Question 1

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

Accepted Answer

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

Question 2

Real GDP definitely increases if

Accepted Answer

A)  both the AD curve and the AS curve shift rightward. 
B)  both the AD curve and AS curve shift leftward. 
C)  the AD curve shifts leftward and the AS curve shifts rightward. 
D)  the AS curve shifts leftward and the AD curve does not shift. 
E)  potential GDP decreases so that real GDP exceeds potential GDP. 
A)  both the AD curve and the AS curve shift rightward. 
B)  both the AD curve and AS curve shift leftward. 
C)  the AD curve shifts leftward and the AS curve shifts rightward. 
D)  the AS curve shifts leftward and the AD curve does not shift. 
E)  potential GDP decreases so that real GDP exceeds potential GDP.

Question 3

When the price level increases there is ________ movement along the aggregate demand curve because the buying power of money ________.

Accepted Answer

A)  an upward; decreases 
B)  a downward; decreases 
C)  an upward; increases 
D)  a downward; increases 
E)  no; does not change 
A)  an upward; decreases 
B)  a downward; decreases 
C)  an upward; increases 
D)  a downward; increases 
E)  no; does not change

Question 4

If the quantity of real GDP demanded is greater than the quantity of real GDP supplied, then

Accepted Answer

A)  the economy must be producing at potential GDP. 
B)  the price level falls and firms decrease production. 
C)  the price level rises and firms increase production. 
D)  the price level falls to restore the macroeconomic equilibrium 
E)  aggregate demand changes to restore equilibrium. 
A)  the economy must be producing at potential GDP. 
B)  the price level falls and firms decrease production. 
C)  the price level rises and firms increase production. 
D)  the price level falls to restore the macroeconomic equilibrium 
E)  aggregate demand changes to restore equilibrium.

Question 5

A rise in the price level ________ the buying power of money and ________ the quantity of real GDP demanded.

Accepted Answer

A)  does not affect; increases 
B)  lowers; increases 
C)  raises; decreases 
D)  lowers; decreases 
E)  does not affect; does not change 
A)  does not affect; increases 
B)  lowers; increases 
C)  raises; decreases 
D)  lowers; decreases 
E)  does not affect; does not change

Question 6

In the late 1920s, the U.S.economy experienced a decrease in investment, which perhaps triggered the Great Depression.The decrease in investment

Accepted Answer

A)  increased aggregate supply. 
B)  decreased aggregate supply. 
C)  increased aggregate demand. 
D)  decreased aggregate demand. 
E)  increased potential GDP. 
A)  increased aggregate supply. 
B)  decreased aggregate supply. 
C)  increased aggregate demand. 
D)  decreased aggregate demand. 
E)  increased potential GDP.

Question 7

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

Accepted Answer

A)  a decrease in the money wage rate. 
B)  a decrease in the real wage rate. 
C)  an increase in the money wage rate. 
D)  an increase in the real wage rate. 
E)  a rise in the price level. 
A)  a decrease in the money wage rate. 
B)  a decrease in the real wage rate. 
C)  an increase in the money wage rate. 
D)  an increase in the real wage rate. 
E)  a rise in the price level.

Question 8

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

Question 9

When the price level rises, the real interest rate ________ and the quantity of real GDP demanded ________.

Accepted Answer

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

Question 10

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Price level } \
\text { (GDP deflator) }
\end{array} & \begin{array} { c } 
\text { Real GDP demanded } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP supplied } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} \
\hline 80 & 10 & 2 \
90 & 9 & 4 \
100 & 8 & 6 \
110 & 7 & 7 \
120 & 6 & 8 \
130 & 4 & 9 \
\hline
\end{array}$$ 
The table gives the aggregate demand and aggregate supply schedules for a nation.
-Equilibrium real GDP is

Accepted Answer

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

Question 11

Which of the following does NOT affect potential GDP?

Accepted Answer

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

Question 12

Which of the following changes aggregate supply and shifts the AS curve?
i. a change in the price of a major resource
ii. increases in the amount of capital
iii. a change in the money income of consumers

Accepted Answer

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

Question 13

The aggregate supply curve shifts rightward when

Accepted Answer

A)  potential GDP decreases. 
B)  the money wage rate falls. 
C)  income taxes increase. 
D)  government purchases increase. 
E)  the money wage rate rises. 
A)  potential GDP decreases. 
B)  the money wage rate falls. 
C)  income taxes increase. 
D)  government purchases increase. 
E)  the money wage rate rises.

Question 14

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Price level } \
\text { (GDP deflator) }
\end{array} & \begin{array} { c } 
\text { Real GDP demanded } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP supplied } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} \
\hline 80 & 10 & 2 \
90 & 9 & 4 \
100 & 8 & 6 \
110 & 7 & 7 \
120 & 6 & 8 \
130 & 4 & 9 \
\hline
\end{array}$$ 
The table gives the aggregate demand and aggregate supply schedules for a nation.
-If the price level is 120 then the aggregate quantity demanded is ________ than the aggregate quantity supplied and the price level ________.

Accepted Answer

A)  greater; rises 
B)  greater; falls 
C)  less; rises 
D)  less; falls 
E)  less; might fall, rise or not change depending on whether real GDP is more than, less than, or equal to potential GDP. 
A)  greater; rises 
B)  greater; falls 
C)  less; rises 
D)  less; falls 
E)  less; might fall, rise or not change depending on whether real GDP is more than, less than, or equal to potential GDP.

Question 15

"Moving along the AS curve, the real wage rate is constant while moving along the potential GDP line, the real wage rate changes." Explain whether the previous statement is correct or incorrect.

Accepted Answer

The statement is incorrect.It reverses t

Question 16

When potential GDP increases the potential GDP line ________ and the aggregate supply curve ________.

Accepted Answer

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

Question 17

Stagflation is a combination of ________ real GDP and a ________ price level.

Accepted Answer

A)  increasing; rising 
B)  increasing; falling 
C)  decreasing; rising 
D)  decreasing; falling 
E)  no change in; rising 
A)  increasing; rising 
B)  increasing; falling 
C)  decreasing; rising 
D)  decreasing; falling 
E)  no change in; rising

Question 18

If the AD curve shifts rightward while the AS curve and potential GDP don't change, then

Accepted Answer

A)  the economy will move from a peak into recession. 
B)  the expansion phase of the business cycle occurs. 
C)  there will be no change in real GDP, so the economy is at the peak of the cycle. 
D)  there will be no change in real GDP, so the economy is at the trough of the cycle. 
E)  real GDP does not change. 
A)  the economy will move from a peak into recession. 
B)  the expansion phase of the business cycle occurs. 
C)  there will be no change in real GDP, so the economy is at the peak of the cycle. 
D)  there will be no change in real GDP, so the economy is at the trough of the cycle. 
E)  real GDP does not change.

Question 19

All of the following shift the aggregate demand curve to the right EXCEPT

Accepted Answer

A)  an increase in taxes. 
B)  an expansion of the global economy. 
C)  an increase in foreign income. 
D)  an increase in government expenditure. 
E)  an increase in expected future profit. 
A)  an increase in taxes. 
B)  an expansion of the global economy. 
C)  an increase in foreign income. 
D)  an increase in government expenditure. 
E)  an increase in expected future profit.

Question 20

-What is the current equilibrium price level and real GDP for the economy illustrated in the figure above?
 Does this economy have an inflationary gap, a recessionary gap, or neither?
 As it adjusts toward full employment, which curve shifts?
 What is the equilibrium real GDP and price level that the economy will ultimately reach?

Accepted Answer

The equilibrium is where the aggregate d

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

Real GDP definitely increases if

When the price level increases there is movement along the aggregate demand curve because the buying power of money .

If the quantity of real GDP demanded is greater than the quantity of real GDP supplied, then

A rise in the price level the buying power of money and the quantity of real GDP demanded.

In the late 1920s, the U.S.economy experienced a decrease in investment, which perhaps triggered the Great Depression.The decrease in investment

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

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

When the price level rises, the real interest rate and the quantity of real GDP demanded .

Price level (GDP deflator) Real GDP demanded (trillions of 2005 dollars) Real GDP supplied (trillions of 2005 dollars) 80 10 2 90 9 4 100 8 6 110 7 7 120 6 8 130 4 9 The table gives the aggregate demand and aggregate supply schedules for a nation. -Equilibrium real GDP is

Which of the following does NOT affect potential GDP?

Which of the following changes aggregate supply and shifts the AS curve? i. a change in the price of a major resource ii. increases in the amount of capital iii. a change in the money income of consumers

The aggregate supply curve shifts rightward when

"Moving along the AS curve, the real wage rate is constant while moving along the potential GDP line, the real wage rate changes." Explain whether the previous statement is correct or incorrect.

When potential GDP increases the potential GDP line and the aggregate supply curve .

Stagflation is a combination of real GDP and a price level.

If the AD curve shifts rightward while the AS curve and potential GDP don't change, then

All of the following shift the aggregate demand curve to the right EXCEPT

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 change reflected in the above figure might be a result of

Real GDP definitely increases if

When the price level increases there is ________ movement along the aggregate demand curve because the buying power of money ________.

If the quantity of real GDP demanded is greater than the quantity of real GDP supplied, then

A rise in the price level ________ the buying power of money and ________ the quantity of real GDP demanded.

In the late 1920s, the U.S.economy experienced a decrease in investment, which perhaps triggered the Great Depression.The decrease in investment

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

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

When the price level rises, the real interest rate ________ and the quantity of real GDP demanded ________.

Price level (GDP deflator) Real GDP demanded (trillions of 2005 dollars) Real GDP supplied (trillions of 2005 dollars) 80 10 2 90 9 4 100 8 6 110 7 7 120 6 8 130 4 9 The table gives the aggregate demand and aggregate supply schedules for a nation. -Equilibrium real GDP is

Which of the following does NOT affect potential GDP?

Which of the following changes aggregate supply and shifts the AS curve? i. a change in the price of a major resource ii. increases in the amount of capital iii. a change in the money income of consumers

The aggregate supply curve shifts rightward when

"Moving along the AS curve, the real wage rate is constant while moving along the potential GDP line, the real wage rate changes." Explain whether the previous statement is correct or incorrect.

When potential GDP increases the potential GDP line ________ and the aggregate supply curve ________.

Stagflation is a combination of ________ real GDP and a ________ price level.

If the AD curve shifts rightward while the AS curve and potential GDP don't change, then

All of the following shift the aggregate demand curve to the right EXCEPT

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

When the price level increases there is movement along the aggregate demand curve because the buying power of money .

A rise in the price level the buying power of money and the quantity of real GDP demanded.

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

When the price level rises, the real interest rate and the quantity of real GDP demanded .

When potential GDP increases the potential GDP line and the aggregate supply curve .

Stagflation is a combination of real GDP and a price level.