Question 1

All of the following would cause the aggregate demand curve to shift EXCEPT

Accepted Answer

A) a rise in real interest rates. 
B) an increase in taxes. 
C) improvements in economic conditions in other countries. 
D) a decrease in the price level. 
A) a rise in real interest rates. 
B) an increase in taxes. 
C) improvements in economic conditions in other countries. 
D) a decrease in the price level.

Question 2

If a nation's production possibilities curve shifts outward, we should expect its long-run aggregate supply curve to

Accepted Answer

A) have an upward movement along the curve. 
B) have a downward movement along the curve. 
C) have a rightward shift. 
D) have a leftward shift. 
A) have an upward movement along the curve. 
B) have a downward movement along the curve. 
C) have a rightward shift. 
D) have a leftward shift.

Question 3

Which of the following would likely result in a decrease in aggregate demand?

Accepted Answer

A) tax increases 
B) a reduction in the real interest rate 
C) increased job and future income security 
D) a rise in the quantity of money in circulation 
A) tax increases 
B) a reduction in the real interest rate 
C) increased job and future income security 
D) a rise in the quantity of money in circulation

Question 4

What causes demand-side inflation?
 What causes supply-side inflation?

Accepted Answer

Demand-side inflation is cause

Question 5

If the price level increases, then

Accepted Answer

A) the exchange rate will increase, causing U.S. goods to become cheaper and increasing total planned real expenditures. 
B) imports increase but exports do not change. Therefore, there is no effect on total planned real expenditures. 
C) foreign residents buy fewer U.S. goods, leaving more goods for U.S. residents and an increase in total planned real production by firms. 
D) domestic goods are more expensive relative to foreign goods, which reduces total planed real expenditures. 
A) the exchange rate will increase, causing U.S. goods to become cheaper and increasing total planned real expenditures. 
B) imports increase but exports do not change. Therefore, there is no effect on total planned real expenditures. 
C) foreign residents buy fewer U.S. goods, leaving more goods for U.S. residents and an increase in total planned real production by firms. 
D) domestic goods are more expensive relative to foreign goods, which reduces total planed real expenditures.

Question 6

The aggregate supply curve

Accepted Answer

A) shows what each producer is willing and able to produce at each income level. 
B) relates planned aggregate production to price level. 
C) becomes vertical if there is excess production capacity within the economy. 
D) shows a negative relationship between the price level and real Gross Domestic Product (GDP). 
A) shows what each producer is willing and able to produce at each income level. 
B) relates planned aggregate production to price level. 
C) becomes vertical if there is excess production capacity within the economy. 
D) shows a negative relationship between the price level and real Gross Domestic Product (GDP).

Question 7

The real-balance effect refers to

Accepted Answer

A) the real interest rate. 
B) the production of real goods and services as opposed to financial instruments. 
C) the prices of goods and services. 
D) the real value of cash balances that a person is holding. 
A) the real interest rate. 
B) the production of real goods and services as opposed to financial instruments. 
C) the prices of goods and services. 
D) the real value of cash balances that a person is holding.

Question 8

Which of the following is consistent with secular deflation?

Accepted Answer

A) a persistently decreasing price level caused by several periods of economic growth with stable AD 
B) a persistently increasing price level caused by several periods of economic growth with decreasing AD 
C) a persistently decreasing price level caused by increases in government expenditures 
D) a persistently decreasing price level caused by money being withdrawn from the economy 
A) a persistently decreasing price level caused by several periods of economic growth with stable AD 
B) a persistently increasing price level caused by several periods of economic growth with decreasing AD 
C) a persistently decreasing price level caused by increases in government expenditures 
D) a persistently decreasing price level caused by money being withdrawn from the economy

Question 9

The aggregate demand curve

Accepted Answer

A) is vertical at the full-employment level of output. 
B) is horizontal at the full-employment level of output. 
C) is downward sloping. 
D) is upward sloping. 
A) is vertical at the full-employment level of output. 
B) is horizontal at the full-employment level of output. 
C) is downward sloping. 
D) is upward sloping.

Question 10

Which of the following will NOT shift the aggregate demand curve?

Accepted Answer

A) a change in the domestic marginal tax rates 
B) a change in government expenditures 
C) a change in the domestic price level 
D) depreciation in the value of the national currency 
A) a change in the domestic marginal tax rates 
B) a change in government expenditures 
C) a change in the domestic price level 
D) depreciation in the value of the national currency

Question 11

Why is the long-run aggregate supply curve a vertical line?

Accepted Answer

A) At that level of real GDP, the unemployment rate is 0 percent. 
B) At that level of real GDP, the inflation rate is 0 percent. 
C) At that level of real GDP, the production costs are at their lowest level. 
D) At that level of real GDP, production costs have fully adjusted to price changes. 
A) At that level of real GDP, the unemployment rate is 0 percent. 
B) At that level of real GDP, the inflation rate is 0 percent. 
C) At that level of real GDP, the production costs are at their lowest level. 
D) At that level of real GDP, production costs have fully adjusted to price changes.

Question 12

The long-run aggregate supply curve shifts right at the same time as

Accepted Answer

A) the Laffer curve shifts upward. 
B) the production possibilities curve shifts outward. 
C) the production possibilities curve shifts inward. 
D) the inflation rate increases. 
A) the Laffer curve shifts upward. 
B) the production possibilities curve shifts outward. 
C) the production possibilities curve shifts inward. 
D) the inflation rate increases.

Question 13

-The curve in the above figure will shift to the right when

Accepted Answer

A) the price level falls. 
B) technology increases. 
C) population falls. 
D) the proportion of the population that is elderly increases. 
A) the price level falls. 
B) technology increases. 
C) population falls. 
D) the proportion of the population that is elderly increases.

Question 14

The aggregate demand curve shows the

Accepted Answer

A) total amount of planned expenditures on goods and services at each possible price level. 
B) total amount of nominal goods that the participants in the economy want to purchase. 
C) total amount of real goods that foreigners want to purchase. 
D) amount of goods producers will produce as production costs fall. 
A) total amount of planned expenditures on goods and services at each possible price level. 
B) total amount of nominal goods that the participants in the economy want to purchase. 
C) total amount of real goods that foreigners want to purchase. 
D) amount of goods producers will produce as production costs fall.

Question 15

Long-run equilibrium will occur at the price level at which

Accepted Answer

A) the long-run aggregate demand and short-run aggregate supply curves intersect. 
B) the aggregate demand and short-run aggregate supply curves intersect. 
C) the aggregate demand and long-run aggregate supply curves intersect. 
D) the short-run aggregate supply and long-run aggregate supply curves intersect. 
A) the long-run aggregate demand and short-run aggregate supply curves intersect. 
B) the aggregate demand and short-run aggregate supply curves intersect. 
C) the aggregate demand and long-run aggregate supply curves intersect. 
D) the short-run aggregate supply and long-run aggregate supply curves intersect.

Question 16

The downward slope of the aggregate demand curve shows that

Accepted Answer

A) an increase in aggregate demand reduces the long-run aggregate supply. 
B) an increase in aggregate demand increases the long-run aggregate supply. 
C) a higher price level will cause planned purchase rates for final goods and services to be higher. 
D) a lower price level will cause planned purchase rates for final goods and services to be higher. 
A) an increase in aggregate demand reduces the long-run aggregate supply. 
B) an increase in aggregate demand increases the long-run aggregate supply. 
C) a higher price level will cause planned purchase rates for final goods and services to be higher. 
D) a lower price level will cause planned purchase rates for final goods and services to be higher.

Question 17

When the production possibilities curve shifts outward,

Accepted Answer

A) the long-run aggregate supply curve shifts to the left. 
B) the long-run aggregate supply curve is unchanged. 
C) the price level rises in the long run. 
D) the long-run aggregate supply curve shifts to the right. 
A) the long-run aggregate supply curve shifts to the left. 
B) the long-run aggregate supply curve is unchanged. 
C) the price level rises in the long run. 
D) the long-run aggregate supply curve shifts to the right.

Question 18

The long-run aggregate supply curve is

Accepted Answer

A) horizontal at the full-employment level of real Gross Domestic Product (GDP). 
B) vertical at the full-employment level of real Gross Domestic Product (GDP). 
C) sloping upward due to the effects of price level changes on real Gross Domestic Product (GDP). 
D) the same as the short run aggregate supply (SRAS)curve. 
A) horizontal at the full-employment level of real Gross Domestic Product (GDP). 
B) vertical at the full-employment level of real Gross Domestic Product (GDP). 
C) sloping upward due to the effects of price level changes on real Gross Domestic Product (GDP). 
D) the same as the short run aggregate supply (SRAS)curve.

Question 19

An aggregate demand curve

Accepted Answer

A) shifts to the right when the price level increases and to the left when the price level falls. 
B) shifts to the right when any non-price-level factor increases total planned real spending. 
C) shifts to the right when population decreases and shifts to the left when population increases. 
D) does not shift, unlike individual or market demand curves. 
A) shifts to the right when the price level increases and to the left when the price level falls. 
B) shifts to the right when any non-price-level factor increases total planned real spending. 
C) shifts to the right when population decreases and shifts to the left when population increases. 
D) does not shift, unlike individual or market demand curves.

Question 20

The long-run aggregate supply curve will shift outward to the right when

Accepted Answer

A) there is economic growth. 
B) the price level decreases. 
C) the real-balance effect increases. 
D) the amount of labor decreases. 
A) there is economic growth. 
B) the price level decreases. 
C) the real-balance effect increases. 
D) the amount of labor decreases.

All of the following would cause the aggregate demand curve to shift EXCEPT

If a nation's production possibilities curve shifts outward, we should expect its long-run aggregate supply curve to

Which of the following would likely result in a decrease in aggregate demand?

What causes demand-side inflation? What causes supply-side inflation?

If the price level increases, then

The aggregate supply curve

The real-balance effect refers to

Which of the following is consistent with secular deflation?

The aggregate demand curve

Which of the following will NOT shift the aggregate demand curve?

Why is the long-run aggregate supply curve a vertical line?

The long-run aggregate supply curve shifts right at the same time as

-The curve in the above figure will shift to the right when

The aggregate demand curve shows the

Long-run equilibrium will occur at the price level at which

The downward slope of the aggregate demand curve shows that

When the production possibilities curve shifts outward,

The long-run aggregate supply curve is

An aggregate demand curve

The long-run aggregate supply curve will shift outward to the right when

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

All of the following would cause the aggregate demand curve to shift EXCEPT

If a nation's production possibilities curve shifts outward, we should expect its long-run aggregate supply curve to

Which of the following would likely result in a decrease in aggregate demand?

What causes demand-side inflation? What causes supply-side inflation?

If the price level increases, then

The aggregate supply curve

The real-balance effect refers to

Which of the following is consistent with secular deflation?

The aggregate demand curve

Which of the following will NOT shift the aggregate demand curve?

Why is the long-run aggregate supply curve a vertical line?

The long-run aggregate supply curve shifts right at the same time as

-The curve in the above figure will shift to the right when

The aggregate demand curve shows the

Long-run equilibrium will occur at the price level at which

The downward slope of the aggregate demand curve shows that

When the production possibilities curve shifts outward,

The long-run aggregate supply curve is

An aggregate demand curve

The long-run aggregate supply curve will shift outward to the right when

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