Question 1

​ Along the short-run supply curve (SRAS), a decrease in the aggregate demand curve will decrease:

Accepted Answer

A)  ​both the price level and real GDP. 
B)  ​real GDP without raising the price level. 
C)  ​the price level without affecting real GDP. 
D)  ​the price level but reduce real GDP. 
A)  ​both the price level and real GDP. 
B)  ​real GDP without raising the price level. 
C)  ​the price level without affecting real GDP. 
D)  ​the price level but reduce real GDP.

Question 2

Suppose two variables are inversely related. If one variable rises, then the other variable:

Accepted Answer

A)  also rises. 
B)  falls. 
C)  remains unchanged. 
D)  reacts unpredictably. 
A)  also rises. 
B)  falls. 
C)  remains unchanged. 
D)  reacts unpredictably.

Question 3

Exhibit 1A-4 Straight line
 
Straight line A-D in Exhibit 1A-4 shows that:

Accepted Answer

A)  as the X value increases by 80, the Y value increases by 40 so the slope is 2. 
B)  as the Y value increases by 40, the X value increases by 80 so the slope is 1/2. 
C)  increasing values for X do not affect the value of Y. 
D)  increasing values for Y do not affect the value of X. 
A)  as the X value increases by 80, the Y value increases by 40 so the slope is 2. 
B)  as the Y value increases by 40, the X value increases by 80 so the slope is 1/2. 
C)  increasing values for X do not affect the value of Y. 
D)  increasing values for Y do not affect the value of X.

Question 4

Moving along a budget line, the prices of both goods:

Accepted Answer

A)  vary and the consumer's budget is held constant. 
B)  are held constant and the consumer's budget varies. 
C)  and the consumer's budget are held constant. 
D)  and the consumer's budget vary. 
A)  vary and the consumer's budget is held constant. 
B)  are held constant and the consumer's budget varies. 
C)  and the consumer's budget are held constant. 
D)  and the consumer's budget vary.

Question 5

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss
 
As shown in Exhibit 3A-2, if the quantity supplied of good X per year is Q1, the result is a deadweight loss represented by area:

Accepted Answer

A)  BEG. 
B)  CBEFD. 
C)  EGH. 
D)  BEF. 
A)  BEG. 
B)  CBEFD. 
C)  EGH. 
D)  BEF.

Question 6

An explanation for why the short-run aggregate supply curve is upward-sloping is because:

Accepted Answer

A)  ​the quantity of real output supplied is inversely related to the aggregate supply curve. 
B)  ​nominal incomes are fixed. 
C)  ​the capital-output ratio is fixed. 
D)  ​an increase in price will increase the marginal aggregate output.​ 
A)  ​the quantity of real output supplied is inversely related to the aggregate supply curve. 
B)  ​nominal incomes are fixed. 
C)  ​the capital-output ratio is fixed. 
D)  ​an increase in price will increase the marginal aggregate output.​

Question 7

An indifference map states:

Accepted Answer

A)  indifference curves farther from the origin yield higher levels of total utility. 
B)  that the consumer's income varies with the level of the indifference curve. 
C)  indifference curves closer to the origin yield higher levels of total utility. 
D)  that the points on either parts of indifference curves are preferred to the midpoint. 
A)  indifference curves farther from the origin yield higher levels of total utility. 
B)  that the consumer's income varies with the level of the indifference curve. 
C)  indifference curves closer to the origin yield higher levels of total utility. 
D)  that the points on either parts of indifference curves are preferred to the midpoint.

Question 8

​
Exhibit 10A-3 Macro AD-AS Model
 
In Exhibit 10A-3, the level of real GDP associated with Y1: ​

Accepted Answer

A)  ​is equal to potential real GDP. 
B)  ​is an inflationary gap real GDP. 
C)  ​is a long-run equilibrium. 
D)  ​is caused by flexible wages and prices. 
A)  ​is equal to potential real GDP. 
B)  ​is an inflationary gap real GDP. 
C)  ​is a long-run equilibrium. 
D)  ​is caused by flexible wages and prices.

Question 9

Exhibit 6A-4 Consumer equilibrium
​
 
Given the budget line and indifference curves shown in Exhibit 6A-4, at point D:

Accepted Answer

A)  Px exceeds Py. 
B)  MRS = Px / Py. 
C)  MUx = MUy. 
D)  MRS = Py / Px. 
A)  Px exceeds Py. 
B)  MRS = Px / Py. 
C)  MUx = MUy. 
D)  MRS = Py / Px.

Question 10

Beginning from the full-employment level of real GDP, an increase in one of the components of the aggregate demand curve will increase the:

Accepted Answer

A)  average level of prices (CPI). 
B)  unemployment rate. 
C)  natural level of real GDP. 
D)  level of investment spending. 
A)  average level of prices (CPI). 
B)  unemployment rate. 
C)  natural level of real GDP. 
D)  level of investment spending.

Question 11

Consumers always prefer indifference curves that are ____ the origin.

Accepted Answer

A)  closer to 
B)  tangent to 
C)  farther from 
D)  concave relative to 
A)  closer to 
B)  tangent to 
C)  farther from 
D)  concave relative to

Question 12

Different points along a downward-sloping demand curve come from

Accepted Answer

A)  tangencies between indifference curves and budget lines that represent different prices of the good. 
B)  tangencies between indifference curves and budget lines that represent different income levels. 
C)  different points along any one budget line when the prices of the goods are held constant. 
D)  different points along any one indifference curve when the prices of the goods are held constant. 
A)  tangencies between indifference curves and budget lines that represent different prices of the good. 
B)  tangencies between indifference curves and budget lines that represent different income levels. 
C)  different points along any one budget line when the prices of the goods are held constant. 
D)  different points along any one indifference curve when the prices of the goods are held constant.

Question 13

Suppose Gizmo Inc. is willing to sell one gizmo for $10, a second gizmo for $12, a third for $14, and a fourth for $20, and the market price is $20. What is Gizmo Inc.'s producer surplus?

Accepted Answer

A)  $56 
B)  $24 
C)  $20 
D)  $10 
A)  $56 
B)  $24 
C)  $20 
D)  $10

Question 14

Which of the following is used to illustrate an independent relationship between two variables?

Accepted Answer

A)  An upward-sloping curve 
B)  A downward-sloping curve 
C)  A hill-shaped curve 
D)  A horizontal or vertical line 
A)  An upward-sloping curve 
B)  A downward-sloping curve 
C)  A hill-shaped curve 
D)  A horizontal or vertical line

Question 15

​ ​ Exhibit 16A-2 Macro AD/AS Models
​
 
As shown in Panel (a) of Exhibit 16A-2, assume the economy adopts a classical nonintervention policy. Which of the following would cause the economy to self-correct?

Accepted Answer

A)  ​Competition among firms for workers increases the nominal wage and SRAS shifts rightward. 
B)  ​Long-run equilibrium will be established at Y 1  and P 2 . 
C)  ​Long-run equilibrium will be established at Y 1  and P 3 . 
D)  ​Competition among unemployed workers decreases nominal wages and SRAS shifts rightward. 
A)  ​Competition among firms for workers increases the nominal wage and SRAS shifts rightward. 
B)  ​Long-run equilibrium will be established at Y 1  and P 2 . 
C)  ​Long-run equilibrium will be established at Y 1  and P 3 . 
D)  ​Competition among unemployed workers decreases nominal wages and SRAS shifts rightward.

Question 16

Which of the following statements is correct?

Accepted Answer

A)  Slope is the ratio of the vertical change (the rise or fall) to the horizontal change (the run). 
B)  A direct relationship is one in which two variables change in the opposite direction. 
C)  An inverse relationship is one in which two variables change in same directions. 
D)  An independent relationship is one in which two variables are upward sloping. 
A)  Slope is the ratio of the vertical change (the rise or fall) to the horizontal change (the run). 
B)  A direct relationship is one in which two variables change in the opposite direction. 
C)  An inverse relationship is one in which two variables change in same directions. 
D)  An independent relationship is one in which two variables are upward sloping.

Question 17

In the short run, a price increase in the goods and services market measured by the CPI will:

Accepted Answer

A)  increase the purchasing power of money. 
B)  improve producer profits and, thereby, induce suppliers to expand output. 
C)  increase resource prices, lower profits, and lead to a decline in output. 
D)  reduce the natural rate of unemployment. 
A)  increase the purchasing power of money. 
B)  improve producer profits and, thereby, induce suppliers to expand output. 
C)  increase resource prices, lower profits, and lead to a decline in output. 
D)  reduce the natural rate of unemployment.

Question 18

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss
 
As shown in Exhibit 3A-2, if the market price falls from P2 to P3, then:

Accepted Answer

A)  consumer surplus increases. 
B)  producer surplus increases. 
C)  deadweight loss increases. 
D)  the market moves to an equilibrium price and quantity. 
A)  consumer surplus increases. 
B)  producer surplus increases. 
C)  deadweight loss increases. 
D)  the market moves to an equilibrium price and quantity.

Question 19

In the short run, an increase in the price level causes:

Accepted Answer

A)  a rightward shift in the aggregate demand curve. 
B)  a leftward shift in the short-run aggregate supply curve. 
C)  a rightward shift in the short-run aggregate supply curve. 
D)  a movement upward along the short-run aggregate supply curve. 
A)  a rightward shift in the aggregate demand curve. 
B)  a leftward shift in the short-run aggregate supply curve. 
C)  a rightward shift in the short-run aggregate supply curve. 
D)  a movement upward along the short-run aggregate supply curve.

Question 20

Suppose Sue's buys a good for $60 on eBay. If the consumer surplus from the sale is $25, Sue would have been willing to pay:

Accepted Answer

A)  $35. 
B)  $25. 
C)  $60. 
D)  $85. 
A)  $35. 
B)  $25. 
C)  $60. 
D)  $85.

Exam 31: Understanding Direct and Inverse Relationships between Variables

​ Along the short-run supply curve (SRAS), a decrease in the aggregate demand curve will decrease:

Suppose two variables are inversely related. If one variable rises, then the other variable:

Exhibit 1A-4 Straight line Straight line A-D in Exhibit 1A-4 shows that:

Moving along a budget line, the prices of both goods:

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss As shown in Exhibit 3A-2, if the quantity supplied of good X per year is Q1, the result is a deadweight loss represented by area:

An explanation for why the short-run aggregate supply curve is upward-sloping is because:

An indifference map states:

​ Exhibit 10A-3 Macro AD-AS Model In Exhibit 10A-3, the level of real GDP associated with Y1: ​

Exhibit 6A-4 Consumer equilibrium ​ Given the budget line and indifference curves shown in Exhibit 6A-4, at point D:

Beginning from the full-employment level of real GDP, an increase in one of the components of the aggregate demand curve will increase the:

Consumers always prefer indifference curves that are ____ the origin.

Different points along a downward-sloping demand curve come from

Suppose Gizmo Inc. is willing to sell one gizmo for $10, a second gizmo for $12, a third for $14, and a fourth for $20, and the market price is $20. What is Gizmo Inc.'s producer surplus?

Which of the following is used to illustrate an independent relationship between two variables?

​ ​ Exhibit 16A-2 Macro AD/AS Models ​ As shown in Panel (a) of Exhibit 16A-2, assume the economy adopts a classical nonintervention policy. Which of the following would cause the economy to self-correct?

Which of the following statements is correct?

In the short run, a price increase in the goods and services market measured by the CPI will:

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss As shown in Exhibit 3A-2, if the market price falls from P2 to P3, then:

In the short run, an increase in the price level causes:

Suppose Sue's buys a good for $60 on eBay. If the consumer surplus from the sale is $25, Sue would have been willing to pay:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Filters

Along the short-run supply curve (SRAS), a decrease in the aggregate demand curve will decrease:

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss As shown in Exhibit 3A-2, if the quantity supplied of good X per year is Q₁, the result is a deadweight loss represented by area:

Exhibit 10A-3 Macro AD-AS Model In Exhibit 10A-3, the level of real GDP associated with Y₁:

Exhibit 6A-4 Consumer equilibrium Given the budget line and indifference curves shown in Exhibit 6A-4, at point D:

Exhibit 16A-2 Macro AD/AS Models As shown in Panel (a) of Exhibit 16A-2, assume the economy adopts a classical nonintervention policy. Which of the following would cause the economy to self-correct?

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss As shown in Exhibit 3A-2, if the market price falls from P₂ to P₃, then: