Question 1

The real wage rate definitely falls if the money wage rate ________ and the price level ________.

Accepted Answer

A) remains constant; rises 
B) remains constant; falls 
C) rises; falls 
D) rises; rises 
E) falls; falls 
A) remains constant; rises 
B) remains constant; falls 
C) rises; falls 
D) rises; rises 
E) falls; falls

Question 2

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 3

What are the two channels through which the world economy can affect U.S. aggregate demand?
 State what changes in the world economy can increase U.S. aggregate demand.

Accepted Answer

The world economy can affect aggregate d

Question 4

By itself, an increase in the price of oil shifts the

Accepted Answer

A) aggregate supply curve leftward and does not shift the aggregate demand curve. 
B) aggregate supply curve rightward and does not shift the aggregate demand curve. 
C) aggregate demand curve leftward and does not shift the aggregate supply curve. 
D) aggregate demand curve rightward and does not shift the aggregate supply curve. 
E) aggregate demand curve rightward and shifts the potential GDP line rightward. 
A) aggregate supply curve leftward and does not shift the aggregate demand curve. 
B) aggregate supply curve rightward and does not shift the aggregate demand curve. 
C) aggregate demand curve leftward and does not shift the aggregate supply curve. 
D) aggregate demand curve rightward and does not shift the aggregate supply curve. 
E) aggregate demand curve rightward and shifts the potential GDP line rightward.

Question 5

-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 6

The ________, the ________ is the quantity of real GDP supplied.

Accepted Answer

A) lower the price level; greater 
B) higher the price level; greater 
C) greater the demand for labor; smaller 
D) lower the supply of labor; greater 
E) lower aggregate demand; greater 
A) lower the price level; greater 
B) higher the price level; greater 
C) greater the demand for labor; smaller 
D) lower the supply of labor; greater 
E) lower aggregate demand; greater

Question 7

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 8

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

Accepted Answer

An increase in aggre

Question 9

Which of the following could result in a recession?

Accepted Answer

A) a rise in the price of oil 
B) an increase in investment 
C) a tax cut 
D) an increase in the quantity of money 
E) an increase in government expenditures on goods and services 
A) a rise in the price of oil 
B) an increase in investment 
C) a tax cut 
D) an increase in the quantity of money 
E) an increase in government expenditures on goods and services

Question 10

A rise in the price level

Accepted Answer

A) raises the buying power of money. 
B) decreases the prices of exports. 
C) lowers the buying power of money. 
D) increases aggregate demand. 
E) makes the aggregate demand curve steeper. 
A) raises the buying power of money. 
B) decreases the prices of exports. 
C) lowers the buying power of money. 
D) increases aggregate demand. 
E) makes the aggregate demand curve steeper.

Question 11

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 12

Which of the following is true?

Accepted Answer

A) Aggregate supply is another name for potential GDP. 
B) Potential GDP increases as the price level increases. 
C) At full employment, aggregate supply is equal to potential GDP. 
D) Potential GDP decreases as the price level increases. 
E) The potential GDP line has a negative slope. 
A) Aggregate supply is another name for potential GDP. 
B) Potential GDP increases as the price level increases. 
C) At full employment, aggregate supply is equal to potential GDP. 
D) Potential GDP decreases as the price level increases. 
E) The potential GDP line has a negative slope.

Question 13

How does a cut in interest rates that increases investment affect the quantity of real GDP demanded, the aggregate demand curve, real GDP, and the price level?

Accepted Answer

The increase in investment inc

Question 14

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 15

What is the aggregate demand multiplier and why does it occur?

Accepted Answer

The aggregate demand multiplier is an ef

Question 16

In its macroeconomic equilibrium, the economy can be producing at i. below full employment.
Ii. full employment.
Iii. above full employment.

Accepted Answer

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

Question 17

"An increase in Mexican income decreases aggregate demand in the United States." Is the preceding statement correct or incorrect?
 Briefly explain your answer.

Accepted Answer

The statement is incorrect. An increase

Question 18

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) more expensive, so Sherri will likely purchase a U.S. manufactured sofa. 
B) more expensive, so Sherri will likely purchase a Canadian manufactured sofa. 
C) less expensive, so Sherri will likely purchase a U.S. manufactured sofa. 
D) less 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) more expensive, so Sherri will likely purchase a U.S. manufactured sofa. 
B) more expensive, so Sherri will likely purchase a Canadian manufactured sofa. 
C) less expensive, so Sherri will likely purchase a U.S. manufactured sofa. 
D) less 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 19

Give examples of factors that decrease aggregate demand. Which way does the aggregate demand curve shift?

Accepted Answer

Anything that decreases spending decreas

Question 20

Cost-push inflation might initially result from

Accepted Answer

A) an increase in the quantity of money. 
B) a decrease in the quantity of money. 
C) the use of new technology. 
D) an increase in government expenditure. 
E) an increase in the cost of resources. 
A) an increase in the quantity of money. 
B) a decrease in the quantity of money. 
C) the use of new technology. 
D) an increase in government expenditure. 
E) an increase in the cost of resources.

The real wage rate definitely falls if the money wage rate and the price level .

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?

What are the two channels through which the world economy can affect U.S. aggregate demand? State what changes in the world economy can increase U.S. aggregate demand.

By itself, an increase in the price of oil shifts the

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

The , the is the quantity of real GDP supplied.

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.

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

Which of the following could result in a recession?

A rise in the price level

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

Which of the following is true?

How does a cut in interest rates that increases investment affect the quantity of real GDP demanded, the aggregate demand curve, real GDP, and the price level?

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

What is the aggregate demand multiplier and why does it occur?

In its macroeconomic equilibrium, the economy can be producing at i. below full employment. Ii. full employment. Iii. above full employment.

"An increase in Mexican income decreases aggregate demand in the United States." Is the preceding statement correct or incorrect? Briefly explain your answer.

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

Give examples of factors that decrease aggregate demand. Which way does the aggregate demand curve shift?

Cost-push inflation might initially result from

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Fiscal Policy and Monetary Policy

Filters

Exam 19: Aggregate Supply and Aggregate Demand

The real wage rate definitely falls if the money wage rate ________ and the price level ________.

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?

What are the two channels through which the world economy can affect U.S. aggregate demand? State what changes in the world economy can increase U.S. aggregate demand.

By itself, an increase in the price of oil shifts the

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

The ________, the ________ is the quantity of real GDP supplied.

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.

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

Which of the following could result in a recession?

A rise in the price level

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

Which of the following is true?

How does a cut in interest rates that increases investment affect the quantity of real GDP demanded, the aggregate demand curve, real GDP, and the price level?

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

What is the aggregate demand multiplier and why does it occur?

In its macroeconomic equilibrium, the economy can be producing at i. below full employment. Ii. full employment. Iii. above full employment.

"An increase in Mexican income decreases aggregate demand in the United States." Is the preceding statement correct or incorrect? Briefly explain your answer.

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

Give examples of factors that decrease aggregate demand. Which way does the aggregate demand curve shift?

Cost-push inflation might initially result from

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Fiscal Policy and Monetary Policy

Filters

The real wage rate definitely falls if the money wage rate and the price level .

The , the is the quantity of real GDP supplied.

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.