Question 1

-Based on the figure above,the aggregate supply curve shifts rightward and the potential GDP line does NOT change when

Accepted Answer

A) both the price level and money wage rate rise by the same proportion. 
B) the price level falls. 
C) the money wage rate falls. 
D) the money wage rate rises. 
E) the price level rises. 
A) both the price level and money wage rate rise by the same proportion. 
B) the price level falls. 
C) the money wage rate falls. 
D) the money wage rate rises. 
E) the price level rises.

Question 2

Demand-pull inflation results from continually increasing the quantity of money,which leads to continually

Accepted Answer

A) decreasing aggregate demand. 
B) decreasing potential GDP. 
C) increasing aggregate supply. 
D) increasing potential GDP. 
E) increasing aggregate demand. 
A) decreasing aggregate demand. 
B) decreasing potential GDP. 
C) increasing aggregate supply. 
D) increasing potential GDP. 
E) increasing aggregate demand.

Question 3

During 2012,a country reports that its price level fell and the money wage rate did not change.These changes led to a(n)________ because the country experienced a(n)________.

Accepted Answer

A) increase in the quantity of real GDP supplied;higher real wage rate and lower profits for firms 
B) decrease in the quantity of real GDP supplied;higher real wage rate and lower profits for firms 
C) decrease in the quantity of real GDP supplied;lower real wage rate and lower profits for firms 
D) decrease in aggregate demand;economic expansion 
E) increase in the quantity of real GDP supplied;lower real wage rate and higher profits for firms 
A) increase in the quantity of real GDP supplied;higher real wage rate and lower profits for firms 
B) decrease in the quantity of real GDP supplied;higher real wage rate and lower profits for firms 
C) decrease in the quantity of real GDP supplied;lower real wage rate and lower profits for firms 
D) decrease in aggregate demand;economic expansion 
E) increase in the quantity of real GDP supplied;lower real wage rate and higher profits for firms

Question 4

An economy is at a full-employment equilibrium,and then the aggregate demand curve shifts leftward.As a result,the price level ________ and real GDP ________.

Accepted Answer

A) falls;increases 
B) falls;does not change 
C) falls;decreases 
D) rises;decreases 
E) rises;increases 
A) falls;increases 
B) falls;does not change 
C) falls;decreases 
D) rises;decreases 
E) rises;increases

Question 5

Which of the following decreases aggregate demand and shifts the AD curve leftward?

Accepted Answer

A) A decrease in government expenditures 
B) A decrease in the price of exported goods and services 
C) A decrease in potential GDP 
D) A tax cut 
E) A decrease in price level 
A) A decrease in government expenditures 
B) A decrease in the price of exported goods and services 
C) A decrease in potential GDP 
D) A tax cut 
E) A decrease in price level

Question 6

If the Chinese economy enters a recession,

Accepted Answer

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

Question 7

If a country is trying to recover from a recent recession,it is unlikely the central bank will decide to ________ because it would ________.

Accepted Answer

A) increase taxes;increase aggregate demand 
B) institute a tax cut;increase aggregate demand 
C) raise interest rates;decrease aggregate demand 
D) lower interest rates;decrease aggregate demand 
E) raise interest rates;increase aggregate demand 
A) increase taxes;increase aggregate demand 
B) institute a tax cut;increase aggregate demand 
C) raise interest rates;decrease aggregate demand 
D) lower interest rates;decrease aggregate demand 
E) raise interest rates;increase aggregate demand

Question 8

Demand-pull inflation persists because of

Accepted Answer

A) continuing increases in the real wage rate. 
B) continuing increases in the quantity of money. 
C) continuing increases in government expenditures. 
D) continuing increases in aggregate supply. 
E) continuing decreases in the money wage rate. 
A) continuing increases in the real wage rate. 
B) continuing increases in the quantity of money. 
C) continuing increases in government expenditures. 
D) continuing increases in aggregate supply. 
E) continuing decreases in the money wage rate.

Question 9

Which of the following shifts the aggregate supply curve leftward?

Accepted Answer

A) An increase in potential GDP. 
B) An increase in real GDP. 
C) A fall in the price level. 
D) A decrease in the money price of oil. 
E) An increase in the money wage rate. 
A) An increase in potential GDP. 
B) An increase in real GDP. 
C) A fall in the price level. 
D) A decrease in the money price of oil. 
E) An increase in the money wage rate.

