?

Cost-push inflation occurs when

What would cause the price level to rise and employment to increase?

Determinants of short-run aggregate supply include the components of GDP: consumption, investment, government spending, and net exports.

The Great Depression was primarily the result of

Output increases if aggregate demand _____ and aggregate supply _____.

Increased productivity leads to increased aggregate supply.

The decline in aggregate demand that occurred during the Great Depression caused a drop in real GDP

Which factor causes a leftward shift of the aggregate demand curve?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Output increases if aggregate demand _ and aggregate supply _.