Question 1

Everything else remaining the same,the short-run aggregate supply curve shifts rightward if

Accepted Answer

A) the money wage rate increases. 
B) aggregate demand increases. 
C) the full-employment quantity of labour increases. 
D) factor prices increase. 
E) the quantity of capital decreases. 
A) the money wage rate increases. 
B) aggregate demand increases. 
C) the full-employment quantity of labour increases. 
D) factor prices increase. 
E) the quantity of capital decreases. C

Question 2

When an economy is operating on its long-run aggregate supply curve,

Accepted Answer

A) the actual inflation rate is greater than the anticipated inflation rate. 
B) the actual unemployment rate equals the natural unemployment rate. 
C) unemployment will fall to an unusually low rate that is not likely to last into the future. 
D) real GDP demanded exceeds real GDP supplied. 
E) inflation must be positive. 
A) the actual inflation rate is greater than the anticipated inflation rate. 
B) the actual unemployment rate equals the natural unemployment rate. 
C) unemployment will fall to an unusually low rate that is not likely to last into the future. 
D) real GDP demanded exceeds real GDP supplied. 
E) inflation must be positive. B

Question 3

The quantity of real GDP demanded is the sum of real consumption expenditure (C),investment (I),

Accepted Answer

A) government expenditure (G), exports (X), and imports (M). 
B) government expenditure (G), and exports (X)minus imports (M). 
C) exports (X), and imports (M). 
D) and exports (X)minus imports (M). 
E) and government expenditure (G). 
A) government expenditure (G), exports (X), and imports (M). 
B) government expenditure (G), and exports (X)minus imports (M). 
C) exports (X), and imports (M). 
D) and exports (X)minus imports (M). 
E) and government expenditure (G). B

Question 4

Which one of the following newspaper quotations describes a rightward shift of the LAS curve?

Accepted Answer

A) "The decrease in consumer spending may lead to a recession." 
B) "The increase in consumer spending is expected to lead to inflation, without any increase in real GDP." 
C) "Recent higher wage settlements are expected to cause higher inflation this year." 
D) "Growth has been unusually high the last few years due to more women entering the work force." 
E) "The recent tornadoes destroyed many factories in Calgary and Edmonton." 
A) "The decrease in consumer spending may lead to a recession." 
B) "The increase in consumer spending is expected to lead to inflation, without any increase in real GDP." 
C) "Recent higher wage settlements are expected to cause higher inflation this year." 
D) "Growth has been unusually high the last few years due to more women entering the work force." 
E) "The recent tornadoes destroyed many factories in Calgary and Edmonton."

Question 5

Use the figure below to answer the following questions.
   
Figure 26.3.5
-Refer to Figure 26.3.5.At point B the economy has

Accepted Answer

A) an inflationary gap with real GDP in excess of potential GDP. 
B) an inflationary gap with real GDP less than potential GDP. 
C) a recessionary gap with real GDP in excess of potential GDP. 
D) a recessionary gap with real GDP less than potential GDP. 
E) neither an inflationary gap nor a recessionary gap. 
A) an inflationary gap with real GDP in excess of potential GDP. 
B) an inflationary gap with real GDP less than potential GDP. 
C) a recessionary gap with real GDP in excess of potential GDP. 
D) a recessionary gap with real GDP less than potential GDP. 
E) neither an inflationary gap nor a recessionary gap.

Question 6

A technological advance shifts

Accepted Answer

A) both SAS and AD rightward. 
B) both SAS and LAS leftward. 
C) SAS rightward but leaves LAS unchanged. 
D) LAS rightward but leaves SAS unchanged. 
E) both SAS and LAS rightward. 
A) both SAS and AD rightward. 
B) both SAS and LAS leftward. 
C) SAS rightward but leaves LAS unchanged. 
D) LAS rightward but leaves SAS unchanged. 
E) both SAS and LAS rightward.

Question 7

Which of the following does not change short-run aggregate supply?

Accepted Answer

A) a change in the money wage rate 
B) technological change 
C) a change in the full-employment quantity of labour 
D) an increase in the quantity of capital 
E) a change in expected future profits 
A) a change in the money wage rate 
B) technological change 
C) a change in the full-employment quantity of labour 
D) an increase in the quantity of capital 
E) a change in expected future profits

Question 8

We observe a decrease in the price level and an increase in real GDP.Which of the following is a possible explanation?

Accepted Answer

A) a decrease in the quantity of money 
B) a decrease in expected future income 
C) an increase in factor prices 
D) an increase in the quantity of capital 
E) an increase in expected future profits 
A) a decrease in the quantity of money 
B) a decrease in expected future income 
C) an increase in factor prices 
D) an increase in the quantity of capital 
E) an increase in expected future profits

Question 9

Which one of the following shifts the aggregate demand curve leftward?

Accepted Answer

A) a decrease in the interest rate 
B) an increase in expected inflation 
C) an increase in taxes 
D) an increase in the price level 
E) an increase in the money wage rate 
A) a decrease in the interest rate 
B) an increase in expected inflation 
C) an increase in taxes 
D) an increase in the price level 
E) an increase in the money wage rate

Question 10

Use the figure below to answer the following questions.
   
Figure 26.3.3
-Refer to Figure 26.3.3.In which of the graphs would we predict that eventually the price level will rise and real GDP will fall,all else remaining the same?

Accepted Answer

A) (a)only 
B) (d)only 
C) (b)only 
D) (c)and (d) 
E) (c)only 
A) (a)only 
B) (d)only 
C) (b)only 
D) (c)and (d) 
E) (c)only

Question 11

Use the table below to answer the following questions.
Table 26.3.3
  
-Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the price level is

Accepted Answer

A) 90. 
B) 110. 
C) 100. 
D) 120. 
E) 130. 
A) 90. 
B) 110. 
C) 100. 
D) 120. 
E) 130.

Question 12

An increase in oil prices to a country that is a net importer of oil shifts

Accepted Answer

A) both the short-run aggregate supply and long-run aggregate supply curves rightward. 
B) both the short-run aggregate supply and long-run aggregate supply curves leftward. 
C) the short-run aggregate supply curve leftward, but leaves the long-run aggregate supply curve unchanged. 
D) the long-run aggregate supply curve rightward, but leaves the short-run aggregate supply curve unchanged. 
E) the short-run aggregate supply curve leftward, but shifts the long-run aggregate supply curve rightward. 
A) both the short-run aggregate supply and long-run aggregate supply curves rightward. 
B) both the short-run aggregate supply and long-run aggregate supply curves leftward. 
C) the short-run aggregate supply curve leftward, but leaves the long-run aggregate supply curve unchanged. 
D) the long-run aggregate supply curve rightward, but leaves the short-run aggregate supply curve unchanged. 
E) the short-run aggregate supply curve leftward, but shifts the long-run aggregate supply curve rightward.

Question 13

Use the figure below to answer the following questions.
   
Figure 26.3.5
-Refer to Figure 26.3.5.Potential GDP is

Accepted Answer

A) $13 trillion. 
B) $13.5 trillion. 
C) more than $13 trillion and less than $13.5 trillion. 
D) less than $13 trillion. 
E) 100 
A) $13 trillion. 
B) $13.5 trillion. 
C) more than $13 trillion and less than $13.5 trillion. 
D) less than $13 trillion. 
E) 100

Question 14

If real GDP is less than potential GDP,then the economy is

Accepted Answer

A) not in short-run equilibrium. 
B) in a full-employment equilibrium. 
C) in an above full-employment equilibrium. 
D) in a below full-employment equilibrium. 
E) in long-run equilibrium. 
A) not in short-run equilibrium. 
B) in a full-employment equilibrium. 
C) in an above full-employment equilibrium. 
D) in a below full-employment equilibrium. 
E) in long-run equilibrium.

Question 15

Use the table below to answer the following questions.
Table 26.3.3
  
-Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the economy

Accepted Answer

A) is also in a long-run macroeconomic equilibrium. 
B) has an inflationary gap. 
C) has a recessionary gap. 
D) has neither an inflationary nor a recessionary gap. 
E) Both A and D are correct. 
A) is also in a long-run macroeconomic equilibrium. 
B) has an inflationary gap. 
C) has a recessionary gap. 
D) has neither an inflationary nor a recessionary gap. 
E) Both A and D are correct.

Question 16

Which of the following news quotes best describes a Keynesian view of a recession?

Accepted Answer

A) "Rapid computerization is creating obsolete workers and higher unemployment." 
B) "The unexpectedly tight fiscal policy is raising spending and lowering unemployment." 
C) "The anti-inflationary policy of the Bank of Canada is increasing spending." 
D) "The cuts in government spending have helped lower consumer spending and created unemployment." 
E) "Businesses are very worried about future sales and have lowered their purchases of capital equipment." 
A) "Rapid computerization is creating obsolete workers and higher unemployment." 
B) "The unexpectedly tight fiscal policy is raising spending and lowering unemployment." 
C) "The anti-inflationary policy of the Bank of Canada is increasing spending." 
D) "The cuts in government spending have helped lower consumer spending and created unemployment." 
E) "Businesses are very worried about future sales and have lowered their purchases of capital equipment."

Question 17

Aggregate demand

Accepted Answer

A) measures the amount of a nation's goods and services that people are willing to buy. 
B) measures the amount of a nation's labour, capital, and technology that people are willing to buy. 
C) is the relationship between the quantity of real GDP demanded and the price level. 
D) increases when the price level falls. 
E) both C and D are correct. 
A) measures the amount of a nation's goods and services that people are willing to buy. 
B) measures the amount of a nation's labour, capital, and technology that people are willing to buy. 
C) is the relationship between the quantity of real GDP demanded and the price level. 
D) increases when the price level falls. 
E) both C and D are correct.

