Question 1

The intersection of aggregate supply and aggregate demand determines the equilibrium price level and equilibrium real output.

Accepted Answer

A) True 
 B)False

Question 2

Which one of the following correctly describes the slope of the aggregate supply curve?

Accepted Answer

A)  Because individual supply curves slope up, the aggregate supply curve slopes down. 
B)  The slope of the aggregate supply curve is determined by the willingness of consumers to substitute between goods in response to changes in their relative prices. 
C)  The aggregate supply curve slopes up to reflect the fact that firms are willing to increase output when their selling prices rise but wages do not. 
D)  The aggregate supply curve slopes up to reflect the fact that firms are willing to increase output when wages rise but their selling prices do not. 
A)  Because individual supply curves slope up, the aggregate supply curve slopes down. 
B)  The slope of the aggregate supply curve is determined by the willingness of consumers to substitute between goods in response to changes in their relative prices. 
C)  The aggregate supply curve slopes up to reflect the fact that firms are willing to increase output when their selling prices rise but wages do not. 
D)  The aggregate supply curve slopes up to reflect the fact that firms are willing to increase output when wages rise but their selling prices do not.

Question 3

The dollar value of total output is equal to the total monetary value of all final goods and services produced.

Accepted Answer

A) True 
 B)False

Question 4

The open economy effect and the real balance effect are two of the reasons why

Accepted Answer

A)  higher price levels increase long-run aggregate supply. 
B)  the aggregate demand curve slopes downward. 
C)  capital formation does not contribute to economic growth in poor countries. 
D)  growth of the labor force does not contribute to economic growth in wealthy countries. 
A)  higher price levels increase long-run aggregate supply. 
B)  the aggregate demand curve slopes downward. 
C)  capital formation does not contribute to economic growth in poor countries. 
D)  growth of the labor force does not contribute to economic growth in wealthy countries.

Question 5

If planned expenditures exceed planned output, _________ will be depleted.

Accepted Answer

The answer of If planned expenditures exceed planned output, _________...

Question 6

Which of the following will NOT shift the aggregate demand curve?

Accepted Answer

A)  A shift in the aggregate supply curve 
B)  An increase in tax rates 
C)  A decrease in tax rates 
D)  A change in economic conditions in other countries 
A)  A shift in the aggregate supply curve 
B)  An increase in tax rates 
C)  A decrease in tax rates 
D)  A change in economic conditions in other countries

Question 7

Which of the following is true about how the aggregate demand curve differs from the individual's demand curve?

Accepted Answer

A)  The individual's demand curve shows the relationship between price and quantity demanded while the aggregate demand curve is not influenced by price. 
B)  For the individual's demand curve equilibrium is determined by the intersection of supply and demand while for the aggregate demand curve equilibrium is determined by the real balance effect. 
C)  The individual's demand curve is just for an individual while the aggregate demand curve looks at the entire circular flow of income. 
D)  The individual's demand curve will shift when there is a change in taxes while the aggregate demand curve will not. 
A)  The individual's demand curve shows the relationship between price and quantity demanded while the aggregate demand curve is not influenced by price. 
B)  For the individual's demand curve equilibrium is determined by the intersection of supply and demand while for the aggregate demand curve equilibrium is determined by the real balance effect. 
C)  The individual's demand curve is just for an individual while the aggregate demand curve looks at the entire circular flow of income. 
D)  The individual's demand curve will shift when there is a change in taxes while the aggregate demand curve will not.

Question 8

Decreases in aggregate demand result in

Accepted Answer

A)  an increase in the price level and a reduction in real output. 
B)  an increase in the price level and an increase in real output. 
C)  a decrease in the price level and a reduction in real output. 
D)  a decrease in the price level and an increase in real output. 
A)  an increase in the price level and a reduction in real output. 
B)  an increase in the price level and an increase in real output. 
C)  a decrease in the price level and a reduction in real output. 
D)  a decrease in the price level and an increase in real output.

Question 9

The aggregate demand curve shows the relationship between

Accepted Answer

A)  the price level and the level of real GDP. 
B)  stock market prices and interest rates. 
C)  employment levels and interest rates. 
D)  employment levels and rates of profit. 
A)  the price level and the level of real GDP. 
B)  stock market prices and interest rates. 
C)  employment levels and interest rates. 
D)  employment levels and rates of profit.

Question 10

If an aging population results in increased numbers of retirements so that the labor force participation rate declines, what will be the economic effect?

Accepted Answer

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

Question 11

As economic conditions improve in other countries, aggregate demand here will increase.

Accepted Answer

A) True 
 B)False

Question 12

What is depicted on the two axes of the aggregate demand-aggregate supply model?

Accepted Answer

The price

Question 13

The aggregate demand curve is

Accepted Answer

A)  horizontal if the economy is experiencing full employment. 
B)  vertical if the economy is experiencing full employment. 
C)  a representation of the spending plans of consumers, firms, and governments. 
D)  a representation of the willingness of firms to expand production as the price level rises. 
A)  horizontal if the economy is experiencing full employment. 
B)  vertical if the economy is experiencing full employment. 
C)  a representation of the spending plans of consumers, firms, and governments. 
D)  a representation of the willingness of firms to expand production as the price level rises.

Question 14

Increases in aggregate demand result in

Accepted Answer

A)  an increase in the price level and a reduction in real output. 
B)  an increase in the price level and an increase in real output. 
C)  a decrease in the price level and a reduction in real output. 
D)  a decrease in the price level and an increase in real output. 
A)  an increase in the price level and a reduction in real output. 
B)  an increase in the price level and an increase in real output. 
C)  a decrease in the price level and a reduction in real output. 
D)  a decrease in the price level and an increase in real output.

