Question 1

If the AD curve shifts rightward,then

Accepted Answer

A) both the price level and real GDP will increase. 
B) potential GDP increases. 
C) the price level will increase,but no change will occur in real GDP. 
D) both the price level and real GDP will decrease. 
E) the price level will not change,but real GDP will increase. 
A) both the price level and real GDP will increase. 
B) potential GDP increases. 
C) the price level will increase,but no change will occur in real GDP. 
D) both the price level and real GDP will decrease. 
E) the price level will not change,but real GDP will increase.

Question 2

Demand-pull inflation starts with a shift of the

Accepted Answer

A) AD curve leftward. 
B) AD curve rightward. 
C) potential GDP line leftward. 
D) AS curve leftward. 
E) AS curve rightward. 
A) AD curve leftward. 
B) AD curve rightward. 
C) potential GDP line leftward. 
D) AS curve leftward. 
E) AS curve rightward.

Question 3

Demand-pull inflation can be started by

Accepted Answer

A) a decrease in net exports. 
B) a decrease in the quantity of money. 
C) a decrease in the money price of resources. 
D) an increase in government expenditure. 
E) an increase in the price of oil. 
A) a decrease in net exports. 
B) a decrease in the quantity of money. 
C) a decrease in the money price of resources. 
D) an increase in government expenditure. 
E) an increase in the price of oil.

Question 4

-In the figure above,the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110.As the economy moves toward its ultimate equilibrium,the ________ curve shifts ________ because ________.

Accepted Answer

A) aggregate supply;rightward;the money wage rate falls 
B) potential GDP;leftward;the money wage rate falls 
C) aggregate supply;leftward;the money wage rate rises 
D) aggregate demand;rightward;the money wage rate falls 
E) aggregate demand;leftward;the money wage rate rises 
A) aggregate supply;rightward;the money wage rate falls 
B) potential GDP;leftward;the money wage rate falls 
C) aggregate supply;leftward;the money wage rate rises 
D) aggregate demand;rightward;the money wage rate falls 
E) aggregate demand;leftward;the money wage rate rises

Question 5

Macroeconomic equilibrium occurs when

Accepted Answer

A) real GDP is equal to potential GDP. 
B) there is no inflation. 
C) the economy is fully employed. 
D) the price level equals the potential price level. 
E) the aggregate quantity demanded is equal to the aggregate quantity supplied. 
A) real GDP is equal to potential GDP. 
B) there is no inflation. 
C) the economy is fully employed. 
D) the price level equals the potential price level. 
E) the aggregate quantity demanded is equal to the aggregate quantity supplied.

Question 6

A fall in the price level produces a ________ the aggregate demand curve.

Accepted Answer

A) movement upward along 
B) rightward shift of 
C) movement downward along 
D) change in the slope of 
E) leftward shift of 
A) movement upward along 
B) rightward shift of 
C) movement downward along 
D) change in the slope of 
E) leftward shift of

Question 7

The aggregate demand curve shifts when any of the following factors change EXCEPT

Accepted Answer

A) foreign income. 
B) expectations about the future. 
C) the price level. 
D) fiscal policy. 
E) monetary policy. 
A) foreign income. 
B) expectations about the future. 
C) the price level. 
D) fiscal policy. 
E) monetary policy.

Question 8

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP less than potential GDP,there is

Accepted Answer

A) an inflationary gap. 
B) falling real GDP. 
C) an above full-employment equilibrium. 
D) a recessionary gap. 
E) a rising price level. 
A) an inflationary gap. 
B) falling real GDP. 
C) an above full-employment equilibrium. 
D) a recessionary gap. 
E) a rising price level.

Question 9

At a trough in the business cycle,the macroeconomic equilibrium is ________ the level of potential real GDP.

Accepted Answer

A) equal to 
B) rising above 
C) less than 
D) greater than 
E) None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion. 
A) equal to 
B) rising above 
C) less than 
D) greater than 
E) None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion.

Question 10

A fall in the price level brings a ________ in the real wage rate that ________ profits and can lead to ________.

Accepted Answer

A) rise;reduces;firms going out of business 
B) fall;decreases;new firms entering business 
C) fall;increases;firms going out of business 
D) rise;increases;new firms entering business 
E) rise;reduces;new firms entering business 
A) rise;reduces;firms going out of business 
B) fall;decreases;new firms entering business 
C) fall;increases;firms going out of business 
D) rise;increases;new firms entering business 
E) rise;reduces;new firms entering business

Question 11

Starting from a situation of full employment,an increase in aggregate demand creates ________ and ________ the price level.

Accepted Answer

A) a recessionary gap;lowers 
B) a recessionary gap;raises 
C) a recessionary gap;does not change 
D) an inflationary gap;raises 
E) an inflationary gap;lowers 
A) a recessionary gap;lowers 
B) a recessionary gap;raises 
C) a recessionary gap;does not change 
D) an inflationary gap;raises 
E) an inflationary gap;lowers

Question 12

Moving along the AS curve,when the price level increases,the

Accepted Answer

A) real wage rate rises,and there is a decrease in the quantity of real GDP supplied. 
B) nominal wage rate rises,and there is a decrease in the quantity of real GDP supplied. 
C) real wage rate falls,and there is an increase in the quantity of real GDP supplied. 
D) real wage rate rises,and there is an increase in the quantity of real GDP supplied. 
E) nominal wage rate falls,and there is an increase in the quantity of real GDP supplied. 
A) real wage rate rises,and there is a decrease in the quantity of real GDP supplied. 
B) nominal wage rate rises,and there is a decrease in the quantity of real GDP supplied. 
C) real wage rate falls,and there is an increase in the quantity of real GDP supplied. 
D) real wage rate rises,and there is an increase in the quantity of real GDP supplied. 
E) nominal wage rate falls,and there is an increase in the quantity of real GDP supplied.

Question 13

If real GDP is less than potential GDP,then the ________ and the price level ________.

Accepted Answer

A) amount of potential GDP increases;falls 
B) aggregate demand curve shifts rightward;falls 
C) aggregate supply curve shifts leftward;rises 
D) aggregate supply curve shifts rightward;falls 
E) aggregate demand curve shifts leftward;rises 
A) amount of potential GDP increases;falls 
B) aggregate demand curve shifts rightward;falls 
C) aggregate supply curve shifts leftward;rises 
D) aggregate supply curve shifts rightward;falls 
E) aggregate demand curve shifts leftward;rises

Question 14

Because of the existence of the aggregate demand multiplier,a $10 billion change in expenditure

Accepted Answer

A) shifts the aggregate demand curve by less than $10 billion. 
B) shifts the aggregate demand curve by $10 billion. 
C) shifts the aggregate demand curve by more than $10 billion. 
D) changes the slope of the aggregate demand curve so it is steeper. 
E) changes the slope of the aggregate demand curve so it is less steep. 
A) shifts the aggregate demand curve by less than $10 billion. 
B) shifts the aggregate demand curve by $10 billion. 
C) shifts the aggregate demand curve by more than $10 billion. 
D) changes the slope of the aggregate demand curve so it is steeper. 
E) changes the slope of the aggregate demand curve so it is less steep.

Question 15

When the quantity of real GDP demanded exceeds the quantity of real GDP supplied,firms

Accepted Answer

A) increase production and prices. 
B) decrease production and prices. 
C) increase production and lower prices. 
D) do not change production because aggregate demand and potential GDP will adjust. 
E) decrease production and increase prices. 
A) increase production and prices. 
B) decrease production and prices. 
C) increase production and lower prices. 
D) do not change production because aggregate demand and potential GDP will adjust. 
E) decrease production and increase prices.

Question 16

If the equilibrium price level is 135 but the actual price level is 120,then

Accepted Answer

A) the quantity of real GDP demanded is less than the quantity of real GDP supplied. 
B) aggregate demand will decrease to restore equilibrium. 
C) aggregate demand will increase to restore equilibrium. 
D) firms decrease their production because they cannot sell the output they produce. 
E) the quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
A) the quantity of real GDP demanded is less than the quantity of real GDP supplied. 
B) aggregate demand will decrease to restore equilibrium. 
C) aggregate demand will increase to restore equilibrium. 
D) firms decrease their production because they cannot sell the output they produce. 
E) the quantity of real GDP demanded is greater than the quantity of real GDP supplied.

Question 17

A rise in the money wage rate shifts the

Accepted Answer

A) AS curve rightward. 
B) AD curve rightward. 
C) AD curve leftward. 
D) potential GDP curve rightward. 
E) AS curve leftward. 
A) AS curve rightward. 
B) AD curve rightward. 
C) AD curve leftward. 
D) potential GDP curve rightward. 
E) AS curve leftward.

Question 18

-In the figure above,as the price level increases,the aggregate demand curve will

Accepted Answer

A) shift from AD₁ to AD₃ and then back to AD₁. 
B) not shift,but the aggregate demand curve will change so that it is positively sloped. 
C) not shift. 
D) shift from AD₁ to AD₃. 
E) shift from AD₁ to AD₂. 
A) shift from AD₁ to AD₃ and then back to AD₁. 
B) not shift,but the aggregate demand curve will change so that it is positively sloped. 
C) not shift. 
D) shift from AD₁ to AD₃. 
E) shift from AD₁ to AD₂.

Question 19

If the price of widgets is $2 and the real wage is $20 per hour then the firm must sell 10 widgets to cover the cost of an hour of labour.If the price of widgets falls to $1,how many widgets must the firms sell to cover the cost of an hour of labour?

Accepted Answer

A) 15 
B) 30 
C) 40 
D) 10 
E) 20 
A) 15 
B) 30 
C) 40 
D) 10 
E) 20

Question 20

At a price level of 100,John has savings equal to $20,000.If the price level increases to 130,the buying power of John's savings is approximately

Accepted Answer

A) $15,400. 
B) $12,780. 
C) $26,000. 
D) $30,000. 
E) $20,000. 
A) $15,400. 
B) $12,780. 
C) $26,000. 
D) $30,000. 
E) $20,000.

If the AD curve shifts rightward,then

Demand-pull inflation starts with a shift of the

Demand-pull inflation can be started by

-In the figure above,the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110.As the economy moves toward its ultimate equilibrium,the curve shifts because .

Macroeconomic equilibrium occurs when

A fall in the price level produces a ________ the aggregate demand curve.

The aggregate demand curve shifts when any of the following factors change EXCEPT

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP less than potential GDP,there is

At a trough in the business cycle,the macroeconomic equilibrium is ________ the level of potential real GDP.

A fall in the price level brings a in the real wage rate that profits and can lead to .

Starting from a situation of full employment,an increase in aggregate demand creates and the price level.

Moving along the AS curve,when the price level increases,the

If real GDP is less than potential GDP,then the and the price level .

Because of the existence of the aggregate demand multiplier,a $10 billion change in expenditure

When the quantity of real GDP demanded exceeds the quantity of real GDP supplied,firms

If the equilibrium price level is 135 but the actual price level is 120,then

A rise in the money wage rate shifts the

-In the figure above,as the price level increases,the aggregate demand curve will

If the price of widgets is $2 and the real wage is $20 per hour then the firm must sell 10 widgets to cover the cost of an hour of labour.If the price of widgets falls to $1,how many widgets must the firms sell to cover the cost of an hour of labour?

At a price level of 100,John has savings equal to $20,000.If the price level increases to 130,the buying power of John's savings is approximately

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

If the AD curve shifts rightward,then

Demand-pull inflation starts with a shift of the

Demand-pull inflation can be started by

-In the figure above,the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110.As the economy moves toward its ultimate equilibrium,the ________ curve shifts ________ because ________.

Macroeconomic equilibrium occurs when

A fall in the price level produces a ________ the aggregate demand curve.

The aggregate demand curve shifts when any of the following factors change EXCEPT

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP less than potential GDP,there is

At a trough in the business cycle,the macroeconomic equilibrium is ________ the level of potential real GDP.

A fall in the price level brings a ________ in the real wage rate that ________ profits and can lead to ________.

Starting from a situation of full employment,an increase in aggregate demand creates ________ and ________ the price level.

Moving along the AS curve,when the price level increases,the

If real GDP is less than potential GDP,then the ________ and the price level ________.

Because of the existence of the aggregate demand multiplier,a $10 billion change in expenditure

When the quantity of real GDP demanded exceeds the quantity of real GDP supplied,firms

If the equilibrium price level is 135 but the actual price level is 120,then

A rise in the money wage rate shifts the

-In the figure above,as the price level increases,the aggregate demand curve will

If the price of widgets is $2 and the real wage is $20 per hour then the firm must sell 10 widgets to cover the cost of an hour of labour.If the price of widgets falls to $1,how many widgets must the firms sell to cover the cost of an hour of labour?

At a price level of 100,John has savings equal to $20,000.If the price level increases to 130,the buying power of John's savings is approximately

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

-In the figure above,the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110.As the economy moves toward its ultimate equilibrium,the curve shifts because .

A fall in the price level brings a in the real wage rate that profits and can lead to .

Starting from a situation of full employment,an increase in aggregate demand creates and the price level.

If real GDP is less than potential GDP,then the and the price level .