Question 1

An increase in investment and government spending can be expected to shift the

Accepted Answer

A)  aggregate expenditures curve downward and the aggregate demand curve leftward. 
B)  aggregate expenditures curve upward and the aggregate demand curve leftward. 
C)  aggregate expenditures curve downward and the aggregate demand curve rightward. 
D)  aggregate expenditures curve upward and the aggregate demand curve rightward. 
A)  aggregate expenditures curve downward and the aggregate demand curve leftward. 
B)  aggregate expenditures curve upward and the aggregate demand curve leftward. 
C)  aggregate expenditures curve downward and the aggregate demand curve rightward. 
D)  aggregate expenditures curve upward and the aggregate demand curve rightward.

Question 2

Explain cost-push inﬂation using aggregate demand-aggregate supply analysis.

Accepted Answer

Decreases in aggregate supply cause cost

Question 3

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit. The level of productivity in this economy is

Accepted Answer

A)  20. 
B)  30. 
C)  40. 
D)  50. 
A)  20. 
B)  30. 
C)  40. 
D)  50.

Question 4

Accepted Answer

A)  demand-pull inﬂation in the late 1960s 
B)  cost-push inﬂation in the early 1970s 
C)  full-employment in the late 1990s 
D)  recession in 2007-09 
A)  demand-pull inﬂation in the late 1960s 
B)  cost-push inﬂation in the early 1970s 
C)  full-employment in the late 1990s 
D)  recession in 2007-09

Question 5

1. Real-Balances Effect 
2. Household Expectations
3. Interest-Rate Effect
4. Personal Income Tax Rates
5. Proﬁt Expectations
6. National Incomes Abroad
7. Government Spending
8. Foreign Purchases Effect
9. Exchange Rates
10. Degree of Excess Capacity
Answer the question based on the accompanying list of factors that are related to the aggregate
demand curve. Changes in which two of the factors would most likely cause a shift in aggregate
demand due to a change in consumer spending?

Accepted Answer

A)  1 and 3 
B)  2 and 4 
C)  5 and 10 
D)  8 and 9 
A)  1 and 3 
B)  2 and 4 
C)  5 and 10 
D)  8 and 9

Question 6

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. The level of productivity is

Accepted Answer

A)  20. 
B)  10. 
C)  5. 
D)  2. 
A)  20. 
B)  10. 
C)  5. 
D)  2.

Question 7

What are the three time horizons used to categorize aggregate supply? What is the difference
between the immediate short run and the short-run aggregate supply?

Accepted Answer

The three different time horizons used t

Question 8

Accepted Answer

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

Question 9

The real-balances, interest-rate, and foreign purchases effects all help explain

Accepted Answer

A)  why the aggregate demand curve is downsloping. 
B)  why the aggregate supply curve is upsloping. 
C)  shifts in the aggregate demand curve. 
D)  shifts in the aggregate supply curve. 
A)  why the aggregate demand curve is downsloping. 
B)  why the aggregate supply curve is upsloping. 
C)  shifts in the aggregate demand curve. 
D)  shifts in the aggregate supply curve.

Question 10

What two factors affect the legal-institutional environment? Discuss the effect of changes in the
legal-institutional environment on aggregate supply.

Accepted Answer

The two factors that affect the legal-in

Question 11

An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce its total output of 640 units. Each unit of capital costs $10; each unit of raw materials, $4; and each
Unit of labor, $3. The per-unit cost of production in this economy is

Accepted Answer

A)  $0.05. 
B)  $0.10. 
C)  $0.50. 
D)  $1.00. 
A)  $0.05. 
B)  $0.10. 
C)  $0.50. 
D)  $1.00.

Question 12

1. Government Spending 
2. Consumer Expectations
3. Degree of Excess Capacity
4. Personal Income Tax Rates
5. Productivity
6. National Income Abroad
7. Business Taxes
8. Domestic Resource Availability
9. Prices of Imported Products
10. Proﬁt Expectations on Investments
Answer the question based on the accompanying list of items related to aggregate demand or
aggregate supply. A change in which factor is most likely to change both aggregate demand and
aggregate supply?

Accepted Answer

A)  3 
B)  5 
C)  7 
D)  6 
A)  3 
B)  5 
C)  7 
D)  6

Question 13

The determinants of aggregate demand determine the location of the aggregate demand curve.
What are the four basic determinants of aggregate demand?

Accepted Answer

The four basic determinants of

Question 14

$\begin{array} { | c | c | } 
\hline Input ~Quantity & Real ~Domestic ~Output \
\hline 100 & 200 \
\hline 150 & 300 \
\hline 200 & 400 \
\hline
\end{array}$
The table gives information about the relationship between input quantities and real domestic output in a hypothetical economy. If the price of each input is $\$ 5$, the per-unit cost of production in the economy is

Accepted Answer

A)  $5. 
B)  $2.75. 
C)  $2.50. 
D)  $0.40. 
A)  $5. 
B)  $2.75. 
C)  $2.50. 
D)  $0.40.

Question 15

The long-run aggregate supply analysis assumes that

Accepted Answer

A)  input prices are ﬁxed, while product prices are variable. 
B)  input prices are variable, while product prices are ﬁxed. 
C)  both input and product prices are variable. 
D)  both input and product prices are ﬁxed. 
A)  input prices are ﬁxed, while product prices are variable. 
B)  input prices are variable, while product prices are ﬁxed. 
C)  both input and product prices are variable. 
D)  both input and product prices are ﬁxed.

Question 16

The aggregate demand curve is

Accepted Answer

A)  vertical under conditions of full employment. 
B)  horizontal when there is considerable unemployment in the economy. 
C)  downsloping because of the interest-rate, real-balances, and foreign purchases effects. 
D)  downsloping because production costs decrease as real output rises. 
A)  vertical under conditions of full employment. 
B)  horizontal when there is considerable unemployment in the economy. 
C)  downsloping because of the interest-rate, real-balances, and foreign purchases effects. 
D)  downsloping because production costs decrease as real output rises.

Question 17

How can the aggregate demand curve be derived from the aggregate expenditures model?

Accepted Answer

A change in the price level alters the l

Question 18

If the national incomes of our trading partners increase, then our

Accepted Answer

A)  aggregate demand decreases because C decreases. 
B)  aggregate demand increases because C increases. 
C)  aggregate demand decreases because net exports decrease. 
D)  aggregate demand increases because net exports increase. 
A)  aggregate demand decreases because C decreases. 
B)  aggregate demand increases because C increases. 
C)  aggregate demand decreases because net exports decrease. 
D)  aggregate demand increases because net exports increase.

Question 19

An aggregate supply curve represents the relationship between the

Accepted Answer

A)  price level and the buying of real domestic output. 
B)  price level and the production of real domestic output. 
C)  real domestic output bought and the real domestic output sold. 
D)  price level that producers are willing to accept and the price level buyers are willing to pay. 
A)  price level and the buying of real domestic output. 
B)  price level and the production of real domestic output. 
C)  real domestic output bought and the real domestic output sold. 
D)  price level that producers are willing to accept and the price level buyers are willing to pay.

Question 20

When the excess capacity of business expands unintentionally, aggregate

Accepted Answer

A)  demand will increase. 
B)  demand will decrease. 
C)  supply will increase. 
D)  supply will decrease. 
A)  demand will increase. 
B)  demand will decrease. 
C)  supply will increase. 
D)  supply will decrease.

An increase in investment and government spending can be expected to shift the

Explain cost-push inﬂation using aggregate demand-aggregate supply analysis.

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit. The level of productivity in this economy is

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. The level of productivity is

What are the three time horizons used to categorize aggregate supply? What is the difference between the immediate short run and the short-run aggregate supply?

The real-balances, interest-rate, and foreign purchases effects all help explain

What two factors affect the legal-institutional environment? Discuss the effect of changes in the legal-institutional environment on aggregate supply.

An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce its total output of 640 units. Each unit of capital costs $10; each unit of raw materials, $4; and each Unit of labor, $3. The per-unit cost of production in this economy is

The determinants of aggregate demand determine the location of the aggregate demand curve. What are the four basic determinants of aggregate demand?

The long-run aggregate supply analysis assumes that

The aggregate demand curve is

How can the aggregate demand curve be derived from the aggregate expenditures model?

If the national incomes of our trading partners increase, then our

An aggregate supply curve represents the relationship between the

When the excess capacity of business expands unintentionally, aggregate

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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Exam 12: Aggregate Demand and Aggregate Supply

An increase in investment and government spending can be expected to shift the

Explain cost-push inﬂation using aggregate demand-aggregate supply analysis.

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit. The level of productivity in this economy is

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. The level of productivity is

What are the three time horizons used to categorize aggregate supply? What is the difference between the immediate short run and the short-run aggregate supply?

The real-balances, interest-rate, and foreign purchases effects all help explain

What two factors affect the legal-institutional environment? Discuss the effect of changes in the legal-institutional environment on aggregate supply.

An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce its total output of 640 units. Each unit of capital costs $10; each unit of raw materials, $4; and each Unit of labor, $3. The per-unit cost of production in this economy is

The determinants of aggregate demand determine the location of the aggregate demand curve. What are the four basic determinants of aggregate demand?

The long-run aggregate supply analysis assumes that

The aggregate demand curve is

How can the aggregate demand curve be derived from the aggregate expenditures model?

If the national incomes of our trading partners increase, then our

An aggregate supply curve represents the relationship between the

When the excess capacity of business expands unintentionally, aggregate

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters