Question 1

The figure above shows aggregate demand curves.
-Based on the figure above, the aggregate demand curve will shift from AD₀ to AD₂ when

Accepted Answer

A)  potential GDP increases. 
B)  the price level falls. 
C)  taxes are lowered. 
D)  government expenditure increases. 
E)  the Federal Reserve raises the interest rate. 
A)  potential GDP increases. 
B)  the price level falls. 
C)  taxes are lowered. 
D)  government expenditure increases. 
E)  the Federal Reserve raises the interest rate.

Question 2

An increase in the price level leads to a

Accepted Answer

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

Question 3

If the costs of production increase, 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)  a decrease in aggregate supply and the AS curve shifts rightward. 
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)  a decrease in aggregate supply and the AS curve shifts rightward.

Question 4

Which of the following shifts the aggregate supply curve rightward?

Accepted Answer

A)  increase in potential GDP 
B)  increase in the money wage rate 
C)  increase in real GDP 
D)  increase in the money price of oil 
E)  increase in consumers' incomes 
A)  increase in potential GDP 
B)  increase in the money wage rate 
C)  increase in real GDP 
D)  increase in the money price of oil 
E)  increase in consumers' incomes

Question 5

A rise in the price level

Accepted Answer

A)  decreases aggregate demand. 
B)  increases aggregate demand. 
C)  decreases the quantity of real GDP demanded. 
D)  increases the quantity of real GDP demanded. 
E)  has no effect on aggregate demand or on the quantity of real GDP demanded. 
A)  decreases aggregate demand. 
B)  increases aggregate demand. 
C)  decreases the quantity of real GDP demanded. 
D)  increases the quantity of real GDP demanded. 
E)  has no effect on aggregate demand or on the quantity of real GDP demanded.

Question 6

Which of the following changes aggregate supply and shifts the aggregate supply curve?
i. change in the price level
ii. change in potential GDP
iii. change in the money wage rate

Accepted Answer

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

Question 7

An increase in the price level ________ the aggregate quantity supplied and ________ the aggregate quantity demanded.

Accepted Answer

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

Question 8

When OPEC nearly tripled the price of oil in late 1973

Accepted Answer

A)  U.S.real GDP increased as profits by oil producers increased. 
B)  U.S.real GDP did not change although the price level rose. 
C)  the U.S.price level fell because production became too expensive. 
D)  the U.S.price level rose and real GDP decreased. 
E)  both U.S.real GDP and the price level increased. 
A)  U.S.real GDP increased as profits by oil producers increased. 
B)  U.S.real GDP did not change although the price level rose. 
C)  the U.S.price level fell because production became too expensive. 
D)  the U.S.price level rose and real GDP decreased. 
E)  both U.S.real GDP and the price level increased.

Question 9

If potential GDP increases,

Accepted Answer

A)  aggregate supply does not change. 
B)  the quantity of aggregate supply decreases. 
C)  aggregate supply increases. 
D)  the price level rises. 
E)  the money wage rate must have fallen. 
A)  aggregate supply does not change. 
B)  the quantity of aggregate supply decreases. 
C)  aggregate supply increases. 
D)  the price level rises. 
E)  the money wage rate must have fallen.

Question 10

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

Accepted Answer

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

Question 11

A tax increase

Accepted Answer

A)  decreases aggregate demand and the AD curve shifts leftward. 
B)  increases aggregate demand and the AD curve shifts rightward. 
C)  decreases the quantity of real GDP demanded and there is a movement up along the AD curve. 
D)  increases the quantity of real GDP demanded and there is a movement down along the AD curve. 
E)  does not shift or lead to a movement along the aggregate demand curve. 
A)  decreases aggregate demand and the AD curve shifts leftward. 
B)  increases aggregate demand and the AD curve shifts rightward. 
C)  decreases the quantity of real GDP demanded and there is a movement up along the AD curve. 
D)  increases the quantity of real GDP demanded and there is a movement down along the AD curve. 
E)  does not shift or lead to a movement along the aggregate demand curve.

Question 12

In the short run, a rise in the price level brings a ________ in the real interest rate that ________ investment, bringing ________ in the quantity of real GDP demanded.

Accepted Answer

A)  rise; decreases; a decrease 
B)  fall; decreases ; a decrease 
C)  fall; increases ; an increase 
D)  rise; increases ; an increase 
E)  rise; decreases; an increase 
A)  rise; decreases; a decrease 
B)  fall; decreases ; a decrease 
C)  fall; increases ; an increase 
D)  rise; increases ; an increase 
E)  rise; decreases; an increase

Question 13

The quantity of real GDP supplied decreases if the price level ________ because it ________ profits.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
E)  None of the above answers are correct because the AS curve is vertical so that the quantity of real GDP supplied does not change when the price level changes. 
A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
E)  None of the above answers are correct because the AS curve is vertical so that the quantity of real GDP supplied does not change when the price level changes.

Question 14

When the price level rises and increases the demand for money, the nominal interest rate ________ and the real interest rate ________.

Accepted Answer

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

Question 15

-In the figure above, the economy is at an equilibrium with real GDP of $10 trillion and a price level of 110.As the economy moves toward its ultimate equilibrium, the ________ curve will shift ________.

Accepted Answer

A)  aggregate supply; leftward 
B)  aggregate supply; rightward 
C)  aggregate demand; rightward 
D)  aggregate demand; leftward 
E)  potential GDP; rightward 
A)  aggregate supply; leftward 
B)  aggregate supply; rightward 
C)  aggregate demand; rightward 
D)  aggregate demand; leftward 
E)  potential GDP; rightward

Question 16

Other things remaining the same, an increase in the price level

Accepted Answer

A)  increases aggregate supply. 
B)  decreases aggregate supply. 
C)  increases the quantity of real GDP supplied. 
D)  decreases the quantity of real GDP supplied. 
E)  neither change aggregate supply nor changes the quantity of real GDP supplied. 
A)  increases aggregate supply. 
B)  decreases aggregate supply. 
C)  increases the quantity of real GDP supplied. 
D)  decreases the quantity of real GDP supplied. 
E)  neither change aggregate supply nor changes the quantity of real GDP supplied.

Question 17

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Price level } \
\text { (GDP deflator) }
\end{array} & \begin{array} { c } 
\text { Potential GDP } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP supplied } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP demanded } \
\text { (billions of 2005 dollars) }
\end{array} \
\hline 150 & 25 & 34 & 16 \
140 & 25 & 31 & 19 \
130 & 25 & 28 & 22 \
120 & 25 & 25 & 25 \
110 & 25 & 23 & 28 \
\hline
\end{array}$$
-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

Accepted Answer

A)  $34 billion. 
B)  $31 billion. 
C)  $28 billion. 
D)  $25 billion. 
E)  $23 billion. 
A)  $34 billion. 
B)  $31 billion. 
C)  $28 billion. 
D)  $25 billion. 
E)  $23 billion.

Question 18

If the money wage rate rises,

Accepted Answer

A)  the AS curve shifts rightward. 
B)  there is a movement up along the AS curve. 
C)  the AS curve shifts leftward. 
D)  there is a movement down along the AS curve. 
E)  there is neither a movement along or a shift in the AS curve. 
A)  the AS curve shifts rightward. 
B)  there is a movement up along the AS curve. 
C)  the AS curve shifts leftward. 
D)  there is a movement down along the AS curve. 
E)  there is neither a movement along or a shift in the AS curve.

Question 19

A change in the price level

Accepted Answer

A)  shifts the aggregate supply curve rightward. 
B)  shifts the potential GDP line. 
C)  shifts the aggregate supply curve leftward. 
D)  changes the quantity of real GDP supplied. 
E)  shifts the aggregate demand curve leftward. 
A)  shifts the aggregate supply curve rightward. 
B)  shifts the potential GDP line. 
C)  shifts the aggregate supply curve leftward. 
D)  changes the quantity of real GDP supplied. 
E)  shifts the aggregate demand curve leftward.

Question 20

A technological advance ________ aggregate supply, shifting the aggregate supply curve ________ and potentially bringing the ________ phase of the business cycle.

Accepted Answer

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

The figure above shows aggregate demand curves. -Based on the figure above, the aggregate demand curve will shift from AD₀ to AD₂ when

An increase in the price level leads to a

If the costs of production increase, there is

Which of the following shifts the aggregate supply curve rightward?

A rise in the price level

Which of the following changes aggregate supply and shifts the aggregate supply curve? i. change in the price level ii. change in potential GDP iii. change in the money wage rate

An increase in the price level the aggregate quantity supplied and the aggregate quantity demanded.

When OPEC nearly tripled the price of oil in late 1973

If potential GDP increases,

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

A tax increase

In the short run, a rise in the price level brings a in the real interest rate that investment, bringing in the quantity of real GDP demanded.

The quantity of real GDP supplied decreases if the price level because it profits.

When the price level rises and increases the demand for money, the nominal interest rate and the real interest rate .

-In the figure above, the economy is at an equilibrium with real GDP of $10 trillion and a price level of 110.As the economy moves toward its ultimate equilibrium, the curve will shift .

Other things remaining the same, an increase in the price level

If the money wage rate rises,

A change in the price level

A technological advance aggregate supply, shifting the aggregate supply curve and potentially bringing the phase of the business cycle.

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 AD₂ when

An increase in the price level leads to a

If the costs of production increase, there is

Which of the following shifts the aggregate supply curve rightward?

A rise in the price level

Which of the following changes aggregate supply and shifts the aggregate supply curve? i. change in the price level ii. change in potential GDP iii. change in the money wage rate

An increase in the price level ________ the aggregate quantity supplied and ________ the aggregate quantity demanded.

When OPEC nearly tripled the price of oil in late 1973

If potential GDP increases,

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

A tax increase

In the short run, a rise in the price level brings a ________ in the real interest rate that ________ investment, bringing ________ in the quantity of real GDP demanded.

The quantity of real GDP supplied decreases if the price level ________ because it ________ profits.

When the price level rises and increases the demand for money, the nominal interest rate ________ and the real interest rate ________.

-In the figure above, the economy is at an equilibrium with real GDP of $10 trillion and a price level of 110.As the economy moves toward its ultimate equilibrium, the ________ curve will shift ________.

Other things remaining the same, an increase in the price level

If the money wage rate rises,

A change in the price level

A technological advance ________ aggregate supply, shifting the aggregate supply curve ________ and potentially bringing the ________ phase of the business cycle.

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

An increase in the price level the aggregate quantity supplied and the aggregate quantity demanded.

In the short run, a rise in the price level brings a in the real interest rate that investment, bringing in the quantity of real GDP demanded.

The quantity of real GDP supplied decreases if the price level because it profits.

When the price level rises and increases the demand for money, the nominal interest rate and the real interest rate .

-In the figure above, the economy is at an equilibrium with real GDP of $10 trillion and a price level of 110.As the economy moves toward its ultimate equilibrium, the curve will shift .

A technological advance aggregate supply, shifting the aggregate supply curve and potentially bringing the phase of the business cycle.