Question 1

How do changes in the money wage rate affect the LAS and SAS curves? Explain your answer.

Accepted Answer

If the money wage rate changes, the LAS

Question 2

-In the above figure, the economy is at point A. Then the price level rises to 110 while the money wage rate remains constant. Firms will be willing to supply output equal to

Accepted Answer

A)  less than $18.0 trillion. 
B)  $18.0 trillion. 
C)  more than $18.0 trillion. 
D)  Without more information, it is impossible to determine which of the above answers is correct. 
A)  less than $18.0 trillion. 
B)  $18.0 trillion. 
C)  more than $18.0 trillion. 
D)  Without more information, it is impossible to determine which of the above answers is correct.

Question 3

In the long-run, the quantity of real GDP supplied increases when the price level increases.

Accepted Answer

A) True 
 B)False

Question 4

-In the above figure, which part corresponds to a destruction of part of the nation's capital stock?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 5

Which of the following shifts both the LAS and SAS curves?

Accepted Answer

A)  a change in the price level 
B)  a change in the money wage rate 
C)  a simultaneous change in both the price level and the money wage rate 
D)  an advance in technology 
A)  a change in the price level 
B)  a change in the money wage rate 
C)  a simultaneous change in both the price level and the money wage rate 
D)  an advance in technology

Question 6

For movements along the short-run aggregate supply curve

Accepted Answer

A)  the money wage rate is constant. 
B)  the real wage rate changes. 
C)  potential GDP remains constant. 
D)  All of the above are correct. 
A)  the money wage rate is constant. 
B)  the real wage rate changes. 
C)  potential GDP remains constant. 
D)  All of the above are correct.

Question 7

The aggregate demand curve shows total expenditures at different levels of national income.

Accepted Answer

A) True 
 B)False

Question 8

Suppose the economy was initially in a long-run equilibrium. Then the world economy expands so that foreign incomes rise. U.S. aggregate demand ________ and eventually the money wage rate ________.

Accepted Answer

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

Question 9

Suppose that during 2009, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos. What sort of equilibrium existed in Chile?

Accepted Answer

Chile's actual real GDP exceed

Question 10

In the short-run, a rise in the money wage rate leads to

Accepted Answer

A)  an increase in the price level and an increase in real GDP. 
B)  an increase in the price level and a decrease in real GDP. 
C)  an increase in the price level, but no change in real GDP. 
D)  no change in the price level, but an increase in real GDP. 
A)  an increase in the price level and an increase in real GDP. 
B)  an increase in the price level and a decrease in real GDP. 
C)  an increase in the price level, but no change in real GDP. 
D)  no change in the price level, but an increase in real GDP.

Question 11

-The figure above illustrates aggregate demand and aggregate supply in Sparta. Which of the following events will decrease Sparta's real GDP in the short run?

Accepted Answer

A)  a decrease in taxes 
B)  a fall in resource prices 
C)  a decrease in government expenditure 
D)  an increase in investment 
A)  a decrease in taxes 
B)  a fall in resource prices 
C)  a decrease in government expenditure 
D)  an increase in investment

Question 12

A below-full-employment equilibrium

Accepted Answer

A)  is not possible in the U.S. economy. 
B)  occurs when real GDP is less than potential GDP. 
C)  occurs when the price level is rising very quickly. 
D)  occurs when real GDP exceeds potential GDP. 
A)  is not possible in the U.S. economy. 
B)  occurs when real GDP is less than potential GDP. 
C)  occurs when the price level is rising very quickly. 
D)  occurs when real GDP exceeds potential GDP.

Question 13

-In the above figure, if the economy is at point a, an increase in ________ will move the economy to ________.

Accepted Answer

A)  real wealth; point d 
B)  real wealth from a fall in the price level; point d 
C)  expected future income; point b 
D)  expected future income; point d 
A)  real wealth; point d 
B)  real wealth from a fall in the price level; point d 
C)  expected future income; point b 
D)  expected future income; point d

Question 14

In November, 2012, U.S. lawmakers were faced with a "fiscal cliff:" if they did not agree on how to reduce the federal deficit, automatic tax increases and drastic cuts in government spending would take effect. What would happen if the fiscal cliff occurred?

Accepted Answer

A)  The aggregate demand curve shifts leftward, the price level falls and real GDP decreases. 
B)  The aggregate demand curve shifts rightward, the price level rises and real GDP increases. 
C)  The short run aggregate supply curve shift leftward, the price level rises and real GDP decreases. 
D)  The short run aggregate supply curve shifts rightward, the price level falls and real GDP increases. 
A)  The aggregate demand curve shifts leftward, the price level falls and real GDP decreases. 
B)  The aggregate demand curve shifts rightward, the price level rises and real GDP increases. 
C)  The short run aggregate supply curve shift leftward, the price level rises and real GDP decreases. 
D)  The short run aggregate supply curve shifts rightward, the price level falls and real GDP increases.

Question 15

In the short-run, real GDP can be greater than or less than potential GDP because in the short run the money wage rate is fixed.

Accepted Answer

A) True 
 B)False

Question 16

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

Accepted Answer

A)  nothing happens because the economy is in long run equilibrium. 
B)  the price level rises and real GDP does not change. 
C)  real GDP increases and the price level does not change. 
D)  the price level rises and real GDP increases. 
A)  nothing happens because the economy is in long run equilibrium. 
B)  the price level rises and real GDP does not change. 
C)  real GDP increases and the price level does not change. 
D)  the price level rises and real GDP increases.

Question 17

Economic growth is best defined as

Accepted Answer

A)  decreases in potential GDP. 
B)  increases in potential GDP. 
C)  rightward shifts of the AD curve. 
D)  rightward shifts of the SAS curve. 
A)  decreases in potential GDP. 
B)  increases in potential GDP. 
C)  rightward shifts of the AD curve. 
D)  rightward shifts of the SAS curve.

Question 18

In the short-run

Accepted Answer

A)  the aggregate supply curve is upward sloping. 
B)  real GDP is always equal to potential GDP. 
C)  the money wage rate can change. 
D)  the price level does not change. 
A)  the aggregate supply curve is upward sloping. 
B)  real GDP is always equal to potential GDP. 
C)  the money wage rate can change. 
D)  the price level does not change.

Question 19

One result of a decrease in aggregate demand and no change in aggregate supply is

Accepted Answer

A)  a recession. 
B)  an increase in employment levels. 
C)  an economic expansion. 
D)  a rise in the price level. 
A)  a recession. 
B)  an increase in employment levels. 
C)  an economic expansion. 
D)  a rise in the price level.

Question 20

Stagflation is the combination of

Accepted Answer

A)  inflation and increasing real GDP. 
B)  deflation and recession. 
C)  inflation and recession. 
D)  deflation with increasing real GDP. 
A)  inflation and increasing real GDP. 
B)  deflation and recession. 
C)  inflation and recession. 
D)  deflation with increasing real GDP.

How do changes in the money wage rate affect the LAS and SAS curves? Explain your answer.

-In the above figure, the economy is at point A. Then the price level rises to 110 while the money wage rate remains constant. Firms will be willing to supply output equal to

In the long-run, the quantity of real GDP supplied increases when the price level increases.

-In the above figure, which part corresponds to a destruction of part of the nation's capital stock?

Which of the following shifts both the LAS and SAS curves?

For movements along the short-run aggregate supply curve

The aggregate demand curve shows total expenditures at different levels of national income.

Suppose the economy was initially in a long-run equilibrium. Then the world economy expands so that foreign incomes rise. U.S. aggregate demand and eventually the money wage rate .

Suppose that during 2009, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos. What sort of equilibrium existed in Chile?

In the short-run, a rise in the money wage rate leads to

-The figure above illustrates aggregate demand and aggregate supply in Sparta. Which of the following events will decrease Sparta's real GDP in the short run?

A below-full-employment equilibrium

-In the above figure, if the economy is at point a, an increase in will move the economy to .

In November, 2012, U.S. lawmakers were faced with a "fiscal cliff:" if they did not agree on how to reduce the federal deficit, automatic tax increases and drastic cuts in government spending would take effect. What would happen if the fiscal cliff occurred?

In the short-run, real GDP can be greater than or less than potential GDP because in the short run the money wage rate is fixed.

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

Economic growth is best defined as

In the short-run

One result of a decrease in aggregate demand and no change in aggregate supply is

Stagflation is the combination of

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 10: Aggregate Supply and Aggregate Demand

How do changes in the money wage rate affect the LAS and SAS curves? Explain your answer.

-In the above figure, the economy is at point A. Then the price level rises to 110 while the money wage rate remains constant. Firms will be willing to supply output equal to

In the long-run, the quantity of real GDP supplied increases when the price level increases.

-In the above figure, which part corresponds to a destruction of part of the nation's capital stock?

Which of the following shifts both the LAS and SAS curves?

For movements along the short-run aggregate supply curve

The aggregate demand curve shows total expenditures at different levels of national income.

Suppose the economy was initially in a long-run equilibrium. Then the world economy expands so that foreign incomes rise. U.S. aggregate demand ________ and eventually the money wage rate ________.

Suppose that during 2009, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos. What sort of equilibrium existed in Chile?

In the short-run, a rise in the money wage rate leads to

-The figure above illustrates aggregate demand and aggregate supply in Sparta. Which of the following events will decrease Sparta's real GDP in the short run?

A below-full-employment equilibrium

-In the above figure, if the economy is at point a, an increase in ________ will move the economy to ________.

In November, 2012, U.S. lawmakers were faced with a "fiscal cliff:" if they did not agree on how to reduce the federal deficit, automatic tax increases and drastic cuts in government spending would take effect. What would happen if the fiscal cliff occurred?

In the short-run, real GDP can be greater than or less than potential GDP because in the short run the money wage rate is fixed.

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

Economic growth is best defined as

In the short-run

One result of a decrease in aggregate demand and no change in aggregate supply is

Stagflation is the combination of

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Suppose the economy was initially in a long-run equilibrium. Then the world economy expands so that foreign incomes rise. U.S. aggregate demand and eventually the money wage rate .

-In the above figure, if the economy is at point a, an increase in will move the economy to .