Question 18

Beginning at a long-run equilibrium,an increase in aggregate demand

Accepted Answer

A) increases the price level and in the long run increases real GDP. 
B) increases the price level and in the long run decreases real GDP. 
C) decreases the price level and in the long run increases real GDP. 
D) decreases the price level and in the long run decreases real GDP. 
E) increases the price level, but in the long run there is no change in real GDP. 
A) increases the price level and in the long run increases real GDP. 
B) increases the price level and in the long run decreases real GDP. 
C) decreases the price level and in the long run increases real GDP. 
D) decreases the price level and in the long run decreases real GDP. 
E) increases the price level, but in the long run there is no change in real GDP.

Question 19

Which of the following news quotes best describes a new classical view of a recession?

Accepted Answer

A) "Rapid computerization is creating obsolete workers and higher unemployment." 
B) "The unexpectedly tight fiscal policy is raising spending and lowering unemployment." 
C) "The anti-inflationary policy of the Bank of Canada is increasing spending." 
D) "The cuts in government spending have helped lower consumer spending and created unemployment." 
E) "Businesses are very worried about future sales and have lowered their purchases of capital equipment." 
A) "Rapid computerization is creating obsolete workers and higher unemployment." 
B) "The unexpectedly tight fiscal policy is raising spending and lowering unemployment." 
C) "The anti-inflationary policy of the Bank of Canada is increasing spending." 
D) "The cuts in government spending have helped lower consumer spending and created unemployment." 
E) "Businesses are very worried about future sales and have lowered their purchases of capital equipment."

Question 20

Use the figure below to answer the following questions.
   
Figure 26.3.2
-Refer to Figure 26.3.2.When the economy of Mythlo is in short-run macroeconomic equilibrium,the price level is

Accepted Answer

A) 65. 
B) 95. 
C) 70. 
D) 75. 
E) 80. 
A) 65. 
B) 95. 
C) 70. 
D) 75. 
E) 80.

Everything else remaining the same,the short-run aggregate supply curve shifts rightward if

When an economy is operating on its long-run aggregate supply curve,

The quantity of real GDP demanded is the sum of real consumption expenditure (C),investment (I),

Which one of the following newspaper quotations describes a rightward shift of the LAS curve?

Use the figure below to answer the following questions. Figure 26.3.5 -Refer to Figure 26.3.5.At point B the economy has

A technological advance shifts

Which of the following does not change short-run aggregate supply?

We observe a decrease in the price level and an increase in real GDP.Which of the following is a possible explanation?

Which one of the following shifts the aggregate demand curve leftward?

Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.In which of the graphs would we predict that eventually the price level will rise and real GDP will fall,all else remaining the same?

Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the price level is

An increase in oil prices to a country that is a net importer of oil shifts

Use the figure below to answer the following questions. Figure 26.3.5 -Refer to Figure 26.3.5.Potential GDP is

If real GDP is less than potential GDP,then the economy is

Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the economy

Which of the following news quotes best describes a Keynesian view of a recession?

Aggregate demand

Beginning at a long-run equilibrium,an increase in aggregate demand

Which of the following news quotes best describes a new classical view of a recession?

Use the figure below to answer the following questions. Figure 26.3.2 -Refer to Figure 26.3.2.When the economy of Mythlo is in short-run macroeconomic equilibrium,the price level is

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance,saving,and Investment

Money,the Price Level,and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers: the Keynesian Model

Canadian Inflation,unemployment,and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

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Exam 26: Aggregate Supply and Aggregate Demand

Everything else remaining the same,the short-run aggregate supply curve shifts rightward if

When an economy is operating on its long-run aggregate supply curve,

The quantity of real GDP demanded is the sum of real consumption expenditure (C),investment (I),

Which one of the following newspaper quotations describes a rightward shift of the LAS curve?

Use the figure below to answer the following questions. Figure 26.3.5 -Refer to Figure 26.3.5.At point B the economy has

A technological advance shifts

Which of the following does not change short-run aggregate supply?

We observe a decrease in the price level and an increase in real GDP.Which of the following is a possible explanation?

Which one of the following shifts the aggregate demand curve leftward?

Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.In which of the graphs would we predict that eventually the price level will rise and real GDP will fall,all else remaining the same?

Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the price level is

An increase in oil prices to a country that is a net importer of oil shifts

Use the figure below to answer the following questions. Figure 26.3.5 -Refer to Figure 26.3.5.Potential GDP is

If real GDP is less than potential GDP,then the economy is

Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the economy

Which of the following news quotes best describes a Keynesian view of a recession?

Aggregate demand

Beginning at a long-run equilibrium,an increase in aggregate demand

Which of the following news quotes best describes a new classical view of a recession?

Use the figure below to answer the following questions. Figure 26.3.2 -Refer to Figure 26.3.2.When the economy of Mythlo is in short-run macroeconomic equilibrium,the price level is

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance,saving,and Investment

Money,the Price Level,and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers: the Keynesian Model

Canadian Inflation,unemployment,and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters