Question 1

The level of output that is produced when all resources are fully employed is known as _____ output.

Accepted Answer

A) recognized 
B) recognized. 
C) structural 
D) structural. 
E) potential.
F)potential
G)balanced budget.
H)balanced budget 
A) recognized 
B) recognized. 
C) structural 
D) structural. 
E) potential.
F)potential
G)balanced budget.
H)balanced budget

Question 2

Contractionary monetary policy _____ consumption, investment, and net exports; _____ aggregate expenditures; and _____ aggregate demand.

Accepted Answer

A) increases; boosts; raises 
B) decreases; boosts; raises 
C) increases; lowers; lowers 
D) decreases; lowers; lowers 
A) increases; boosts; raises 
B) decreases; boosts; raises 
C) increases; lowers; lowers 
D) decreases; lowers; lowers

Question 3

Consumption is $14.2 trillion, investment is $4.8 trillion, government expenditure is $4.1 trillion, and net exports are $1.2 trillion. Based on these statistics, what is aggregate expenditure?

Accepted Answer

The answer of Consumption is $14.2 trillion, investment is $4.8...

Question 4

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when there is a sharp increase in oil prices? Illustrate your answer using a graph of the AD-AS framework.

Accepted Answer

The answer of You are an analyst preparing a forecast...

Question 5

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when productivity increases in the economy?

Accepted Answer

A) Both prices and GDP increase. 
B) Both prices and GDP decrease. 
C) Prices increase, and GDP decreases. 
D) Prices decrease, and GDP increases. 
A) Both prices and GDP increase. 
B) Both prices and GDP decrease. 
C) Prices increase, and GDP decreases. 
D) Prices decrease, and GDP increases.

Question 6

Given your knowledge of how aggregate supply changes from the very short run to the long run, what is the medium run impact of a decrease in aggregate demand?

Accepted Answer

A) All prices adjust, and the economy returns to long-run potential. 
B) There is a slow fall in prices as the short-run aggregate supply begins to have a positive slope, and the initial decline in output will moderate. 
C) There is a sharp fall in prices in the economy as business hurriedly lower prices to try to boost sales. 
D) There is a recession as output falls sharply, and prices will not have had time to adjust. 
A) All prices adjust, and the economy returns to long-run potential. 
B) There is a slow fall in prices as the short-run aggregate supply begins to have a positive slope, and the initial decline in output will moderate. 
C) There is a sharp fall in prices in the economy as business hurriedly lower prices to try to boost sales. 
D) There is a recession as output falls sharply, and prices will not have had time to adjust.

Question 7

Suppose that Mongolian government engages in contractionary fiscal policy. Ceteris paribus, which of the graphs shows the correct effect in the AD-AS framework?

Accepted Answer

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

Question 8

Suppose that the Mexican government lowers personal income tax rates. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework in Mexico?

Accepted Answer

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

Question 9

In May 2019, worries about U.S. tariffs on China caused the Chinese stock market to fall by 5.5%. Ceteris paribus, which of the graphs shows the correct effect on aggregate demand?

Accepted Answer

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

Question 10

How does an increase in asset prices affect aggregate demand in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

Accepted Answer

The answer of How does an increase in asset prices...

Question 11

On a macroeconomic scale, demand and supply are represented by:

Accepted Answer

A) markets and the government. 
B) government spending and taxation. 
C) consumption and investment. 
D) aggregate demand and aggregate supply. 
A) markets and the government. 
B) government spending and taxation. 
C) consumption and investment. 
D) aggregate demand and aggregate supply.

Question 12

How do changes in each of these variables affect aggregate demand in Germany?
(i) Business confidence decreases in Germany.
(ii) Germany's trading partners experience increased economic growth.
(iii) Unemployment insurance increases in Germany.

Accepted Answer

The answer of How do changes in each of these...

Question 13

Consumption is $13.7 trillion, investment is $4 trillion, government expenditure is $5 trillion, and net exports are -$3 trillion. Based on these statistics, what is aggregate expenditure?

Accepted Answer

The answer of Consumption is $13.7 trillion, investment is $4...

Question 14

Planned investment refers to the:

Accepted Answer

A) total investment. 
B) intentional expenditures by companies on capital goods such as factories, machinery, and software. 
C) total purchases of inputs by companies. 
D) spending on capital imports by an economy. 
A) total investment. 
B) intentional expenditures by companies on capital goods such as factories, machinery, and software. 
C) total purchases of inputs by companies. 
D) spending on capital imports by an economy.

Question 15

Macroeconomic equilibrium occurs where:

Accepted Answer

A) aggregate demand intersects with aggregate supply. 
B) the price level in the economy is at the lowest possible level. 
C) aggregate demand is larger than aggregate supply. 
D) the quantity of output that buyers plan to buy is less than the quantity of output produced in the economy. 
A) aggregate demand intersects with aggregate supply. 
B) the price level in the economy is at the lowest possible level. 
C) aggregate demand is larger than aggregate supply. 
D) the quantity of output that buyers plan to buy is less than the quantity of output produced in the economy.

Question 16

The international trade effect is the:

Accepted Answer

A) inverse relationship between prices and investment. 
B) positive relationship between prices and investment. 
C) inverse relationship between domestic prices and net exports. 
D) positive relationship between domestic prices and net exports. 
A) inverse relationship between prices and investment. 
B) positive relationship between prices and investment. 
C) inverse relationship between domestic prices and net exports. 
D) positive relationship between domestic prices and net exports.

Question 17

Besides consumption, the component(s) of aggregate demand is/are:

Accepted Answer

A) planned investment. 
B) planned investment 
C) planned investment and government expenditures 
D) planned investment and government expenditures. 
E) planned investment and net exports
F)planned investment and net exports.
G)planned investment, government expenditures, and net exports
H)planned investment, government expenditures, and net exports. 
A) planned investment. 
B) planned investment 
C) planned investment and government expenditures 
D) planned investment and government expenditures. 
E) planned investment and net exports
F)planned investment and net exports.
G)planned investment, government expenditures, and net exports
H)planned investment, government expenditures, and net exports.

Question 18

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when the Federal Reserve engages in expansionary monetary policy? Illustrate your answer using a graph of the AD-AS framework.

Accepted Answer

The answer of You are an analyst preparing a forecast...

Question 19

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when corporate taxes rise in the economy?

Accepted Answer

A) Both prices and GDP increase. 
B) Both prices and GDP decrease. 
C) Prices increase, and GDP decreases. 
D) Prices decrease, and GDP increases. 
A) Both prices and GDP increase. 
B) Both prices and GDP decrease. 
C) Prices increase, and GDP decreases. 
D) Prices decrease, and GDP increases.

Question 20

What is meant by sticky wages, and how do they explain the shape of the short-run aggregate supply curve?

Accepted Answer

The answer of What is meant by sticky wages, and...

Exam 33: Aggregate Demand and Aggregate Supply

The level of output that is produced when all resources are fully employed is known as _____ output.

Contractionary monetary policy _____ consumption, investment, and net exports; _____ aggregate expenditures; and _____ aggregate demand.

Consumption is $14.2 trillion, investment is $4.8 trillion, government expenditure is $4.1 trillion, and net exports are $1.2 trillion. Based on these statistics, what is aggregate expenditure?

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when there is a sharp increase in oil prices? Illustrate your answer using a graph of the AD-AS framework.

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when productivity increases in the economy?

Given your knowledge of how aggregate supply changes from the very short run to the long run, what is the medium run impact of a decrease in aggregate demand?

Suppose that Mongolian government engages in contractionary fiscal policy. Ceteris paribus, which of the graphs shows the correct effect in the AD-AS framework?

Suppose that the Mexican government lowers personal income tax rates. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework in Mexico?

In May 2019, worries about U.S. tariffs on China caused the Chinese stock market to fall by 5.5%. Ceteris paribus, which of the graphs shows the correct effect on aggregate demand?

How does an increase in asset prices affect aggregate demand in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

On a macroeconomic scale, demand and supply are represented by:

How do changes in each of these variables affect aggregate demand in Germany? (i) Business confidence decreases in Germany. (ii) Germany's trading partners experience increased economic growth. (iii) Unemployment insurance increases in Germany.

Consumption is $13.7 trillion, investment is $4 trillion, government expenditure is $5 trillion, and net exports are -$3 trillion. Based on these statistics, what is aggregate expenditure?

Planned investment refers to the:

Macroeconomic equilibrium occurs where:

The international trade effect is the:

Besides consumption, the component(s) of aggregate demand is/are:

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when the Federal Reserve engages in expansionary monetary policy? Illustrate your answer using a graph of the AD-AS framework.

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when corporate taxes rise in the economy?

What is meant by sticky wages, and how do they explain the shape of the short-run aggregate supply curve?

The Core Principles of Economics

Demand: Thinking Like a Buyer

Supply: Thinking Like a Seller

Equilibrium: Where Supply Meets Demand

Elasticity: Measuring Responsiveness

When Governments Intervene in Markets

Welfare and Efficiency

Gains From Trade

International Trade

Externalities and Public Goods

Labor Demand and Supply

Wages, Workers, and Management

Inequality, Social Insurance, and Redistribution

Market Structure and Market Power

Entry, Exit, and Long-Run Profitability

Business Strategy

Sophisticated Pricing Strategies

Game Theory and Strategic Choices

Decisions Involving Uncertainty

Decisions With Private Information

Sizing up the Economy Using Gdp

Economic Growth

Unemployment

Inflation and Money

Consumption and Saving

Investment

The Financial Sector

International Finance and the Exchange Rate

Business Cycles

IS-MP Analysis: Interest Rates and Output

Phillips Curve

The Fed Model: Linking Interest Rates, Output, and Inflation

Monetary Policy

Government Spending, Taxes, and Fiscal Policy

Appendix: Aggregate Expenditure and the Multiplier

Filters

Contractionary monetary policy ___ consumption, investment, and net exports; _ aggregate expenditures; and ___ aggregate demand.