Question 10

An increase in the price level leads to

Accepted Answer

A) a rightward shift of the aggregate demand curve. 
B) a movement upward along the aggregate demand curve. 
C) a movement downward along the aggregate demand curve. 
D) neither a shift in the aggregate demand curve nor a movement along it. 
E) a leftward shift of the aggregate demand curve. 
A) a rightward shift of the aggregate demand curve. 
B) a movement upward along the aggregate demand curve. 
C) a movement downward along the aggregate demand curve. 
D) neither a shift in the aggregate demand curve nor a movement along it. 
E) a leftward shift of the aggregate demand curve.

Question 11

Cost-push inflation can start with

Accepted Answer

A) a decrease in government expenditure. 
B) a decrease in the quantity of money. 
C) an increase in oil prices. 
D) a decrease in investment. 
E) an increase in government expenditure. 
A) a decrease in government expenditure. 
B) a decrease in the quantity of money. 
C) an increase in oil prices. 
D) a decrease in investment. 
E) an increase in government expenditure.

Question 12

-The table above gives data for the nation of Pearl,a small island in the South Pacific.If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level,the new equilibrium real GDP is ________,and the nation is now experiencing a(n)________.

Accepted Answer

A) $22 billion;recessionary gap 
B) $28 billion;recessionary gap 
C) $28 billion;inflationary gap 
D) $25 billion;equilibrium 
E) $22 billion;inflationary gap 
A) $22 billion;recessionary gap 
B) $28 billion;recessionary gap 
C) $28 billion;inflationary gap 
D) $25 billion;equilibrium 
E) $22 billion;inflationary gap

Question 13

Sherri lives in Canada and is considering buying a new sofa.If the price level in Canada falls and the price level in the United States does not change,Canadian manufactured sofas are relatively

Accepted Answer

A) less expensive,so Sherri will likely purchase a Canadian manufactured sofa. 
B) less expensive,so Sherri will likely purchase a U.S.manufactured sofa. 
C) more expensive,so Sherri will likely purchase a U.S.manufactured sofa. 
D) more expensive,so Sherri will likely purchase a Canadian manufactured sofa. 
E) Both answers B and D could be correct depending on whether U.S.manufactured sofas were initially more expensive or less expensive than Canadian sofas. 
A) less expensive,so Sherri will likely purchase a Canadian manufactured sofa. 
B) less expensive,so Sherri will likely purchase a U.S.manufactured sofa. 
C) more expensive,so Sherri will likely purchase a U.S.manufactured sofa. 
D) more expensive,so Sherri will likely purchase a Canadian manufactured sofa. 
E) Both answers B and D could be correct depending on whether U.S.manufactured sofas were initially more expensive or less expensive than Canadian sofas.

Question 14

If the price level increases from 110.0 to 115.0,the quantity of

Accepted Answer

A) potential GDP will decrease. 
B) potential GDP will increase. 
C) real GDP demanded will increase. 
D) real GDP supplied will decrease. 
E) real GDP supplied will increase. 
A) potential GDP will decrease. 
B) potential GDP will increase. 
C) real GDP demanded will increase. 
D) real GDP supplied will decrease. 
E) real GDP supplied will increase.

Question 15

A reason why an increase in the price level decreases the quantity of real GDP demanded is that

Accepted Answer

A) potential GDP decreases. 
B) the real interest rate falls. 
C) the inflation rate decreases. 
D) the buying power of money increases. 
E) the price of domestic goods and services increases relative to foreign goods and services. 
A) potential GDP decreases. 
B) the real interest rate falls. 
C) the inflation rate decreases. 
D) the buying power of money increases. 
E) the price of domestic goods and services increases relative to foreign goods and services.

Question 16

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

Accepted Answer

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

Question 17

Which of the following does NOT affect potential GDP?

Accepted Answer

A) The quantity of labour employed 
B) The quantity of land and natural resources 
C) The quantity of capital and human capital 
D) The quantity of money 
E) The amount of entrepreneurial talent available 
A) The quantity of labour employed 
B) The quantity of land and natural resources 
C) The quantity of capital and human capital 
D) The quantity of money 
E) The amount of entrepreneurial talent available

Question 18

If the economy is above full employment,there is ________ gap,and as the economy adjusts toward full employment,the price level ________.

Accepted Answer

A) a recessionary;rises 
B) an inflationary;falls 
C) a recessionary;falls 
D) an inflationary;does not change 
E) an inflationary;rises 
A) a recessionary;rises 
B) an inflationary;falls 
C) a recessionary;falls 
D) an inflationary;does not change 
E) an inflationary;rises

Question 19

-If potential GDP increases,then,in the figure above,the potential GDP line ________,and the aggregate supply curve ________.

Accepted Answer

A) shifts rightward;shifts leftward 
B) shifts rightward;shifts rightward 
C) does not shift;shifts rightward 
D) does not shift;does not shift 
E) shifts rightward;does not shift 
A) shifts rightward;shifts leftward 
B) shifts rightward;shifts rightward 
C) does not shift;shifts rightward 
D) does not shift;does not shift 
E) shifts rightward;does not shift

Question 20

The table gives the aggregate demand and aggregate supply schedules for a nation.
-Based on the table above,equilibrium real GDP is

Accepted Answer

A) $9 trillion. 
B) $10 trillion. 
C) $7 trillion. 
D) $6 trillion. 
E) $8 trillion. 
A) $9 trillion. 
B) $10 trillion. 
C) $7 trillion. 
D) $6 trillion. 
E) $8 trillion.

-Based on the figure above,the aggregate supply curve shifts rightward and the potential GDP line does NOT change when

Demand-pull inflation results from continually increasing the quantity of money,which leads to continually

During 2012,a country reports that its price level fell and the money wage rate did not change.These changes led to a(n) because the country experienced a(n).

An economy is at a full-employment equilibrium,and then the aggregate demand curve shifts leftward.As a result,the price level and real GDP .

Which of the following decreases aggregate demand and shifts the AD curve leftward?

If the Chinese economy enters a recession,

If a country is trying to recover from a recent recession,it is unlikely the central bank will decide to because it would .

Demand-pull inflation persists because of

Which of the following shifts the aggregate supply curve leftward?

An increase in the price level leads to

Cost-push inflation can start with

-The table above gives data for the nation of Pearl,a small island in the South Pacific.If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level,the new equilibrium real GDP is ,and the nation is now experiencing a(n).

Sherri lives in Canada and is considering buying a new sofa.If the price level in Canada falls and the price level in the United States does not change,Canadian manufactured sofas are relatively

If the price level increases from 110.0 to 115.0,the quantity of

A reason why an increase in the price level decreases the quantity of real GDP demanded is that

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

Which of the following does NOT affect potential GDP?

If the economy is above full employment,there is gap,and as the economy adjusts toward full employment,the price level .

-If potential GDP increases,then,in the figure above,the potential GDP line ,and the aggregate supply curve .

The table gives the aggregate demand and aggregate supply schedules for a nation. -Based on the table above,equilibrium real GDP is

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

-Based on the figure above,the aggregate supply curve shifts rightward and the potential GDP line does NOT change when

Demand-pull inflation results from continually increasing the quantity of money,which leads to continually

During 2012,a country reports that its price level fell and the money wage rate did not change.These changes led to a(n)________ because the country experienced a(n)________.

An economy is at a full-employment equilibrium,and then the aggregate demand curve shifts leftward.As a result,the price level ________ and real GDP ________.

Which of the following decreases aggregate demand and shifts the AD curve leftward?

If the Chinese economy enters a recession,

If a country is trying to recover from a recent recession,it is unlikely the central bank will decide to ________ because it would ________.

Demand-pull inflation persists because of

Which of the following shifts the aggregate supply curve leftward?

An increase in the price level leads to

Cost-push inflation can start with

-The table above gives data for the nation of Pearl,a small island in the South Pacific.If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level,the new equilibrium real GDP is ________,and the nation is now experiencing a(n)________.

Sherri lives in Canada and is considering buying a new sofa.If the price level in Canada falls and the price level in the United States does not change,Canadian manufactured sofas are relatively

If the price level increases from 110.0 to 115.0,the quantity of

A reason why an increase in the price level decreases the quantity of real GDP demanded is that

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

Which of the following does NOT affect potential GDP?

If the economy is above full employment,there is ________ gap,and as the economy adjusts toward full employment,the price level ________.

-If potential GDP increases,then,in the figure above,the potential GDP line ________,and the aggregate supply curve ________.

The table gives the aggregate demand and aggregate supply schedules for a nation. -Based on the table above,equilibrium real GDP is

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

During 2012,a country reports that its price level fell and the money wage rate did not change.These changes led to a(n) because the country experienced a(n).

An economy is at a full-employment equilibrium,and then the aggregate demand curve shifts leftward.As a result,the price level and real GDP .

If a country is trying to recover from a recent recession,it is unlikely the central bank will decide to because it would .

-The table above gives data for the nation of Pearl,a small island in the South Pacific.If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level,the new equilibrium real GDP is ,and the nation is now experiencing a(n).

If the economy is above full employment,there is gap,and as the economy adjusts toward full employment,the price level .

-If potential GDP increases,then,in the figure above,the potential GDP line ,and the aggregate supply curve .