Question 1

The figure above shows aggregate demand curves.
-Based on the figure above, the aggregate demand curve will shift from AD₀ to AD₁ when

Accepted Answer

A)  potential GDP increases. 
B)  the price level falls. 
C)  the price level rises. 
D)  government expenditure decreases. 
E)  the Federal Reserve lowers the interest rate. 
A)  potential GDP increases. 
B)  the price level falls. 
C)  the price level rises. 
D)  government expenditure decreases. 
E)  the Federal Reserve lowers the interest rate.

Question 2

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion.What happens if the current price level equals 125?

Accepted Answer

The quantity of real GDP demanded is gre

Question 3

A fall in the real wage rate ________ firms' profits and leads to ________ in the quantity supplied.

Accepted Answer

A)  raises; an increase 
B)  raises; a decrease 
C)  lowers; an increase 
D)  lowers; a decrease 
E)  does not change; no change 
A)  raises; an increase 
B)  raises; a decrease 
C)  lowers; an increase 
D)  lowers; a decrease 
E)  does not change; no change

Question 4

If the quantity of real GDP supplied equals the quantity of real GDP demanded, then

Accepted Answer

A)  nominal GDP must equal real GDP. 
B)  real GDP must equal potential GDP. 
C)  real GDP must be greater than potential GDP. 
D)  real GDP might be greater than, equal to, or less than potential GDP. 
E)  real GDP must be less than potential GDP. 
A)  nominal GDP must equal real GDP. 
B)  real GDP must equal potential GDP. 
C)  real GDP must be greater than potential GDP. 
D)  real GDP might be greater than, equal to, or less than potential GDP. 
E)  real GDP must be less than potential GDP.

Question 5

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

Accepted Answer

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

Question 6

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

Accepted Answer

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

Question 7

An economy experiences a recessionary gap.As a result, the money wage rate

Accepted Answer

A)  falls, shifting the aggregate supply curve rightward. 
B)  rises, shifting the aggregate supply curve leftward. 
C)  rises, shifting the aggregate demand curve rightward. 
D)  falls, shifting the aggregate demand curve leftward. 
E)  falls, increasing potential GDP. 
A)  falls, shifting the aggregate supply curve rightward. 
B)  rises, shifting the aggregate supply curve leftward. 
C)  rises, shifting the aggregate demand curve rightward. 
D)  falls, shifting the aggregate demand curve leftward. 
E)  falls, increasing potential GDP.

Question 8

Which of the following statements is true?

Accepted Answer

A)  An increase in potential GDP increases aggregate supply and shifts the AS curve leftward. 
B)  A decrease in potential GDP decreases aggregate supply and shifts the AS curve leftward. 
C)  An increase in the money wage rate shifts the AS curve rightward. 
D)  A fall in the price level shifts the AS curve leftward. 
E)  An increase in the money wage rate increases potential GDP. 
A)  An increase in potential GDP increases aggregate supply and shifts the AS curve leftward. 
B)  A decrease in potential GDP decreases aggregate supply and shifts the AS curve leftward. 
C)  An increase in the money wage rate shifts the AS curve rightward. 
D)  A fall in the price level shifts the AS curve leftward. 
E)  An increase in the money wage rate increases potential GDP.

Question 9

The economy is at full employment.If aggregate demand increases,

Accepted Answer

A)  an inflationary gap is created and the AS curve shifts leftward as the money wage rate rises. 
B)  an inflationary gap is created and the AD curve shifts leftward. 
C)  an inflationary gap is created and potential GDP increases to close the gap. 
D)  a recessionary gap is created and the AS curve shifts leftward as the money wage rate falls. 
E)  a recessionary gap is created and the AS curve shifts leftward as the money wage rate rises. 
A)  an inflationary gap is created and the AS curve shifts leftward as the money wage rate rises. 
B)  an inflationary gap is created and the AD curve shifts leftward. 
C)  an inflationary gap is created and potential GDP increases to close the gap. 
D)  a recessionary gap is created and the AS curve shifts leftward as the money wage rate falls. 
E)  a recessionary gap is created and the AS curve shifts leftward as the money wage rate rises.

Question 10

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

Accepted Answer

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

Question 11

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

Question 12

As a result of OPEC ________ oil prices in 1973 and 1980, real GDP in United States ________.

Accepted Answer

A)  increasing; increased 
B)  increasing; decreased 
C)  decreasing; increased 
D)  decreasing; decreased 
E)  increasing; did not change 
A)  increasing; increased 
B)  increasing; decreased 
C)  decreasing; increased 
D)  decreasing; decreased 
E)  increasing; did not change

Question 13

Which of the following does NOT shift the aggregate demand curve?

Accepted Answer

A)  a change in the money wage 
B)  a change in expectations about the future 
C)  a change in monetary policy 
D)  a change in fiscal policy 
E)  a change in foreign income 
A)  a change in the money wage 
B)  a change in expectations about the future 
C)  a change in monetary policy 
D)  a change in fiscal policy 
E)  a change in foreign income

Question 14

If the AD curve shifts rightward, then

Accepted Answer

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

Question 15

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

Question 16

GDP is

Accepted Answer

A)  a perfect measure of the standard of living. 
B)  a perfect measure of the value of production. 
C)  a measure which includes the value of all newly produced goods and services. 
D)  an imperfect measure of the standard of living. 
E)  the only factor that affects our standard of living. 
A)  a perfect measure of the standard of living. 
B)  a perfect measure of the value of production. 
C)  a measure which includes the value of all newly produced goods and services. 
D)  an imperfect measure of the standard of living. 
E)  the only factor that affects our standard of living.

Question 17

Oil price hikes

Accepted Answer

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

Question 18

Which of the following shifts the aggregate supply curve leftward?

Accepted Answer

A)  a decrease in potential GDP 
B)  a fall in the money wage rate 
C)  a decrease in the price level 
D)  a fall in the real wage rate 
E)  an increase in potential GDP 
A)  a decrease in potential GDP 
B)  a fall in the money wage rate 
C)  a decrease in the price level 
D)  a fall in the real wage rate 
E)  an increase in potential GDP

Question 19

-The change in potential real GDP and aggregate supply shown in the graph above can be a result of

Accepted Answer

A)  an increase in the real wage rate. 
B)  an increase in the quantity of capital. 
C)  a decrease in the money wage rate. 
D)  a decrease in the money price of oil. 
E)  a fall in the price level. 
A)  an increase in the real wage rate. 
B)  an increase in the quantity of capital. 
C)  a decrease in the money wage rate. 
D)  a decrease in the money price of oil. 
E)  a fall in the price level.

Question 20

How does a recession in Asia affect U.S.aggregate demand and the U.S.aggregate demand curve?

Accepted Answer

A recession in Asia means that Asians pu

The figure above shows aggregate demand curves. -Based on the figure above, the aggregate demand curve will shift from AD₀ to AD₁ when

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion.What happens if the current price level equals 125?

A fall in the real wage rate firms' profits and leads to in the quantity supplied.

If the quantity of real GDP supplied equals the quantity of real GDP demanded, then

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

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

An economy experiences a recessionary gap.As a result, the money wage rate

Which of the following statements is true?

The economy is at full employment.If aggregate demand increases,

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

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 .

As a result of OPEC oil prices in 1973 and 1980, real GDP in United States .

Which of the following does NOT shift the aggregate demand curve?

If the AD curve shifts rightward, then

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

GDP is

Oil price hikes

Which of the following shifts the aggregate supply curve leftward?

-The change in potential real GDP and aggregate supply shown in the graph above can be a result of

How does a recession in Asia affect U.S.aggregate demand and the U.S.aggregate demand curve?

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

The figure above shows aggregate demand curves. -Based on the figure above, the aggregate demand curve will shift from AD₀ to AD₁ when

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion.What happens if the current price level equals 125?

A fall in the real wage rate ________ firms' profits and leads to ________ in the quantity supplied.

If the quantity of real GDP supplied equals the quantity of real GDP demanded, then

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

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

An economy experiences a recessionary gap.As a result, the money wage rate

Which of the following statements is true?

The economy is at full employment.If aggregate demand increases,

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

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 ________.

As a result of OPEC ________ oil prices in 1973 and 1980, real GDP in United States ________.

Which of the following does NOT shift the aggregate demand curve?

If the AD curve shifts rightward, then

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

GDP is

Oil price hikes

Which of the following shifts the aggregate supply curve leftward?

-The change in potential real GDP and aggregate supply shown in the graph above can be a result of

How does a recession in Asia affect U.S.aggregate demand and the U.S.aggregate demand curve?

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

A fall in the real wage rate firms' profits and leads to in the quantity supplied.

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

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

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 .

As a result of OPEC oil prices in 1973 and 1980, real GDP in United States .