Starting with AD₁ and AS1 in the graph below, if taxes increase, then in the short run: Graph 14-1

A) output stays the same and prices fall B) output increases and prices rise C) output increases and prices fall D) output decreases and prices rise E) output decreases and prices fall A) output stays the same and prices fall B) output increases and prices rise C) output increases and prices fall D) output decreases and prices rise E) output decreases and prices fall

Exam 33: Aggregate Demand and Aggregate Supply

Write each of the following words or phrases in the correct column in the table: costs of production, technology, income tax, sales tax, GST, interest rates, transfer payments, level of workers' productivity, cost of imported raw materials, government spending, savings, expectations about inflation, capital stock, level of labour force, a wage award, net exports. Shifts AD Shifts AS

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Question 1

Correct Answer:

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$\begin{array}{|l|l|}\hline\text { Shifts AD }&\text { Shifts AS }\\\hline \text { Income taxes } & \text { Costs of production } \\\hline \text { Interest rates } & \text { Technology } \\\hline \text { Transfer payments } & \text { Sales tax } \\\hline \text { Government spending } & \text { GST } \\\hline \text { Savings } & \text { Level of workers' productivity } \\\hline \text { Expectations about inflation } & \text { Cost of imported raw materials } \\\hline \text { Net exports } & \text { Capital stock } \\\hline & \text { Level of labour force } \\\hline & \text { Wage award } \\\hline\end{array}$

The short-run equilibrium level of real GDP and inflation is given by the intersection of:

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Question 2

Correct Answer:

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B

According to Okun's law, if real GDP grows at an average rate of 3 per cent, the unemployment rate remains unchanged.

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Question 3

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True

The slope of the AD curve only reflects the total price demanded by consumers in the economy.

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Question 4

Okun's law looks at the relationship between:

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Question 5

Keynes attempted to explain:

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Question 6

The aggregate-demand curve is downward-sloping because of Pigou's wealth effect, Keynes's interest-rate effect, Mundell-Fleming's exchange-rate effect and Veblen's envy effect.

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Question 7

The aggregate-supply curve shows:

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Question 8

For a given level of inflation, if there is a greater willingness by foreigners to purchase domestic goods, then the _ shifts _.

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Question 9

If there is an increase in both the price level and employment, which of the following could possibly explain this?

(Multiple Choice)

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Question 10

Starting with AD₁ and AS₁ in the graph below, if taxes increase, then in the short run: Graph 14-1

(Multiple Choice)

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Question 11

The components of aggregate expenditure that depend negatively on the interest rate are:

(Multiple Choice)

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Question 12

As long as aggregate supply remains constant, the greater the increase in aggregate demand the:

(Multiple Choice)

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Question 13

The business cycle follows a regular and predictable pattern.

(True/False)

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Question 14

The aggregate-demand curve shows:

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Question 15

What causes shifts in the aggregate demand curve?

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Question 16

If there is an excess demand situation in the economy at the current price level, then the:

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Question 17

For a given level of inflation, if bright prospects for the future of the economy cause businesses to increase their spending on new capital, then the _ shifts _.

(Multiple Choice)

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Question 18

When the price level falls:

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Question 19

What are three alternative explanations for the upward slope of the short-run aggregate-supply curve? Do these explanations also apply in the long run?

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Question 20

Exam 33: Aggregate Demand and Aggregate Supply

The short-run equilibrium level of real GDP and inflation is given by the intersection of:

According to Okun's law, if real GDP grows at an average rate of 3 per cent, the unemployment rate remains unchanged.

The slope of the AD curve only reflects the total price demanded by consumers in the economy.

Okun's law looks at the relationship between:

Keynes attempted to explain:

The aggregate-demand curve is downward-sloping because of Pigou's wealth effect, Keynes's interest-rate effect, Mundell-Fleming's exchange-rate effect and Veblen's envy effect.

The aggregate-supply curve shows:

For a given level of inflation, if there is a greater willingness by foreigners to purchase domestic goods, then the _____ shifts _____.

If there is an increase in both the price level and employment, which of the following could possibly explain this?

Starting with AD₁ and AS1 in the graph below, if taxes increase, then in the short run: Graph 14-1

The components of aggregate expenditure that depend negatively on the interest rate are:

As long as aggregate supply remains constant, the greater the increase in aggregate demand the:

The business cycle follows a regular and predictable pattern.

The aggregate-demand curve shows:

What causes shifts in the aggregate demand curve?

If there is an excess demand situation in the economy at the current price level, then the:

For a given level of inflation, if bright prospects for the future of the economy cause businesses to increase their spending on new capital, then the _____ shifts _____.

When the price level falls:

What are three alternative explanations for the upward slope of the short-run aggregate-supply curve? Do these explanations also apply in the long run?

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

Filters

For a given level of inflation, if there is a greater willingness by foreigners to purchase domestic goods, then the _ shifts _.

Starting with AD₁ and AS₁ in the graph below, if taxes increase, then in the short run: Graph 14-1

For a given level of inflation, if bright prospects for the future of the economy cause businesses to increase their spending on new capital, then the _ shifts _.