Question 1

What is the key resource underlying aggregate supply?

Accepted Answer

A)  production incentives 
B)  labour 
C)  technology 
D)  natural resources 
A)  production incentives 
B)  labour 
C)  technology 
D)  natural resources

Question 2

Suppose the price level is lower than expected.How will this affect output?

Accepted Answer

A)  Businesses will decrease production. 
B)  Businesses will increase production. 
C)  Initially, the short-run aggregate supply curve will shift leftward, but later the movement will be downward along the curve. 
D)  Initially, the short-run aggregate supply curve will shift leftward, but later the movement will be upward along the curve. 
A)  Businesses will decrease production. 
B)  Businesses will increase production. 
C)  Initially, the short-run aggregate supply curve will shift leftward, but later the movement will be downward along the curve. 
D)  Initially, the short-run aggregate supply curve will shift leftward, but later the movement will be upward along the curve.

Question 3

Which of the following causes the capital stock to increase?

Accepted Answer

A)  whenever gross investment is positive 
B)  whenever gross investment is negative 
C)  when net investment is positive 
D)  when net investment is negative 
A)  whenever gross investment is positive 
B)  whenever gross investment is negative 
C)  when net investment is positive 
D)  when net investment is negative

Question 4

Which of the following occurs as macroeconomic output expands in the short run?

Accepted Answer

A)  The nominal cost of labour decreases. 
B)  The demand for nonlabour resources decreases. 
C)  Equipment wears out faster. 
D)  The nominal cost per unit of output falls. 
A)  The nominal cost of labour decreases. 
B)  The demand for nonlabour resources decreases. 
C)  Equipment wears out faster. 
D)  The nominal cost per unit of output falls.

Question 5

Which of the following is NOT assumed to be constant along a short-run aggregate supply curve?

Accepted Answer

A)  the actual price level 
B)  the state of technology 
C)  the size and quality of the labour force 
D)  the size and quality of the capital stock 
A)  the actual price level 
B)  the state of technology 
C)  the size and quality of the labour force 
D)  the size and quality of the capital stock

Question 6

Why does the short-run aggregate supply curve slope upward?

Accepted Answer

A)  because quantity supplied increases when cost per unit falls 
B)  because quantity supplied decreases when cost per unit falls 
C)  because quantity supplied increases when the price level increases 
D)  because quantity supplied increases when GDP decreases 
A)  because quantity supplied increases when cost per unit falls 
B)  because quantity supplied decreases when cost per unit falls 
C)  because quantity supplied increases when the price level increases 
D)  because quantity supplied increases when GDP decreases

Question 7

-Refer to the table in the exhibit.Consider the aggregate demand and the aggregate supply schedule #3.What is the equilibrium output level and price level?

Accepted Answer

A)  Output is $6.50, and price level is 120. 
B)  Output is $6.00, and price level is 130. 
C)  Output is $5.00, and price level is 150. 
D)  Output is $5.50, and price level is 140. 
A)  Output is $6.50, and price level is 120. 
B)  Output is $6.00, and price level is 130. 
C)  Output is $5.00, and price level is 150. 
D)  Output is $5.50, and price level is 140.

Question 8

Which of the following would be strong evidence that an expansionary gap exists?

Accepted Answer

A)  Rapid inflation occurs during a period when plant capacity utilization is below average. 
B)  Help-wanted advertising is higher than usual, and the consumer price index is up more than expected. 
C)  Inflation has slowed markedly, and the TSX average is at record levels. 
D)  The number of new unemployment claims has skyrocketed, and the price level is falling. 
A)  Rapid inflation occurs during a period when plant capacity utilization is below average. 
B)  Help-wanted advertising is higher than usual, and the consumer price index is up more than expected. 
C)  Inflation has slowed markedly, and the TSX average is at record levels. 
D)  The number of new unemployment claims has skyrocketed, and the price level is falling.

Question 9

How are the various output levels produced at different price levels illustrated?