Question 15

An increase in aggregate demand causes the price level to _________ .

Accepted Answer

The answer of An increase in aggregate demand causes the...

Question 16

The aggregate demand curve would shift to the right as a result of

Accepted Answer

A)  a drop in the price level. 
B)  tax increases. 
C)  a reduction in economic uncertainty. 
D)  an increase in energy prices. 
A)  a drop in the price level. 
B)  tax increases. 
C)  a reduction in economic uncertainty. 
D)  an increase in energy prices.

Question 17

The effect of an increase in aggregate supply is to lower the price level and to decrease real output.

Accepted Answer

A) True 
 B)False

Question 18

When an increase in the price level reduces the purchasing power of financial assets

Accepted Answer

A)  the amount of real goods and services people can purchase declines. 
B)  people work harder to regain the same initial purchasing power. 
C)  the aggregate demand curve shifts left. 
D)  the aggregate demand curve shifts right. 
A)  the amount of real goods and services people can purchase declines. 
B)  people work harder to regain the same initial purchasing power. 
C)  the aggregate demand curve shifts left. 
D)  the aggregate demand curve shifts right.

Question 19

A decrease in the exchange value of the dollar will

Accepted Answer

A)  lower the nominal price of imported goods. 
B)  raise the nominal price of imported goods. 
C)  not affect the household sector. 
D)  not affect the business sector. 
A)  lower the nominal price of imported goods. 
B)  raise the nominal price of imported goods. 
C)  not affect the household sector. 
D)  not affect the business sector.

Question 20

As the U.S. population ages and more people retire from the labor force, aggregate supply decreases.

Accepted Answer

A) True 
 B)False

The intersection of aggregate supply and aggregate demand determines the equilibrium price level and equilibrium real output.

Which one of the following correctly describes the slope of the aggregate supply curve?

The dollar value of total output is equal to the total monetary value of all final goods and services produced.

The open economy effect and the real balance effect are two of the reasons why

If planned expenditures exceed planned output, _________ will be depleted.

Which of the following will NOT shift the aggregate demand curve?

Which of the following is true about how the aggregate demand curve differs from the individual's demand curve?

Decreases in aggregate demand result in

The aggregate demand curve shows the relationship between

If an aging population results in increased numbers of retirements so that the labor force participation rate declines, what will be the economic effect?

As economic conditions improve in other countries, aggregate demand here will increase.

What is depicted on the two axes of the aggregate demand-aggregate supply model?

The aggregate demand curve is

Increases in aggregate demand result in

An increase in aggregate demand causes the price level to _________ .

The aggregate demand curve would shift to the right as a result of

The effect of an increase in aggregate supply is to lower the price level and to decrease real output.

When an increase in the price level reduces the purchasing power of financial assets

A decrease in the exchange value of the dollar will

As the U.S. population ages and more people retire from the labor force, aggregate supply decreases.

Economics and the World of Scarcity

The United States Within the World Economy

Demand and Supply

Consumer Decision Making and Consumer Reaction to Price Changes

The Firm: Production and Cost

The Two Extremes: Perfect Competition and Pure Monopoly

In Between the Extremes: Imperfect Competition

Market and Government Failures

Labor Economics

Unemployment, Inflation, and the Business Cycle

The Fiscal Policy Approach to Stabilization

Money and Our Banking System

The Monetary Policy Approach to Stabilization

How Economies Grow

Trading With Other Nations

Financing World Trade

Filters

Exam 11: Aggregate Demand and Supply

The intersection of aggregate supply and aggregate demand determines the equilibrium price level and equilibrium real output.

Which one of the following correctly describes the slope of the aggregate supply curve?

The dollar value of total output is equal to the total monetary value of all final goods and services produced.

The open economy effect and the real balance effect are two of the reasons why

If planned expenditures exceed planned output, _________ will be depleted.

Which of the following will NOT shift the aggregate demand curve?

Which of the following is true about how the aggregate demand curve differs from the individual's demand curve?

Decreases in aggregate demand result in

The aggregate demand curve shows the relationship between

If an aging population results in increased numbers of retirements so that the labor force participation rate declines, what will be the economic effect?

As economic conditions improve in other countries, aggregate demand here will increase.

What is depicted on the two axes of the aggregate demand-aggregate supply model?

The aggregate demand curve is

Increases in aggregate demand result in

An increase in aggregate demand causes the price level to _________ .

The aggregate demand curve would shift to the right as a result of

The effect of an increase in aggregate supply is to lower the price level and to decrease real output.

When an increase in the price level reduces the purchasing power of financial assets

A decrease in the exchange value of the dollar will

As the U.S. population ages and more people retire from the labor force, aggregate supply decreases.

Economics and the World of Scarcity

The United States Within the World Economy

Demand and Supply

Consumer Decision Making and Consumer Reaction to Price Changes

The Firm: Production and Cost

The Two Extremes: Perfect Competition and Pure Monopoly

In Between the Extremes: Imperfect Competition

Market and Government Failures

Labor Economics

Unemployment, Inflation, and the Business Cycle

The Fiscal Policy Approach to Stabilization

Money and Our Banking System

The Monetary Policy Approach to Stabilization

How Economies Grow

Trading With Other Nations

Financing World Trade

Filters