Question 1

A macroeconomic equilibrium occurs when the

Accepted Answer

A) quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
B) quantity of real GDP demanded is less than the quantity of real GDP supplied. 
C) quantity of real GDP demanded equals the quantity of real GDP supplied even if they are not equal to potential GDP. 
D) quantity of real GDP demanded equals the quantity of real GDP supplied and both equal potential GDP. 
E) None of the above answers is correct. 
A) quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
B) quantity of real GDP demanded is less than the quantity of real GDP supplied. 
C) quantity of real GDP demanded equals the quantity of real GDP supplied even if they are not equal to potential GDP. 
D) quantity of real GDP demanded equals the quantity of real GDP supplied and both equal potential GDP. 
E) None of the above answers is correct.

Question 2

A deep recession hits the world economy, and real GDP in the rest of the world decreases. In the United States,

Accepted Answer

A) aggregate supply and aggregate demand both increase, and the price level rises. 
B) aggregate supply decreases while aggregate demand does not change, and the price level rises. 
C) aggregate demand decreases while aggregate supply does not change, and the price level falls. 
D) aggregate supply increases and aggregate demand decreases, so the effect on the price level is uncertain. 
E) aggregate supply and aggregate demand both decrease, and the price level rises. 
A) aggregate supply and aggregate demand both increase, and the price level rises. 
B) aggregate supply decreases while aggregate demand does not change, and the price level rises. 
C) aggregate demand decreases while aggregate supply does not change, and the price level falls. 
D) aggregate supply increases and aggregate demand decreases, so the effect on the price level is uncertain. 
E) aggregate supply and aggregate demand both decrease, and the price level rises.

Question 3

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

Accepted Answer

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

Question 4

What are sources that can start a demand-pull inflation?

Accepted Answer

Demand-pull inflation starts with an inc

Question 5

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Price level } \
\text { (GDP deflator) }
\end{array} & \begin{array} { c } 
\text { Potential GDP } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP supplied } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP demanded } \
\text { (billions of 2005 dollars) }
\end{array} \
\hline 150 & 25 & 34 & 16 \
140 & 25 & 31 & 19 \
130 & 25 & 28 & 22 \
120 & 25 & 25 & 25 \
110 & 25 & 23 & 28
\end{array}$$
-The table above gives data for the nation of Pearl, a small island in the South Pacific. When the economy is at full employment the price level is

Accepted Answer

A) 130. 
B) 120. 
C) 110. 
D) 140. 
E) 150. 
A) 130. 
B) 120. 
C) 110. 
D) 140. 
E) 150.

Question 6

-In the above figure, illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.

Accepted Answer

@#IMG-DLM& An increase in the money price of a key

Question 7

19.4 Chapter Figures
   
The figure above shows the aggregate supply curve and potential GDP.
-Based on the figure above, the aggregate supply curve shifts rightward and the potential GDP line does not change when

Accepted Answer

A) the money wage rate rises. 
B) the price level rises. 
C) the money wage rate falls. 
D) the price level falls. 
E) both the price level and money wage rate rise by the same proportion. 
A) the money wage rate rises. 
B) the price level rises. 
C) the money wage rate falls. 
D) the price level falls. 
E) both the price level and money wage rate rise by the same proportion.

Question 8

Explain how changes in foreign income can impact real GDP in a country.

Accepted Answer

Changes in the income of any nation impa

Question 9

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

Question 10

Over the business cycle, factors such as the quantity of capital, human capital and technology

Accepted Answer

A) grow but do not fluctuate as much as the quantity of labor employed. 
B) change drastically, fluctuating more than the quantity of labor employed. 
C) fluctuate about the same amount as the quantity of labor employed. 
D) do not grow and are therefore not the source of economic growth. 
E) change randomly, sometimes growing, sometimes falling. 
A) grow but do not fluctuate as much as the quantity of labor employed. 
B) change drastically, fluctuating more than the quantity of labor employed. 
C) fluctuate about the same amount as the quantity of labor employed. 
D) do not grow and are therefore not the source of economic growth. 
E) change randomly, sometimes growing, sometimes falling.

Question 11

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 12

Explain the difference between a movement along the aggregate demand curve and a shift of the aggregate demand curve.

Accepted Answer

There is a movement along the aggregate

Question 13

What is demand-pull inflation?

Accepted Answer

An inflation that st

Question 14

If the Fed increases the quantity of money, then

Accepted Answer

A) aggregate demand decreases and the AD curve shifts leftward. 
B) aggregate demand increases and the AD curve shifts rightward. 
C) the quantity of real GDP demanded decreases and there is a movement up along the AD curve. 
D) the quantity of real GDP demanded increases and there is a movement down along the AD curve. 
E) both the aggregate demand curve and the aggregate supply curve shift leftward. 
A) aggregate demand decreases and the AD curve shifts leftward. 
B) aggregate demand increases and the AD curve shifts rightward. 
C) the quantity of real GDP demanded decreases and there is a movement up along the AD curve. 
D) the quantity of real GDP demanded increases and there is a movement down along the AD curve. 
E) both the aggregate demand curve and the aggregate supply curve shift leftward.

Question 15

Which of the following can start an inflation?

Accepted Answer

A) an increase in aggregate demand 
B) an increase in aggregate supply 
C) a decrease in aggregate supply 
D) Both answers A and C are correct. 
E) Answers A, B, and C are correct. 
A) an increase in aggregate demand 
B) an increase in aggregate supply 
C) a decrease in aggregate supply 
D) Both answers A and C are correct. 
E) Answers A, B, and C are correct.

Question 16

What factors can start a cost-push inflation?
 What must the Fed's response be for the inflation to continue?

Accepted Answer

Cost push inflation starts with a decrea

Question 17

A demand-pull inflation initially is characterized by

Accepted Answer

A) increasing real output and a labor shortage. 
B) increasing real output and a labor surplus. 
C) decreasing real output and a labor shortage. 
D) decreasing real output and a labor surplus. 
E) no change in real output and a labor shortage. 
A) increasing real output and a labor shortage. 
B) increasing real output and a labor surplus. 
C) decreasing real output and a labor shortage. 
D) decreasing real output and a labor surplus. 
E) no change in real output and a labor shortage.

Question 18

When the domestic price level increases, exports decrease and imports increase. Other things the same, this change is illustrated by a

Accepted Answer

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

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

In a persisting demand-pull inflation

Accepted Answer

A) aggregate supply decreases and aggregate demand increases. 
B) aggregate demand decreases and aggregate supply decreases. 
C) aggregate demand increases and potential GDP decreases. 
D) aggregate supply increases and aggregate demand increases. 
E) None of the above answers are correct. 
A) aggregate supply decreases and aggregate demand increases. 
B) aggregate demand decreases and aggregate supply decreases. 
C) aggregate demand increases and potential GDP decreases. 
D) aggregate supply increases and aggregate demand increases. 
E) None of the above answers are correct.

A macroeconomic equilibrium occurs when the

A deep recession hits the world economy, and real GDP in the rest of the world decreases. In the United States,

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

What are sources that can start a demand-pull inflation?

-In the above figure, illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.

19.4 Chapter Figures The figure above shows the aggregate supply curve and potential GDP. -Based on the figure above, the aggregate supply curve shifts rightward and the potential GDP line does not change when

Explain how changes in foreign income can impact real GDP in a country.

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

Over the business cycle, factors such as the quantity of capital, human capital and technology

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

Explain the difference between a movement along the aggregate demand curve and a shift of the aggregate demand curve.

What is demand-pull inflation?

If the Fed increases the quantity of money, then

Which of the following can start an inflation?

What factors can start a cost-push inflation? What must the Fed's response be for the inflation to continue?

A demand-pull inflation initially is characterized by

When the domestic price level increases, exports decrease and imports increase. Other things the same, this change is illustrated by a

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

In a persisting demand-pull inflation

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

A macroeconomic equilibrium occurs when the

A deep recession hits the world economy, and real GDP in the rest of the world decreases. In the United States,

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

What are sources that can start a demand-pull inflation?

-In the above figure, illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.

19.4 Chapter Figures The figure above shows the aggregate supply curve and potential GDP. -Based on the figure above, the aggregate supply curve shifts rightward and the potential GDP line does not change when

Explain how changes in foreign income can impact real GDP in a country.

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

Over the business cycle, factors such as the quantity of capital, human capital and technology

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

Explain the difference between a movement along the aggregate demand curve and a shift of the aggregate demand curve.

What is demand-pull inflation?

If the Fed increases the quantity of money, then

Which of the following can start an inflation?

What factors can start a cost-push inflation? What must the Fed's response be for the inflation to continue?

A demand-pull inflation initially is characterized by

When the domestic price level increases, exports decrease and imports increase. Other things the same, this change is illustrated by a

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

In a persisting demand-pull inflation

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

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

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