Question 1

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion. What happens if the current price level equals 125?

Accepted Answer

The quantity of real GDP demanded is gre

Question 2

In 2008, Germany passed a stimulus package of $29 billion as its economy slowed. This policy action follows the ________ to restore full employment.

Accepted Answer

A)  Keynesian viewpoint that supports increases in federal government expenditure 
B)  Keynesian viewpoint that supports increases in the money supply 
C)  monetarist viewpoint that supports increases in expenditure by the federal government 
D)  new classical viewpoint that discourages the use of expenditure by the federal government 
A)  Keynesian viewpoint that supports increases in federal government expenditure 
B)  Keynesian viewpoint that supports increases in the money supply 
C)  monetarist viewpoint that supports increases in expenditure by the federal government 
D)  new classical viewpoint that discourages the use of expenditure by the federal government

Question 3

If you have $1,000 in wealth and the price level increases by 20 percent, then

Accepted Answer

A)  the $1,000 will buy fewer goods and services. 
B)  the $1,000 dollars will buy 20 percent more goods and services. 
C)  the real value of the $1,000 increases. 
D)  you will be able to buy fewer goods, but the real value of those goods will increase. 
A)  the $1,000 will buy fewer goods and services. 
B)  the $1,000 dollars will buy 20 percent more goods and services. 
C)  the real value of the $1,000 increases. 
D)  you will be able to buy fewer goods, but the real value of those goods will increase.

Question 4

According to www.oecd.org, the United States spends a larger portion of expenditures on higher education compared to any other country. Increasing the amount of higher education produces
I. rightward shifts in the U.S. long-run aggregate supply curve.
II. movements up along the U.S. aggregate demand curve.
III. increases in U.S. human capital.

Accepted Answer

A)  I and III only 
B)  I, II and III 
C)  II and III only 
D)  III only 
A)  I and III only 
B)  I, II and III 
C)  II and III only 
D)  III only

Question 5

Technological progress will

Accepted Answer

A)  shift the LAS curve rightward but will not shift the SAS curve. 
B)  not shift either the LAS or the SAS curve. 
C)  shift both the LAS and SAS curves rightward. 
D)  shift the SAS curve rightward but will not shift the LAS curve. 
A)  shift the LAS curve rightward but will not shift the SAS curve. 
B)  not shift either the LAS or the SAS curve. 
C)  shift both the LAS and SAS curves rightward. 
D)  shift the SAS curve rightward but will not shift the LAS curve.

Question 6

-In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate?

Accepted Answer

A)  E to I 
B)  E to F 
C)  E to J 
D)  E to H 
A)  E to I 
B)  E to F 
C)  E to J 
D)  E to H

Question 7

The long-run aggregate supply curve is ________ because along it, as prices rise, the money wage rate ________.

Accepted Answer

A)  vertical; falls 
B)  vertical; rises 
C)  upward sloping; falls 
D)  upward sloping; stays constant 
A)  vertical; falls 
B)  vertical; rises 
C)  upward sloping; falls 
D)  upward sloping; stays constant

Question 8

-The above figure depicts an economy with a short-run equilibrium

Accepted Answer

A)  at full employment. 
B)  below full employment. 
C)  at higher than full employment. 
D)  at zero unemployment. 
A)  at full employment. 
B)  below full employment. 
C)  at higher than full employment. 
D)  at zero unemployment.

Question 9

The supply of real GDP is a function of

Accepted Answer

A)  the total expenditures of consumers, investors and government. 
B)  the sum of wages, salaries, corporate profits, rents and interest. 
C)  only the state of technology. 
D)  the quantities of labor, capital and the state of technology. 
A)  the total expenditures of consumers, investors and government. 
B)  the sum of wages, salaries, corporate profits, rents and interest. 
C)  only the state of technology. 
D)  the quantities of labor, capital and the state of technology.

Question 10

-In the above figure, the economy is at point A. Then the price level falls to 90 while the money wage rate does not change. 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 11

One reason that the aggregate demand curve has a negative slope is because

Accepted Answer

A)  firms supply more when prices rise. 
B)  people buy more foreign goods when the domestic price level rises. 
C)  the amount of money in the economy increases when the price level rises. 
D)  firms supply less when prices rise. 
A)  firms supply more when prices rise. 
B)  people buy more foreign goods when the domestic price level rises. 
C)  the amount of money in the economy increases when the price level rises. 
D)  firms supply less when prices rise.

Question 12

When the quantity of capital increases, then the

Accepted Answer

A)  LAS curve shifts rightward and the SAS curve does not shift. 
B)  SAS curve shifts rightward and the LAS curve does not shift. 
C)  SAS curve shifts rightward and the LAS curve shifts rightward. 
D)  SAS curve shifts rightward and the LAS curve shifts leftward. 
A)  LAS curve shifts rightward and the SAS curve does not shift. 
B)  SAS curve shifts rightward and the LAS curve does not shift. 
C)  SAS curve shifts rightward and the LAS curve shifts rightward. 
D)  SAS curve shifts rightward and the LAS curve shifts leftward.

Question 13

The positive relationship between short-run aggregate supply and the price level indicates that, in the short run

Accepted Answer

A)  firms produce more output as the price level falls. 
B)  firms produce more output as the price level rises. 
C)  the money wage rate increases when moving along the short-run aggregate supply curve. 
D)  lower price levels are more profitable for firms. 
A)  firms produce more output as the price level falls. 
B)  firms produce more output as the price level rises. 
C)  the money wage rate increases when moving along the short-run aggregate supply curve. 
D)  lower price levels are more profitable for firms.

Question 14

A lower price level combined with a decrease in real GDP occurs when the

Accepted Answer

A)  short-run aggregate supply curve shifts rightward. 
B)  short-run aggregate supply curve shifts leftward. 
C)  aggregate demand curve shifts rightward. 
D)  aggregate demand curve shifts leftward. 
A)  short-run aggregate supply curve shifts rightward. 
B)  short-run aggregate supply curve shifts leftward. 
C)  aggregate demand curve shifts rightward. 
D)  aggregate demand curve shifts leftward.

Question 15

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

Accepted Answer

A)  a decrease in the quantity of money 
B)  an increase in investment 
C)  an increase in the price level 
D)  a decrease in taxes 
A)  a decrease in the quantity of money 
B)  an increase in investment 
C)  an increase in the price level 
D)  a decrease in taxes

Question 16

Which of the following increases aggregate demand?

Accepted Answer

A)  an increase in taxes 
B)  an increase in the quantity of money 
C)  an increase in the exchange rate 
D)  a decrease in government expenditures 
A)  an increase in taxes 
B)  an increase in the quantity of money 
C)  an increase in the exchange rate 
D)  a decrease in government expenditures

Question 17

According to the wealth effect, if real wealth decreases then people

Accepted Answer

A)  decrease their consumption expenditure. 
B)  increase their consumption expenditure. 
C)  do not respond if their nominal wealth does not change. 
D)  decrease their consumption expenditure only if their nominal wealth also decreases. 
A)  decrease their consumption expenditure. 
B)  increase their consumption expenditure. 
C)  do not respond if their nominal wealth does not change. 
D)  decrease their consumption expenditure only if their nominal wealth also decreases.

Question 18

The long-run aggregate supply curve is the relationship between the quantity of real GDP supplied and ________ when ________.

Accepted Answer

A)  the price level; real GDP equals potential GDP 
B)  real GDP demanded; the wage rate is constant 
C)  the price level; real GDP equals nominal GDP 
D)  real GDP demanded; the price level does not change 
A)  the price level; real GDP equals potential GDP 
B)  real GDP demanded; the wage rate is constant 
C)  the price level; real GDP equals nominal GDP 
D)  real GDP demanded; the price level does not change

Question 19

Suppose that the economy begins at a long-run equilibrium. Which of the following raises the price level and decrease real GDP in the short run?

Accepted Answer

A)  a decrease in the quantity of money 
B)  an increase in the price of oil that decreases aggregate supply 
C)  an increase in the stock of capital that increases aggregate supply 
D)  an increase in government expenditures 
A)  a decrease in the quantity of money 
B)  an increase in the price of oil that decreases aggregate supply 
C)  an increase in the stock of capital that increases aggregate supply 
D)  an increase in government expenditures

Question 20

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees.   The economy is experiencing ________ gap and firms will ________.

Accepted Answer

A)  an inflationary gap; increase production 
B)  an inflationary gap; increase money wages paid to workers 
C)  a recessionary gap; increase production 
D)  a recessionary gap; decrease money wages paid to workers 
A)  an inflationary gap; increase production 
B)  an inflationary gap; increase money wages paid to workers 
C)  a recessionary gap; increase production 
D)  a recessionary gap; decrease money wages paid to workers

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion. What happens if the current price level equals 125?

In 2008, Germany passed a stimulus package of $29 billion as its economy slowed. This policy action follows the ________ to restore full employment.

If you have $1,000 in wealth and the price level increases by 20 percent, then

Technological progress will

-In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate?

The long-run aggregate supply curve is because along it, as prices rise, the money wage rate .

-The above figure depicts an economy with a short-run equilibrium

The supply of real GDP is a function of

-In the above figure, the economy is at point A. Then the price level falls to 90 while the money wage rate does not change. Firms will be willing to supply output equal to

One reason that the aggregate demand curve has a negative slope is because

When the quantity of capital increases, then the

The positive relationship between short-run aggregate supply and the price level indicates that, in the short run

A lower price level combined with a decrease in real GDP occurs when the

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

Which of the following increases aggregate demand?

According to the wealth effect, if real wealth decreases then people

The long-run aggregate supply curve is the relationship between the quantity of real GDP supplied and when .

Suppose that the economy begins at a long-run equilibrium. Which of the following raises the price level and decrease real GDP in the short run?

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees. The economy is experiencing gap and firms will .

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

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion. What happens if the current price level equals 125?

In 2008, Germany passed a stimulus package of $29 billion as its economy slowed. This policy action follows the ________ to restore full employment.

If you have $1,000 in wealth and the price level increases by 20 percent, then

Technological progress will

-In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate?

The long-run aggregate supply curve is ________ because along it, as prices rise, the money wage rate ________.

-The above figure depicts an economy with a short-run equilibrium

The supply of real GDP is a function of

-In the above figure, the economy is at point A. Then the price level falls to 90 while the money wage rate does not change. Firms will be willing to supply output equal to

One reason that the aggregate demand curve has a negative slope is because

When the quantity of capital increases, then the

The positive relationship between short-run aggregate supply and the price level indicates that, in the short run

A lower price level combined with a decrease in real GDP occurs when the

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

Which of the following increases aggregate demand?

According to the wealth effect, if real wealth decreases then people

The long-run aggregate supply curve is the relationship between the quantity of real GDP supplied and ________ when ________.

Suppose that the economy begins at a long-run equilibrium. Which of the following raises the price level and decrease real GDP in the short run?

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees. The economy is experiencing ________ gap and firms will ________.

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

The long-run aggregate supply curve is because along it, as prices rise, the money wage rate .

The long-run aggregate supply curve is the relationship between the quantity of real GDP supplied and when .

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees. The economy is experiencing gap and firms will .