Accepted Answer

A)  by the short-run aggregate supply curve 
B)  by the aggregate demand curve 
C)  by the labour demand curve 
D)  by the labour supply curve 
A)  by the short-run aggregate supply curve 
B)  by the aggregate demand curve 
C)  by the labour demand curve 
D)  by the labour supply curve

Question 10

How is nominal wage measured?

Accepted Answer

A)  in constant dollars 
B)  in terms of the goods it can buy 
C)  in terms of the goods and services it can buy 
D)  in current dollars rather than in constant dollars 
A)  in constant dollars 
B)  in terms of the goods it can buy 
C)  in terms of the goods and services it can buy 
D)  in current dollars rather than in constant dollars

Question 11

Which of the following is one explanation for the persistently high unemployment rates in Europe during the 1990s?

Accepted Answer

A)  Unemployment rates have always been high in Europe. 
B)  The labour supply in Europe increased faster than labour demand. 
C)  The labour supply in Europe increased while labour demand decreased. 
D)  European labour demand decreased because of legislation that made hiring a worker an almost irreversible decision. 
A)  Unemployment rates have always been high in Europe. 
B)  The labour supply in Europe increased faster than labour demand. 
C)  The labour supply in Europe increased while labour demand decreased. 
D)  European labour demand decreased because of legislation that made hiring a worker an almost irreversible decision.

Question 12

What relationship does aggregate supply describe?

Accepted Answer

A)  the relationship between price level and real GDP 
B)  the relationship between nominal GDP and real GDP 
C)  the relationship between real GDP and the level of production 
D)  the relationship between nominal GDP and the level of output 
A)  the relationship between price level and real GDP 
B)  the relationship between nominal GDP and real GDP 
C)  the relationship between real GDP and the level of production 
D)  the relationship between nominal GDP and the level of output

Question 13

-Refer to the table in the exhibit.Consider the aggregate demand and aggregate supply schedule #1.What is the equilibrium level of output?

Accepted Answer

A)  $5.00 
B)  $5.50 
C)  $6.00 
D)  $6.50 
A)  $5.00 
B)  $5.50 
C)  $6.00 
D)  $6.50

Question 14

-Refer to the graph in the exhibit.What could be the cause of the shift?

Accepted Answer

A)  a decrease in the real wage 
B)  an increase in the economy's capital stock 
C)  the actions of a cartel of resource suppliers 
D)  a decrease in consumer spending 
A)  a decrease in the real wage 
B)  an increase in the economy's capital stock 
C)  the actions of a cartel of resource suppliers 
D)  a decrease in consumer spending

Question 15

In the long run, under what circumstances would the economy produce at potential output?

Accepted Answer

A)  if workers mistakenly believe that nominal wages equal real wages 
B)  if expectations are the same in the long run and in the short run 
C)  if wages and prices are sufficiently flexible 
D)  if the price level is high 
A)  if workers mistakenly believe that nominal wages equal real wages 
B)  if expectations are the same in the long run and in the short run 
C)  if wages and prices are sufficiently flexible 
D)  if the price level is high

Question 16

How might a recessionary gap be closed in the long run, assuming a passive policy?

Accepted Answer

A)  by a rightward shift of the short-run aggregate supply curve 
B)  by a leftward shift of the short-run aggregate supply curve 
C)  by a rightward movement along a fixed short-run aggregate supply curve 
D)  by a decrease in aggregate demand 
A)  by a rightward shift of the short-run aggregate supply curve 
B)  by a leftward shift of the short-run aggregate supply curve 
C)  by a rightward movement along a fixed short-run aggregate supply curve 
D)  by a decrease in aggregate demand

Question 17

When does actual output fall below potential output?

Accepted Answer

A)  during a recession 
B)  when aggregate demand exceeds aggregate supply 
C)  when the natural rate of unemployment exceeds the actual rate of unemployment 
D)  when the natural rate of unemployment is zero 
A)  during a recession 
B)  when aggregate demand exceeds aggregate supply 
C)  when the natural rate of unemployment exceeds the actual rate of unemployment 
D)  when the natural rate of unemployment is zero

Question 18

Which of the following supply shocks would shift the aggregate supply curve inward?

Accepted Answer

A)  a decrease in business taxes 
B)  a decrease in gasoline taxes 
C)  a decrease in the cost of raw materials 
D)  a decrease in agricultural output 
A)  a decrease in business taxes 
B)  a decrease in gasoline taxes 
C)  a decrease in the cost of raw materials 
D)  a decrease in agricultural output

Question 19

What do fixed resource prices help explain?

Accepted Answer

A)  why firms increase output in the short run when the price level increases 
B)  why firms keep production levels constant in the short run when the price level decreases 
C)  why firms sell output in the short run at fixed prices 
D)  why firms increase output in the long run when the price level increases 
A)  why firms increase output in the short run when the price level increases 
B)  why firms keep production levels constant in the short run when the price level decreases 
C)  why firms sell output in the short run at fixed prices 
D)  why firms increase output in the long run when the price level increases

Question 20

Suppose the economy is initially in long-run equilibrium.Which of the following best describes the effects of a shift in aggregate demand?

Accepted Answer

A)  Prices and output are affected in the short run and in the long run. 
B)  Prices and output are affected only in the short run. 
C)  Prices are affected in the long run and in the short run, but output is affected only in the short run. 
D)  Prices are affected in the long run and in the short run, but output is affected only in the long run. 
A)  Prices and output are affected in the short run and in the long run. 
B)  Prices and output are affected only in the short run. 
C)  Prices are affected in the long run and in the short run, but output is affected only in the short run. 
D)  Prices are affected in the long run and in the short run, but output is affected only in the long run.

What is the key resource underlying aggregate supply?

Suppose the price level is lower than expected.How will this affect output?

Which of the following causes the capital stock to increase?

Which of the following occurs as macroeconomic output expands in the short run?

Which of the following is NOT assumed to be constant along a short-run aggregate supply curve?

Why does the short-run aggregate supply curve slope upward?

-Refer to the table in the exhibit.Consider the aggregate demand and the aggregate supply schedule #3.What is the equilibrium output level and price level?

Which of the following would be strong evidence that an expansionary gap exists?

How are the various output levels produced at different price levels illustrated?

How is nominal wage measured?

Which of the following is one explanation for the persistently high unemployment rates in Europe during the 1990s?

What relationship does aggregate supply describe?

-Refer to the table in the exhibit.Consider the aggregate demand and aggregate supply schedule #1.What is the equilibrium level of output?

-Refer to the graph in the exhibit.What could be the cause of the shift?

In the long run, under what circumstances would the economy produce at potential output?

How might a recessionary gap be closed in the long run, assuming a passive policy?

When does actual output fall below potential output?

Which of the following supply shocks would shift the aggregate supply curve inward?

What do fixed resource prices help explain?

Suppose the economy is initially in long-run equilibrium.Which of the following best describes the effects of a shift in aggregate demand?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

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Exam 11: Aggregate Supply

What is the key resource underlying aggregate supply?

Suppose the price level is lower than expected.How will this affect output?

Which of the following causes the capital stock to increase?

Which of the following occurs as macroeconomic output expands in the short run?

Which of the following is NOT assumed to be constant along a short-run aggregate supply curve?

Why does the short-run aggregate supply curve slope upward?

-Refer to the table in the exhibit.Consider the aggregate demand and the aggregate supply schedule #3.What is the equilibrium output level and price level?

Which of the following would be strong evidence that an expansionary gap exists?

How are the various output levels produced at different price levels illustrated?

How is nominal wage measured?

Which of the following is one explanation for the persistently high unemployment rates in Europe during the 1990s?

What relationship does aggregate supply describe?

-Refer to the table in the exhibit.Consider the aggregate demand and aggregate supply schedule #1.What is the equilibrium level of output?

-Refer to the graph in the exhibit.What could be the cause of the shift?

In the long run, under what circumstances would the economy produce at potential output?

How might a recessionary gap be closed in the long run, assuming a passive policy?

When does actual output fall below potential output?

Which of the following supply shocks would shift the aggregate supply curve inward?

What do fixed resource prices help explain?

Suppose the economy is initially in long-run equilibrium.Which of the following best describes the effects of a shift in aggregate demand?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters