Question 1

Changes in which of the following shifts the aggregate supply curve?
i.The price level
ii.The money wage rate
iii.Potential GDP

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) ii and iii 
E) i,ii and iii 
A) i only 
B) ii only 
C) iii only 
D) ii and iii 
E) i,ii and iii D

Question 2

A technological advance ________ aggregate supply,shifting the aggregate supply curve ________ and potentially bringing the ________ phase of the business cycle.

Accepted Answer

A) increases;rightward;expansion 
B) increases;leftward;expansion 
C) increases;rightward;recession 
D) decreases;leftward recession 
E) decreases;rightward;expansion 
A) increases;rightward;expansion 
B) increases;leftward;expansion 
C) increases;rightward;recession 
D) decreases;leftward recession 
E) decreases;rightward;expansion A

Question 3

-The aggregate demand curve in the figure above shifts rightward if

Accepted Answer

A) taxes are raised. 
B) potential GDP increases. 
C) government expenditure increases. 
D) the money wage rate falls. 
E) the Reserve Bank raises the interest rate. 
A) taxes are raised. 
B) potential GDP increases. 
C) government expenditure increases. 
D) the money wage rate falls. 
E) the Reserve Bank raises the interest rate. C

Question 4

A rise in the price level brings a ________ in the real wage rate that ________ profits which leads to ________ production.

Accepted Answer

A) fall;increases;increasing 
B) rise;reduces;decreasing 
C) rise;increases;decreasing 
D) rise;reduces;increasing 
E) fall;decreases;decreasing 
A) fall;increases;increasing 
B) rise;reduces;decreasing 
C) rise;increases;decreasing 
D) rise;reduces;increasing 
E) fall;decreases;decreasing

Question 5

If potential GDP increases,then the

Accepted Answer

A) aggregate supply curve shifts rightward. 
B) real wage rate increases. 
C) real wage rate falls. 
D) aggregate demand curve shifts rightward. 
E) aggregate supply curve shifts leftward. 
A) aggregate supply curve shifts rightward. 
B) real wage rate increases. 
C) real wage rate falls. 
D) aggregate demand curve shifts rightward. 
E) aggregate supply curve shifts leftward.

Question 6

A decrease in foreign income ________ exports of Australian-made goods,so aggregate demand ________ and the aggregate demand curve shifts ________.

Accepted Answer

A) decreases;decreases;rightward 
B) increases;increases;rightward 
C) decreases;increases;rightward 
D) increases;increases;leftward 
E) decreases;decreases;leftward 
A) decreases;decreases;rightward 
B) increases;increases;rightward 
C) decreases;increases;rightward 
D) increases;increases;leftward 
E) decreases;decreases;leftward

Question 7

When the price level rises,the quantity of real GDP supplied ________ because ________.

Accepted Answer

A) increases;the AS curve shifts rightward 
B) increases;new businesses open 
C) decreases;businesses fail and have to shut their doors 
D) increases;businesses fail and have to shut their doors 
E) decreases;new businesses open 
A) increases;the AS curve shifts rightward 
B) increases;new businesses open 
C) decreases;businesses fail and have to shut their doors 
D) increases;businesses fail and have to shut their doors 
E) decreases;new businesses open

Question 8

A change in the price level produces a ________ the aggregate demand curve. i.shift in
Ii)change in the slope of
Iii)movement along

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i and ii 
A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i and ii

Question 9

Aggregate demand ________ and shifts the AD curve ________ when ________.

Accepted Answer

A) decreases;leftward;the price level rises 
B) increases;rightward;foreign incomes increase 
C) increases;leftward;taxes increase 
D) increases;rightward;taxes increase 
E) decreases;rightward;government expenditure increases 
A) decreases;leftward;the price level rises 
B) increases;rightward;foreign incomes increase 
C) increases;leftward;taxes increase 
D) increases;rightward;taxes increase 
E) decreases;rightward;government expenditure increases

Question 10

The global economy enters a recession,thereby decreasing the level of Australian exports.If the aggregate supply curve does NOT shift,then aggregate demand will ________,real GDP will ________,and the price level will ________.

Accepted Answer

A) increase;remain the same;increase 
B) remain the same;increase;increase 
C) decrease;decrease;decrease 
D) decrease;increase;increase 
E) increase;increase;remain the same 
A) increase;remain the same;increase 
B) remain the same;increase;increase 
C) decrease;decrease;decrease 
D) decrease;increase;increase 
E) increase;increase;remain the same

Question 11

The change reflected in the above figure might be a result of

Accepted Answer

A) a fall in the price level. 
B) an increase in the quantity of labour. 
C) a decrease in the money prices of resources other than labour. 
D) a decrease in the quantity of capital. 
E) a rise in the money wage rate. 
A) a fall in the price level. 
B) an increase in the quantity of labour. 
C) a decrease in the money prices of resources other than labour. 
D) a decrease in the quantity of capital. 
E) a rise in the money wage rate.

