Question 1

-Refer to the above figures. Which panel(s)represent the effect of an increase in the price level?

Accepted Answer

A) Panel A only 
B) Panels A and C only 
C) Panel D only 
D) none of the panels 
A) Panel A only 
B) Panels A and C only 
C) Panel D only 
D) none of the panels

Question 2

-Consider the above figure. At a price level of 120

Accepted Answer

A) total planned real expenditures exceed total planned production. 
B) total planned production exceeds total planned expenditures. 
C) prices would fall. 
D) inventories would begin to accumulate. 
A) total planned real expenditures exceed total planned production. 
B) total planned production exceeds total planned expenditures. 
C) prices would fall. 
D) inventories would begin to accumulate.

Question 3

Over the past several decades, what has been true about inflation in the United States?

Accepted Answer

A) Inflation rates have been consistently negative. 
B) The nation has experienced persistent deflation. 
C) Inflation has been very stable. 
D) Inflation rates have been consistently positive. 
A) Inflation rates have been consistently negative. 
B) The nation has experienced persistent deflation. 
C) Inflation has been very stable. 
D) Inflation rates have been consistently positive.

Question 4

The sum of all planned expenditures for the entire economy at each possible price level is

Accepted Answer

A) aggregate supply. 
B) effective demand. 
C) aggregate demand. 
D) actual expenditures by consumers. 
A) aggregate supply. 
B) effective demand. 
C) aggregate demand. 
D) actual expenditures by consumers.

Question 5

Long-run aggregate supply is

Accepted Answer

A) the sum of planned expenditures by consumers and firms. 
B) the level of output that occurs when the economy is operating on the production possibilities curve. 
C) downward sloping. 
D) upward sloping. 
A) the sum of planned expenditures by consumers and firms. 
B) the level of output that occurs when the economy is operating on the production possibilities curve. 
C) downward sloping. 
D) upward sloping.

Question 6

Secular deflation

Accepted Answer

A) has been a serious problem during the last three decades in the United States. 
B) although present, has not been a problem during the last three decades in the United States. 
C) has not been present in the United States since 1959. 
D) cannot exist in a capitalistic economy. 
A) has been a serious problem during the last three decades in the United States. 
B) although present, has not been a problem during the last three decades in the United States. 
C) has not been present in the United States since 1959. 
D) cannot exist in a capitalistic economy.

Question 7

A long-run aggregate supply curve may graphically be represented as a

Accepted Answer

A) vertical line. 
B) horizontal line. 
C) an upward sloping line. 
D) a downward sloping line. 
A) vertical line. 
B) horizontal line. 
C) an upward sloping line. 
D) a downward sloping line.

Question 8

The open economy effect refers to the fact that

Accepted Answer

A) the position and shape of the long run aggregate supply curve is partially due to the fact that we import goods. 
B) the aggregate supply curve shifts when the economy grows. 
C) the slope of the aggregate demand curve is partially explained by the reduction in the desire to buy fewer U.S. goods by U.S. residents and foreign residents as a result of a higher price level. 
D) the immigration policies of the United States are disruptive to labor markets. 
A) the position and shape of the long run aggregate supply curve is partially due to the fact that we import goods. 
B) the aggregate supply curve shifts when the economy grows. 
C) the slope of the aggregate demand curve is partially explained by the reduction in the desire to buy fewer U.S. goods by U.S. residents and foreign residents as a result of a higher price level. 
D) the immigration policies of the United States are disruptive to labor markets.

Question 9

If the economy grows steadily over several years and at the same time maintains the aggregate demand curve in its present position, then the economy will experience which of the following?

Accepted Answer

A) inflation 
B) a stable price level 
C) secular deflation 
D) The price level cannot be determined without more information. 
A) inflation 
B) a stable price level 
C) secular deflation 
D) The price level cannot be determined without more information.

Question 10

The interest rate effect shows that if the price level increases

Accepted Answer

A) consumers and businesses will increase their spending to buy the same amount of goods as before to make up for the higher interest rates. 
B) consumers and businesses will decrease their spending as the interest rate increases, thereby pushing up the cost of acquiring funds. 
C) U.S. exports and imports will both decrease. 
D) the real value of financial assets will increase. 
A) consumers and businesses will increase their spending to buy the same amount of goods as before to make up for the higher interest rates. 
B) consumers and businesses will decrease their spending as the interest rate increases, thereby pushing up the cost of acquiring funds. 
C) U.S. exports and imports will both decrease. 
D) the real value of financial assets will increase.

Question 11

When expenditures change due to changes in the real value of money caused by variations in the price level, this is known as the

Accepted Answer

A) interest rate effect. 
B) real-balance effect. 
C) open economy effect. 
D) aggregate balances effect. 
A) interest rate effect. 
B) real-balance effect. 
C) open economy effect. 
D) aggregate balances effect.

Question 12

The long-run aggregate supply when resources are fully employed

Accepted Answer

A) has no relationship with the production possibilities curve. 
B) will always be associated with a point outside the production possibilities curve. 
C) will always be associated with a point on the production possibilities curve. 
D) is determined by demand. 
A) has no relationship with the production possibilities curve. 
B) will always be associated with a point outside the production possibilities curve. 
C) will always be associated with a point on the production possibilities curve. 
D) is determined by demand.

Question 13

If there is persistent inflation

Accepted Answer

A) long-run aggregate supply is growing at a faster rate than aggregate demand. 
B) long-run aggregate supply is growing at a slower rate than aggregate demand. 
C) there is an excess of total planned expenditures. 
D) long-run aggregate supply is constant. 
A) long-run aggregate supply is growing at a faster rate than aggregate demand. 
B) long-run aggregate supply is growing at a slower rate than aggregate demand. 
C) there is an excess of total planned expenditures. 
D) long-run aggregate supply is constant.

Question 14

Over the past 40 years, which of the following has the U.S. economy experienced?

Accepted Answer

A) persistent deflation 
B) hyperinflation with prices rising at over 100 percent per year 
C) persistent inflation 
D) secular deflation 
A) persistent deflation 
B) hyperinflation with prices rising at over 100 percent per year 
C) persistent inflation 
D) secular deflation

Question 15

What is the real-balance effect of an increase in the price level?

Accepted Answer

The real-balance effect is the change in

Question 16

The long-run aggregate supply curve is

Accepted Answer

A) upward sloping. 
B) downward sloping. 
C) vertical. 
D) horizontal. 
A) upward sloping. 
B) downward sloping. 
C) vertical. 
D) horizontal.

Question 17

Supply-side inflation is caused by

Accepted Answer

A) a decrease in aggregate supply and no change in aggregate demand. 
B) a decrease in aggregate demand and no change in aggregate supply. 
C) an increase in aggregate supply and no change in aggregate demand. 
D) an increase in aggregate demand and no change in aggregate supply. 
A) a decrease in aggregate supply and no change in aggregate demand. 
B) a decrease in aggregate demand and no change in aggregate supply. 
C) an increase in aggregate supply and no change in aggregate demand. 
D) an increase in aggregate demand and no change in aggregate supply.

Question 18

Which of the following would cause an increase in aggregate demand (AD)?

Accepted Answer

A) a decrease in price levels 
B) an increase in interest rates 
C) a decrease in taxes 
D) a rise in the foreign exchange value of the dollar 
A) a decrease in price levels 
B) an increase in interest rates 
C) a decrease in taxes 
D) a rise in the foreign exchange value of the dollar

Question 19

What is measured on the vertical axis of the aggregate demand/aggregate supply model?

Accepted Answer

A) real Gross Domestic Product (GDP) 
B) nominal income 
C) the price level 
D) the interest rate 
A) real Gross Domestic Product (GDP) 
B) nominal income 
C) the price level 
D) the interest rate

Question 20

A human resource such as ingenuity can be thought of as

Accepted Answer

A) a positive for imports. 
B) part of a country's endowment. 
C) part of government spending programs. 
D) a causal factor for aggregate supply shifting left. 
A) a positive for imports. 
B) part of a country's endowment. 
C) part of government spending programs. 
D) a causal factor for aggregate supply shifting left.

-Refer to the above figures. Which panel(s)represent the effect of an increase in the price level?

-Consider the above figure. At a price level of 120

Over the past several decades, what has been true about inflation in the United States?

The sum of all planned expenditures for the entire economy at each possible price level is

Long-run aggregate supply is

Secular deflation

A long-run aggregate supply curve may graphically be represented as a

The open economy effect refers to the fact that

If the economy grows steadily over several years and at the same time maintains the aggregate demand curve in its present position, then the economy will experience which of the following?

The interest rate effect shows that if the price level increases

When expenditures change due to changes in the real value of money caused by variations in the price level, this is known as the

The long-run aggregate supply when resources are fully employed

If there is persistent inflation

Over the past 40 years, which of the following has the U.S. economy experienced?

What is the real-balance effect of an increase in the price level?

The long-run aggregate supply curve is

Supply-side inflation is caused by

Which of the following would cause an increase in aggregate demand (AD)?

What is measured on the vertical axis of the aggregate demand/aggregate supply model?

A human resource such as ingenuity can be thought of as

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 9: Real GDP and the Price Level in the Long Run

-Refer to the above figures. Which panel(s)represent the effect of an increase in the price level?

-Consider the above figure. At a price level of 120

Over the past several decades, what has been true about inflation in the United States?

The sum of all planned expenditures for the entire economy at each possible price level is

Long-run aggregate supply is

Secular deflation

A long-run aggregate supply curve may graphically be represented as a

The open economy effect refers to the fact that

If the economy grows steadily over several years and at the same time maintains the aggregate demand curve in its present position, then the economy will experience which of the following?

The interest rate effect shows that if the price level increases

When expenditures change due to changes in the real value of money caused by variations in the price level, this is known as the

The long-run aggregate supply when resources are fully employed

If there is persistent inflation

Over the past 40 years, which of the following has the U.S. economy experienced?

What is the real-balance effect of an increase in the price level?

The long-run aggregate supply curve is

Supply-side inflation is caused by

Which of the following would cause an increase in aggregate demand (AD)?

What is measured on the vertical axis of the aggregate demand/aggregate supply model?

A human resource such as ingenuity can be thought of as

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters