Question 1

The long-run aggregate supply curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 2

An increase in net exports will shift the AD curve to the

Accepted Answer

A)  left by a multiple of the change in net exports. 
B)  left by the same amount as the change in net exports. 
C)  right by the same amount as the change in net exports. 
D)  right by a multiple of the change in net exports. 
A)  left by a multiple of the change in net exports. 
B)  left by the same amount as the change in net exports. 
C)  right by the same amount as the change in net exports. 
D)  right by a multiple of the change in net exports.

Question 3

If the cost of resources decreases, then real domestic output will increase.

Accepted Answer

A) True 
 B)False

Question 4

Accepted Answer

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

Question 5

If aggregate demand decreases, and, as a result, real output and employment decline but the price level remains unchanged, it is most likely that

Accepted Answer

A)  the money supply has declined. 
B)  the price level is inﬂexible downward and a recession has occurred. 
C)  cost-push inﬂation has occurred. 
D)  productivity has declined. 
A)  the money supply has declined. 
B)  the price level is inﬂexible downward and a recession has occurred. 
C)  cost-push inﬂation has occurred. 
D)  productivity has declined.

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. Given an increase in input price from $4 to $6, we would expect the
Aggregate

Accepted Answer

A)  supply curve to shift to the left. 
B)  supply curve to shift to the right. 
C)  demand curve to shift to the left. 
D)  supply and demand curves to both remain unchanged. 
A)  supply curve to shift to the left. 
B)  supply curve to shift to the right. 
C)  demand curve to shift to the left. 
D)  supply and demand curves to both remain unchanged.

Question 7

Explain the reasoning behind the shape of the short-run aggregate supply curve in the short run.

Accepted Answer

The short run is the period of time duri

Question 8

The short-run aggregate supply curve

Accepted Answer

A)  becomes ﬂatter at output levels above the full-employment output. 
B)  becomes steep at output levels above the full-employment output. 
C)  is upward-sloping with a constant slope. 
D)  is horizontal. 
A)  becomes ﬂatter at output levels above the full-employment output. 
B)  becomes steep at output levels above the full-employment output. 
C)  is upward-sloping with a constant slope. 
D)  is horizontal.

Question 9

An increase in the price level reduces the real value of ﬁnancial assets with ﬁxed money values,
and, as a result, the holders of these assets decrease their spending.

Accepted Answer

A) True 
 B)False

Question 10

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Real Domestic Output } \
\text { Demanded (in Billions) }
\end{array} & \text { Price Level (Index Value) } & \begin{array} { c } 
\text { Real Domestic Output } \
\text { Supplied (in Billions) }
\end{array} \
\hline \$ 3,000 & 350 & \$ 9,000 \
\hline 4,000 & 300 & 8,000 \
\hline 5,000 & 250 & 7,000 \
\hline 6,000 & 200 & 6,000 \
\hline 7,000 & 150 & 5,000 \
\hline 8,000 & 100 & 4,000 \
\hline
\end{array}$$ The accompanying table shows the aggregate demand and aggregate supply schedules for a hypothetical economy. The equilibrium price and output levels will be

Accepted Answer

A)  200 and $5,000. 
B)  200 and $6,000. 
C)  250 and $7,000. 
D)  300 and $8,000. 
A)  200 and $5,000. 
B)  200 and $6,000. 
C)  250 and $7,000. 
D)  300 and $8,000.

Question 11

Explain the rationale for the shape of the short-run aggregate supply curve in the immediate short
run.

Accepted Answer

Input prices are ﬁxed due to contractual

Question 12

Deﬁne aggregate supply.

Accepted Answer

Aggregate supply is a schedule

Question 13

If the price of crude oil decreased, then this would most likely

Accepted Answer

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

Question 14

A decrease in consumer 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 15

The foreign purchases, interest rate, and real-balances effects explain why the

Accepted Answer

A)  aggregate demand curve is downward sloping. 
B)  aggregate demand curve may shift to the left or right. 
C)  economy will adjust toward equilibrium. 
D)  aggregate expenditures schedule may shift up or down. 
A)  aggregate demand curve is downward sloping. 
B)  aggregate demand curve may shift to the left or right. 
C)  economy will adjust toward equilibrium. 
D)  aggregate expenditures schedule may shift up or down.

Question 16

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. If the per-unit price of raw materials rises from $4 to $8 and all else remains
Constant, the aggregate

Accepted Answer

A)  supply curve would shift to the left. 
B)  supply curve would shift to the right. 
C)  demand curve would shift to the left. 
D)  demand curve would shift to the right. 
A)  supply curve would shift to the left. 
B)  supply curve would shift to the right. 
C)  demand curve would shift to the left. 
D)  demand curve would shift to the right.

Question 17

Accepted Answer

A)  $\text { increases from } Q _ { 1 } \text { to } Q _ { 3 } \text { while the price level falls from } P _ { 2 } \text { to } P _ { 1 } \text {. }$ 
B)  $\text { increases from } Q _ { 1 } \text { to } Q _ { 2 } \text { while the price level falls from } P _ { 2 } \text { to } P _ { 1 } \text {. }$ 
C)  $\text { increases from } Q _ { 1 } \text { to } Q _ { 3 } \text { while the price level rises from } P _ { 1 } \text { to } P _ { 2 } \text {. }$ 
D)  $\text { increases from } Q _ { 1 } \text { to } Q _ { 2 } \text { while the price level rises from } P _ { 1 } \text { to } P _ { 2 } \text {. }$ 
A)  $\text { increases from } Q _ { 1 } \text { to } Q _ { 3 } \text { while the price level falls from } P _ { 2 } \text { to } P _ { 1 } \text {. }$ 
B)  $\text { increases from } Q _ { 1 } \text { to } Q _ { 2 } \text { while the price level falls from } P _ { 2 } \text { to } P _ { 1 } \text {. }$ 
C)  $\text { increases from } Q _ { 1 } \text { to } Q _ { 3 } \text { while the price level rises from } P _ { 1 } \text { to } P _ { 2 } \text {. }$ 
D)  $\text { increases from } Q _ { 1 } \text { to } Q _ { 2 } \text { while the price level rises from } P _ { 1 } \text { to } P _ { 2 } \text {. }$

Question 18

Changes in the national incomes of our trading partners would directly impact our

Accepted Answer

A)  consumption. 
B)  exports. 
C)  imports. 
D)  government spending. 
A)  consumption. 
B)  exports. 
C)  imports. 
D)  government spending.

Question 19

In the accompanying graph, which line might represent an aggregate demand curve?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 20

In the diagram, the economy's long-run aggregate supply curve is shown by line

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
A)  1. 
B)  2. 
C)  3. 
D)  4.

The long-run aggregate supply curve is upward sloping.

An increase in net exports will shift the AD curve to the

If the cost of resources decreases, then real domestic output will increase.

If aggregate demand decreases, and, as a result, real output and employment decline but the price level remains unchanged, it is most likely that

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. Given an increase in input price from $4 to $6, we would expect the Aggregate

Explain the reasoning behind the shape of the short-run aggregate supply curve in the short run.

The short-run aggregate supply curve

An increase in the price level reduces the real value of ﬁnancial assets with ﬁxed money values, and, as a result, the holders of these assets decrease their spending.

Explain the rationale for the shape of the short-run aggregate supply curve in the immediate short run.

Deﬁne aggregate supply.

If the price of crude oil decreased, then this would most likely

A decrease in consumer spending can be expected to shift the

The foreign purchases, interest rate, and real-balances effects explain why the

Changes in the national incomes of our trading partners would directly impact our

In the accompanying graph, which line might represent an aggregate demand curve?

In the diagram, the economy's long-run aggregate supply curve is shown by line

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

Exam 12: Aggregate Demand and Aggregate Supply

The long-run aggregate supply curve is upward sloping.

An increase in net exports will shift the AD curve to the

If the cost of resources decreases, then real domestic output will increase.

If aggregate demand decreases, and, as a result, real output and employment decline but the price level remains unchanged, it is most likely that

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. Given an increase in input price from $4 to $6, we would expect the Aggregate

Explain the reasoning behind the shape of the short-run aggregate supply curve in the short run.

The short-run aggregate supply curve

An increase in the price level reduces the real value of ﬁnancial assets with ﬁxed money values, and, as a result, the holders of these assets decrease their spending.

Explain the rationale for the shape of the short-run aggregate supply curve in the immediate short run.

Deﬁne aggregate supply.

If the price of crude oil decreased, then this would most likely

A decrease in consumer spending can be expected to shift the

The foreign purchases, interest rate, and real-balances effects explain why the

Changes in the national incomes of our trading partners would directly impact our

In the accompanying graph, which line might represent an aggregate demand curve?

In the diagram, the economy's long-run aggregate supply curve is shown by line

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