Question 1

Consider the graph shown here. The equilibrium price level is:

Accepted Answer

A) P3. 
B) P2. 
C) P1. 
D) P0. 
A) P3. 
B) P2. 
C) P1. 
D) P0.

Question 2

What is meant by the interest rate effect of a change in the aggregate price level, and why does it help explain the shape of the aggregate demand curve?

Accepted Answer

The answer of What is meant by the interest rate...

Question 3

Consider the graph shown here. The equilibrium level of GDP is:

Accepted Answer

A) Q0. 
B) Q1. 
C) Q2. 
D) Q3. 
A) Q0. 
B) Q1. 
C) Q2. 
D) Q3.

Question 4

The stock market rises consistently and reaches a record high. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework?

Accepted Answer

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

Question 5

(Figure: Aggregate Demand) Use Figure: Aggregate Demand. The quantity of output demanded at a price level is 120 is:

Accepted Answer

A) $9 trillion 
B) $9 trillion. 
C) $10 trillion 
D) $10 trillion. 
E) $11 trillion
F)$11 trillion.
G)$12 trillion
H)$12 trillion. 
A) $9 trillion 
B) $9 trillion. 
C) $10 trillion 
D) $10 trillion. 
E) $11 trillion
F)$11 trillion.
G)$12 trillion
H)$12 trillion.

Question 6

Expansionary monetary policy causes a:

Accepted Answer

A) right shift of the aggregate supply curve. 
B) left shift of the aggregate demand curve. 
C) right shift of the aggregate demand curve. 
D) movement along the same aggregate demand curve. 
A) right shift of the aggregate supply curve. 
B) left shift of the aggregate demand curve. 
C) right shift of the aggregate demand curve. 
D) movement along the same aggregate demand curve.

Question 7

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...

Question 8

In the AD-AS framework, macroeconomic equilibrium occurs when:

Accepted Answer

A) AS meets potential GDP. 
B) AD and AS intersect. 
C) AD meets potential GDP. 
D) the GDP deflator is equal to 100. 
A) AS meets potential GDP. 
B) AD and AS intersect. 
C) AD meets potential GDP. 
D) the GDP deflator is equal to 100.

Question 9

A previously enacted steel tariff is removed. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework for the country exporting steel?

Accepted Answer

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

Question 10

Suppose the economy is in a recession. A fiscal policy that would counteract contractionary pressures is a(n):

Accepted Answer

A) decrease in government transfer payments 
B) decrease in government transfer payments. 
C) increase in government purchases of goods and services 
D) increase in government purchases of goods and services. 
E) increase in tax rates
F)increase in tax rates.
G)decrease in interest rates.
H)decrease in interest rates 
A) decrease in government transfer payments 
B) decrease in government transfer payments. 
C) increase in government purchases of goods and services 
D) increase in government purchases of goods and services. 
E) increase in tax rates
F)increase in tax rates.
G)decrease in interest rates.
H)decrease in interest rates

Question 11

In 2019, South Africa's consumer confidence index dipped sharply. 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 12

A rise in prices leads to a:

Accepted Answer

A) movement up and to the right along the same aggregate supply curve. 
B) movement down and to the left along the same aggregate supply curve. 
C) right shift of the aggregate supply curve. 
D) left shift of the aggregate supply curve. 
A) movement up and to the right along the same aggregate supply curve. 
B) movement down and to the left along the same aggregate supply curve. 
C) right shift of the aggregate supply curve. 
D) left shift of the aggregate supply curve.

Question 13

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. Which graph shows the correct effect on prices and GDP when the central bank engages in contractionary monetary policy?

Accepted Answer

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

Question 14

The aggregate demand curve is negatively sloped in part because of the impact of the:

Accepted Answer

A) wealth effect of a change in the price level on consumer spending 
B) wealth effect of a change in the price level on consumer spending. 
C) interest rate effect of a change in the price level on government spending 
D) interest rate effect of a change in the price level on government spending. 
E) stickiness of nominal wages and salaries
F)stickiness of nominal wages and salaries.
G)flexibility of nominal wages and salaries
H)flexibility of nominal wages and salaries. 
A) wealth effect of a change in the price level on consumer spending 
B) wealth effect of a change in the price level on consumer spending. 
C) interest rate effect of a change in the price level on government spending 
D) interest rate effect of a change in the price level on government spending. 
E) stickiness of nominal wages and salaries
F)stickiness of nominal wages and salaries.
G)flexibility of nominal wages and salaries
H)flexibility of nominal wages and salaries.

Question 15

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. Which graph shows the correct effect on prices and GDP when the government engages in expansionary fiscal policy?

Accepted Answer

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

Question 16

The wealth effect is the:

Accepted Answer

A) inverse relationship between prices and consumption spending due to changes in real wealth. 
B) positive relationship between prices and consumption spending due to changes in real wealth. 
C) inverse relationship between real interest rates and consumption. 
D) positive relationship between real interest rates and consumption. 
A) inverse relationship between prices and consumption spending due to changes in real wealth. 
B) positive relationship between prices and consumption spending due to changes in real wealth. 
C) inverse relationship between real interest rates and consumption. 
D) positive relationship between real interest rates and consumption.

Question 17

(Figure: Aggregate Supply) Use Figure: Aggregate Supply. At point F, potential output is _____ than actual output, and unemployment is _____.

Accepted Answer

A) less; high 
B) less; high. 
C) less; low 
D) less; low. 
E) greater; high.
F)greater; high
G)greater; low.
H)greater; low 
A) less; high 
B) less; high. 
C) less; low 
D) less; low. 
E) greater; high.
F)greater; high
G)greater; low.
H)greater; low

Question 18

Ceteris paribus, a decrease in exports leads to a:

Accepted Answer

A) movement up and to the left along the same aggregate demand curve. 
B) movement down and to the right along the same aggregate demand curve. 
C) right shift of the aggregate demand curve. 
D) left shift of the aggregate demand curve. 
A) movement up and to the left along the same aggregate demand curve. 
B) movement down and to the right along the same aggregate demand curve. 
C) right shift of the aggregate demand curve. 
D) left shift of the aggregate demand curve.

Question 19

Minimum wages rise sharply in the economy. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework?

Accepted Answer

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

Question 20

The U.S. dollar appreciates. 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

Exam 33: Aggregate Demand and Aggregate Supply

Consider the graph shown here. The equilibrium price level is:

What is meant by the interest rate effect of a change in the aggregate price level, and why does it help explain the shape of the aggregate demand curve?

Consider the graph shown here. The equilibrium level of GDP is:

The stock market rises consistently and reaches a record high. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework?

(Figure: Aggregate Demand) Use Figure: Aggregate Demand. The quantity of output demanded at a price level is 120 is:

Expansionary monetary policy causes a:

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

In the AD-AS framework, macroeconomic equilibrium occurs when:

A previously enacted steel tariff is removed. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework for the country exporting steel?

Suppose the economy is in a recession. A fiscal policy that would counteract contractionary pressures is a(n):

In 2019, South Africa's consumer confidence index dipped sharply. Ceteris paribus, which of the graphs shows the correct effect on aggregate demand?

A rise in prices leads to a:

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. Which graph shows the correct effect on prices and GDP when the central bank engages in contractionary monetary policy?

The aggregate demand curve is negatively sloped in part because of the impact of the:

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. Which graph shows the correct effect on prices and GDP when the government engages in expansionary fiscal policy?

The wealth effect is the:

(Figure: Aggregate Supply) Use Figure: Aggregate Supply. At point F, potential output is _____ than actual output, and unemployment is _____.

Ceteris paribus, a decrease in exports leads to a:

Minimum wages rise sharply in the economy. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework?

The U.S. dollar appreciates. Ceteris paribus, which of the graphs shows the correct effect on aggregate demand?

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

(Figure: Aggregate Supply) Use Figure: Aggregate Supply. At point F, potential output is _ than actual output, and unemployment is _.