Question 1

If the costs of production decrease, there is

Accepted Answer

A)  an increase in aggregate supply and the AS curve shifts rightward. 
B)  a decrease in aggregate supply and the AS curve shifts leftward. 
C)  an increase in the quantity of real GDP supplied and a movement up along the AS curve. 
D)  a decrease in the quantity of real GDP supplied and a movement down along the AS curve. 
E)  an increase in aggregate supply and the AS curve shifts leftward. 
A)  an increase in aggregate supply and the AS curve shifts rightward. 
B)  a decrease in aggregate supply and the AS curve shifts leftward. 
C)  an increase in the quantity of real GDP supplied and a movement up along the AS curve. 
D)  a decrease in the quantity of real GDP supplied and a movement down along the AS curve. 
E)  an increase in aggregate supply and the AS curve shifts leftward. A

Question 2

If real GDP is greater than potential GDP, then to restore equilibrium ________ and the price level ________.

Accepted Answer

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

Question 3

The aggregate supply curve is

Accepted Answer

A)  upward sloping. 
B)  downward sloping. 
C)  a vertical line. 
D)  a horizontal line. 
E)  U-shaped. 
A)  upward sloping. 
B)  downward sloping. 
C)  a vertical line. 
D)  a horizontal line. 
E)  U-shaped. A

Question 4

If the money wage rate increases, then the

Accepted Answer

A)  aggregate supply curve shifts rightward. 
B)  potential GDP increases. 
C)  potential GDP decreases. 
D)  aggregate supply curve shifts leftward. 
E)  aggregate demand curve shifts leftward. 
A)  aggregate supply curve shifts rightward. 
B)  potential GDP increases. 
C)  potential GDP decreases. 
D)  aggregate supply curve shifts leftward. 
E)  aggregate demand curve shifts leftward.

Question 5

If the price of oil rises, the

Accepted Answer

A)  AD curve shifts rightward, real GDP increases, and the price level rises. 
B)  AS curve shifts leftward, the price level rises, and real GDP decreases. 
C)  AD curve and the AS curve shift leftward, real GDP decreases, and the price level rises. 
D)  AD curve and the AS curve shift rightward, the price level rises, and real GDP decreases. 
E)  AS curve shifts leftward, the price level rises, and real GDP increases. 
A)  AD curve shifts rightward, real GDP increases, and the price level rises. 
B)  AS curve shifts leftward, the price level rises, and real GDP decreases. 
C)  AD curve and the AS curve shift leftward, real GDP decreases, and the price level rises. 
D)  AD curve and the AS curve shift rightward, the price level rises, and real GDP decreases. 
E)  AS curve shifts leftward, the price level rises, and real GDP increases.

Question 6

Last year the price level increased from 118 to 122.The increase in the price level leads to a decrease in

Accepted Answer

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

Question 7

Suppose that during 2005, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos.What sort of equilibrium existed in Chile?

Accepted Answer

Chile's actual real GDP exceed

Question 8

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

Accepted Answer

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

Question 9

A technological advance ________ potential GDP, ________ aggregate supply, and shifts the aggregate supply curve ________.

Accepted Answer

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

Question 10

If the equilibrium price level is 135 but the actual price level is 150, then

Accepted Answer

A)  firms increase their production because they are able to sell their output at a higher than expected price. 
B)  the quantity of real GDP demanded is less than the quantity of real GDP supplied. 
C)  the quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
D)  aggregate demand will increase to restore equilibrium. 
E)  aggregate demand will decrease to restore equilibrium. 
A)  firms increase their production because they are able to sell their output at a higher than expected price. 
B)  the quantity of real GDP demanded is less than the quantity of real GDP supplied. 
C)  the quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
D)  aggregate demand will increase to restore equilibrium. 
E)  aggregate demand will decrease to restore equilibrium.

Question 11

The aggregate demand multiplier effect says that an initial increase in expenditure plans leads to an induced

Accepted Answer

A)  increase in consumption expenditure. 
B)  increase in production expenditure. 
C)  increase in government expenditures on goods and services. 
D)  decrease in the price level. 
E)  increase in exports. 
A)  increase in consumption expenditure. 
B)  increase in production expenditure. 
C)  increase in government expenditures on goods and services. 
D)  decrease in the price level. 
E)  increase in exports.

Question 12

If European economies enter a recession,

Accepted Answer

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

Question 13

The aggregate supply curve illustrates that the

Accepted Answer

A)  higher the price level, the greater the quantity of real GDP supplied. 
B)  higher the price level, the smaller the quantity of real GDP supplied. 
C)  aggregate demand curve is not needed to determine the aggregate price level. 
D)  price level does not affect the quantity of real GDP supplied. 
E)  amount of potential GDP increases when the price level rises. 
A)  higher the price level, the greater the quantity of real GDP supplied. 
B)  higher the price level, the smaller the quantity of real GDP supplied. 
C)  aggregate demand curve is not needed to determine the aggregate price level. 
D)  price level does not affect the quantity of real GDP supplied. 
E)  amount of potential GDP increases when the price level rises.

Question 14

How does the aggregate demand curve reflect an increase in aggregate demand?

Accepted Answer

An increase in aggre

Question 15

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

Question 16

A rise in the price level produces a ________ the aggregate supply curve.

Accepted Answer

A)  rightward shift of 
B)  movement downward along 
C)  leftward shift of 
D)  movement upward along 
E)  rightward shift of the aggregate supply curve and a movement downward along 
A)  rightward shift of 
B)  movement downward along 
C)  leftward shift of 
D)  movement upward along 
E)  rightward shift of the aggregate supply curve and a movement downward along

Question 17

How might an inflationary gap arise?
 How does the economy adjust to an inflationary gap?

Accepted Answer

An inflationary gap arises when aggregat

Question 18

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

Accepted Answer

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

Question 19

A crisis in the Middle East drastically raises the price of petroleum.If the aggregate demand curve does not shift, then aggregate supply will ________, real GDP will ________, and the price level will ________.

Accepted Answer

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

Question 20

If real GDP is less than potential GDP, then the money wage rate ________, aggregate supply ________ so that the price level ________.

Accepted Answer

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

If the costs of production decrease, there is

If real GDP is greater than potential GDP, then to restore equilibrium and the price level .

The aggregate supply curve is

If the money wage rate increases, then the

If the price of oil rises, the

Last year the price level increased from 118 to 122.The increase in the price level leads to a decrease in

Suppose that during 2005, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos.What sort of equilibrium existed in Chile?

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

A technological advance potential GDP, aggregate supply, and shifts the aggregate supply curve .

If the equilibrium price level is 135 but the actual price level is 150, then

The aggregate demand multiplier effect says that an initial increase in expenditure plans leads to an induced

If European economies enter a recession,

The aggregate supply curve illustrates that the

How does the aggregate demand curve reflect an increase in aggregate demand?

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

A rise in the price level produces a ________ the aggregate supply curve.

How might an inflationary gap arise? How does the economy adjust to an inflationary gap?

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

A crisis in the Middle East drastically raises the price of petroleum.If the aggregate demand curve does not shift, then aggregate supply will , real GDP will , and the price level will .

If real GDP is less than potential GDP, then the money wage rate , aggregate supply so that the price level .

Getting Started

The Usand 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

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 13: Aggregate Supply and Aggregate Demand

If the costs of production decrease, there is

If real GDP is greater than potential GDP, then to restore equilibrium ________ and the price level ________.

The aggregate supply curve is

If the money wage rate increases, then the

If the price of oil rises, the

Last year the price level increased from 118 to 122.The increase in the price level leads to a decrease in

Suppose that during 2005, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos.What sort of equilibrium existed in Chile?

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

A technological advance ________ potential GDP, ________ aggregate supply, and shifts the aggregate supply curve ________.

If the equilibrium price level is 135 but the actual price level is 150, then

The aggregate demand multiplier effect says that an initial increase in expenditure plans leads to an induced

If European economies enter a recession,

The aggregate supply curve illustrates that the

How does the aggregate demand curve reflect an increase in aggregate demand?

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

A rise in the price level produces a ________ the aggregate supply curve.

How might an inflationary gap arise? How does the economy adjust to an inflationary gap?

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

A crisis in the Middle East drastically raises the price of petroleum.If the aggregate demand curve does not shift, then aggregate supply will ________, real GDP will ________, and the price level will ________.

If real GDP is less than potential GDP, then the money wage rate ________, aggregate supply ________ so that the price level ________.

Getting Started

The Usand 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

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

If real GDP is greater than potential GDP, then to restore equilibrium and the price level .

A technological advance potential GDP, aggregate supply, and shifts the aggregate supply curve .

A crisis in the Middle East drastically raises the price of petroleum.If the aggregate demand curve does not shift, then aggregate supply will , real GDP will , and the price level will .

If real GDP is less than potential GDP, then the money wage rate , aggregate supply so that the price level .