Question 12

Over a business cycle,the quantities of capital,human capital and entrepreneurial talent

Accepted Answer

A) are constant and do not change. 
B) cycle alongside real GDP. 
C) are completely unpredictable and cannot be forecast. 
D) cycle more than real GDP. 
E) change gradually and do not fluctuate much. 
A) are constant and do not change. 
B) cycle alongside real GDP. 
C) are completely unpredictable and cannot be forecast. 
D) cycle more than real GDP. 
E) change gradually and do not fluctuate much.

Question 13

Over the business cycle,factors such as the quantity of capital,human capital and technology

Accepted Answer

A) change drastically,fluctuating more than the quantity of labour employed. 
B) grow but do not fluctuate as much as the quantity of labour employed. 
C) do not grow and are therefore not the source of economic growth. 
D) fluctuate about the same amount as the quantity of labour employed. 
E) change randomly,sometimes growing,sometimes falling. 
A) change drastically,fluctuating more than the quantity of labour employed. 
B) grow but do not fluctuate as much as the quantity of labour employed. 
C) do not grow and are therefore not the source of economic growth. 
D) fluctuate about the same amount as the quantity of labour employed. 
E) change randomly,sometimes growing,sometimes falling.

Question 14

-In the figure above,the shift in the aggregate demand curve from AD₁ to AD₃ could be the result of

Accepted Answer

A) a decrease in the buying power of money. 
B) an increased expectation of a recession that lowers the expected rate of profit from investment. 
C) a decrease in the real interest rate. 
D) a decrease in the foreign exchange rate. 
E) an increase in the price level. 
A) a decrease in the buying power of money. 
B) an increased expectation of a recession that lowers the expected rate of profit from investment. 
C) a decrease in the real interest rate. 
D) a decrease in the foreign exchange rate. 
E) an increase in the price level.

Question 15

If the Reserve Bank increases the quantity of money,then

Accepted Answer

A) the quantity of real GDP demanded decreases and there is a movement up along the AD curve. 
B) the quantity of real GDP demanded increases and there is a movement down along the AD curve. 
C) both the aggregate demand curve and the aggregate supply curve shift leftward. 
D) aggregate demand decreases and the AD curve shifts leftward. 
E) aggregate demand increases and the AD curve shifts rightward. 
A) the quantity of real GDP demanded decreases and there is a movement up along the AD curve. 
B) the quantity of real GDP demanded increases and there is a movement down along the AD curve. 
C) both the aggregate demand curve and the aggregate supply curve shift leftward. 
D) aggregate demand decreases and the AD curve shifts leftward. 
E) aggregate demand increases and the AD curve shifts rightward.

Question 16

If the price level falls and the money wage rate does not change,some firms ________ and there is ________.

Accepted Answer

A) shut down;a leftward shift of the aggregate supply curve 
B) shut down;a decrease in potential GDP 
C) start up;a rightward shift of the aggregate supply curve 
D) shut down;a decrease in the quantity of real GDP supplied 
E) start up;an increase in potential GDP 
A) shut down;a leftward shift of the aggregate supply curve 
B) shut down;a decrease in potential GDP 
C) start up;a rightward shift of the aggregate supply curve 
D) shut down;a decrease in the quantity of real GDP supplied 
E) start up;an increase in potential GDP

Question 17

Demand-pull inflation starts with

Accepted Answer

A) an increase in aggregate demand. 
B) a decrease in aggregate supply. 
C) a decrease in aggregate demand. 
D) an increase in potential GDP. 
E) an increase in aggregate supply. 
A) an increase in aggregate demand. 
B) a decrease in aggregate supply. 
C) a decrease in aggregate demand. 
D) an increase in potential GDP. 
E) an increase in aggregate supply.

Question 18

When the price level rises and the money wage rate does not change,

Accepted Answer

A) existing businesses do not change their level of output. 
B) the quantity of real GDP supplied decreases as more businesses fail and potential GDP does not change. 
C) profits fall and more businesses fail. 
D) the quantity of real GDP supplied increases as more businesses start up and potential GDP does not change. 
E) the quantity of potential GDP increases because the quantity of real GDP supplied increases. 
A) existing businesses do not change their level of output. 
B) the quantity of real GDP supplied decreases as more businesses fail and potential GDP does not change. 
C) profits fall and more businesses fail. 
D) the quantity of real GDP supplied increases as more businesses start up and potential GDP does not change. 
E) the quantity of potential GDP increases because the quantity of real GDP supplied increases.

Question 19

If investment spending increases by $1 million,then the aggregate demand curve shifts

Accepted Answer

A) leftward by less than $1 million. 
B) rightward by $1 million. 
C) rightward by less than $1 million. 
D) rightward by more than $1 million. 
E) leftward by more than $1 million. 
A) leftward by less than $1 million. 
B) rightward by $1 million. 
C) rightward by less than $1 million. 
D) rightward by more than $1 million. 
E) leftward by more than $1 million.

Question 20

A fall in the price level brings a ________ in the real wage rate that ________ profits which leads to ________.

Accepted Answer

A) rise;reduces;firms temporarily shutting down 
B) rise;reduces;firms restarting production 
C) fall;increases;firms temporarily shutting down 
D) rise;increases;firms restarting production 
E) rise;increases;firms temporarily shutting down 
A) rise;reduces;firms temporarily shutting down 
B) rise;reduces;firms restarting production 
C) fall;increases;firms temporarily shutting down 
D) rise;increases;firms restarting production 
E) rise;increases;firms temporarily shutting down

Changes in which of the following shifts the aggregate supply curve? i.The price level ii.The money wage rate iii.Potential GDP

A technological advance aggregate supply,shifting the aggregate supply curve and potentially bringing the phase of the business cycle.

-The aggregate demand curve in the figure above shifts rightward if

A rise in the price level brings a in the real wage rate that profits which leads to production.

If potential GDP increases,then the

A decrease in foreign income exports of Australian-made goods,so aggregate demand and the aggregate demand curve shifts .

When the price level rises,the quantity of real GDP supplied because .

A change in the price level produces a ________ the aggregate demand curve. i.shift in Ii)change in the slope of Iii)movement along

Aggregate demand and shifts the AD curve when .

The global economy enters a recession,thereby decreasing the level of Australian exports.If the aggregate supply curve does NOT shift,then aggregate demand will ,real GDP will ,and the price level will .

The change reflected in the above figure might be a result of

Over a business cycle,the quantities of capital,human capital and entrepreneurial talent

Over the business cycle,factors such as the quantity of capital,human capital and technology

-In the figure above,the shift in the aggregate demand curve from AD₁ to AD₃ could be the result of

If the Reserve Bank increases the quantity of money,then

If the price level falls and the money wage rate does not change,some firms and there is .

Demand-pull inflation starts with

When the price level rises and the money wage rate does not change,

If investment spending increases by $1 million,then the aggregate demand curve shifts

A fall in the price level brings a in the real wage rate that profits which leads to .

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance,saving and Investment

Money,the Price Level and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Trade Off

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 11: Aggregate Supply and Aggregate Demand

Changes in which of the following shifts the aggregate supply curve? i.The price level ii.The money wage rate iii.Potential GDP

A technological advance ________ aggregate supply,shifting the aggregate supply curve ________ and potentially bringing the ________ phase of the business cycle.

-The aggregate demand curve in the figure above shifts rightward if

A rise in the price level brings a ________ in the real wage rate that ________ profits which leads to ________ production.

If potential GDP increases,then the

A decrease in foreign income ________ exports of Australian-made goods,so aggregate demand ________ and the aggregate demand curve shifts ________.

When the price level rises,the quantity of real GDP supplied ________ because ________.

A change in the price level produces a ________ the aggregate demand curve. i.shift in Ii)change in the slope of Iii)movement along

Aggregate demand ________ and shifts the AD curve ________ when ________.

The global economy enters a recession,thereby decreasing the level of Australian exports.If the aggregate supply curve does NOT shift,then aggregate demand will ________,real GDP will ________,and the price level will ________.

The change reflected in the above figure might be a result of

Over a business cycle,the quantities of capital,human capital and entrepreneurial talent

Over the business cycle,factors such as the quantity of capital,human capital and technology

-In the figure above,the shift in the aggregate demand curve from AD₁ to AD₃ could be the result of

If the Reserve Bank increases the quantity of money,then

If the price level falls and the money wage rate does not change,some firms ________ and there is ________.

Demand-pull inflation starts with

When the price level rises and the money wage rate does not change,

If investment spending increases by $1 million,then the aggregate demand curve shifts

A fall in the price level brings a ________ in the real wage rate that ________ profits which leads to ________.

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance,saving and Investment

Money,the Price Level and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Trade Off

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

A technological advance aggregate supply,shifting the aggregate supply curve and potentially bringing the phase of the business cycle.

A rise in the price level brings a in the real wage rate that profits which leads to production.

A decrease in foreign income exports of Australian-made goods,so aggregate demand and the aggregate demand curve shifts .

When the price level rises,the quantity of real GDP supplied because .

Aggregate demand and shifts the AD curve when .

The global economy enters a recession,thereby decreasing the level of Australian exports.If the aggregate supply curve does NOT shift,then aggregate demand will ,real GDP will ,and the price level will .

If the price level falls and the money wage rate does not change,some firms and there is .

A fall in the price level brings a in the real wage rate that profits which leads to .