Question 1

An economy experiences real growth over time with stable aggregate demand. This would likely result in

Accepted Answer

A) increasing prices. 
B) decreasing prices. 
C) secular inflation. 
D) increased unemployment. 
A) increasing prices. 
B) decreasing prices. 
C) secular inflation. 
D) increased unemployment.

Question 2

What has caused persistent inflation in the United States?

Accepted Answer

A) The nation's long-run aggregate supply curve has shifted to the left. 
B) supply-side inflation 
C) a decrease in labor productivity 
D) none of the above 
A) The nation's long-run aggregate supply curve has shifted to the left. 
B) supply-side inflation 
C) a decrease in labor productivity 
D) none of the above

Question 3

-Refer to the above figure. A movement from B to C would be NOT be the result of

Accepted Answer

A) an increase in foreign income levels. 
B) an increase in government spending. 
C) an increase in worker productivity. 
D) an increase in consumption spending. 
A) an increase in foreign income levels. 
B) an increase in government spending. 
C) an increase in worker productivity. 
D) an increase in consumption spending.

Question 4

The intersection of aggregate demand and long-run aggregate supply identify the price level at which total planned

Accepted Answer

A) real expenditures equal actual nominal GDP. 
B) real expenditures equal total planned production. 
C) export spending equals total planned import spending. 
D) government spending equals total planned tax revenues. 
A) real expenditures equal actual nominal GDP. 
B) real expenditures equal total planned production. 
C) export spending equals total planned import spending. 
D) government spending equals total planned tax revenues.

Question 5

Which of the following is the most likely explanation for inflation in the United States?

Accepted Answer

A) increases in aggregate supply 
B) decreases in aggregate supply 
C) increases in aggregate demand 
D) decreases in aggregate demand 
A) increases in aggregate supply 
B) decreases in aggregate supply 
C) increases in aggregate demand 
D) decreases in aggregate demand

Question 6

At each price level, the aggregate demand curve indicates

Accepted Answer

A) the nominal value of total production of goods and services domestic income that will be produced. 
B) the total amount of real planned expenditures. 
C) the nominal Gross Domestic Product (GDP)that will be produced. 
D) the total amount of real Gross Domestic Product (GDP)that will be produced. 
A) the nominal value of total production of goods and services domestic income that will be produced. 
B) the total amount of real planned expenditures. 
C) the nominal Gross Domestic Product (GDP)that will be produced. 
D) the total amount of real Gross Domestic Product (GDP)that will be produced.

Question 7

-In the above figure, a movement from point B to point C could be explained by

Accepted Answer

A) an increase in the price level. 
B) a decrease in the quantity of money in circulation. 
C) increased government spending. 
D) the real-balance effect. 
A) an increase in the price level. 
B) a decrease in the quantity of money in circulation. 
C) increased government spending. 
D) the real-balance effect.

Question 8

Which of the following statements is TRUE about the interest rate effect?

Accepted Answer

A) The interest rate effect is why the aggregate demand curve is upward sloping. 
B) A lower price level lowers the interest rate, which causes businesses and consumers to increase their desired spending. 
C) A higher price level lowers the interest rate, which causes business and consumers to increase their desired spending. 
D) Expenditures will change as a result of a change in the real value of money balances when there is a change in the price level. 
A) The interest rate effect is why the aggregate demand curve is upward sloping. 
B) A lower price level lowers the interest rate, which causes businesses and consumers to increase their desired spending. 
C) A higher price level lowers the interest rate, which causes business and consumers to increase their desired spending. 
D) Expenditures will change as a result of a change in the real value of money balances when there is a change in the price level.

Question 9

Which of the following would likely result in a shift of the aggregate demand curve to the right?

Accepted Answer

A) a tax cut 
B) a decrease in job security 
C) a rise in the real interest rate 
D) a decrease in the quantity of money in circulation 
A) a tax cut 
B) a decrease in job security 
C) a rise in the real interest rate 
D) a decrease in the quantity of money in circulation

Question 10

The change in total planned real expenditures resulting from a change in the real value of money balances when the price level changes, all other things held constant, is

Accepted Answer

A) the real-balance effect. 
B) the interest rate effect. 
C) the open economy effect. 
D) demand side inflation. 
A) the real-balance effect. 
B) the interest rate effect. 
C) the open economy effect. 
D) demand side inflation.

Question 11

An increase in U.S. prices relative to Japanese prices will

Accepted Answer

A) increase total planned spending on U.S. goods and services. 
B) increase U.S. imports and decrease U.S. exports. 
C) decrease U.S. imports and increase U.S. exports. 
D) decrease both U.S. exports and imports. 
A) increase total planned spending on U.S. goods and services. 
B) increase U.S. imports and decrease U.S. exports. 
C) decrease U.S. imports and increase U.S. exports. 
D) decrease both U.S. exports and imports.

Question 12

The long-run aggregate supply curve

Accepted Answer

A) shows that at higher prices, potential real Gross Domestic Product (GDP)increases. 
B) slopes up and to the right. 
C) shows that long-run aggregate supply equals potential real Gross Domestic Product (GDP). 
D) is very sensitive to changes in the price level. 
A) shows that at higher prices, potential real Gross Domestic Product (GDP)increases. 
B) slopes up and to the right. 
C) shows that long-run aggregate supply equals potential real Gross Domestic Product (GDP). 
D) is very sensitive to changes in the price level.

Question 13

Aggregate demand reflects

Accepted Answer

A) planned total spending in the economy. 
B) planned total production in the economy. 
C) both spending and production in the economy. 
D) planned demand for consumer goods only. 
A) planned total spending in the economy. 
B) planned total production in the economy. 
C) both spending and production in the economy. 
D) planned demand for consumer goods only.

Question 14

The total level of all planned expenditures in the economy best describes

Accepted Answer

A) aggregate supply. 
B) aggregate demand. 
C) aggregate expenditures. 
D) both B and C are correct. 
A) aggregate supply. 
B) aggregate demand. 
C) aggregate expenditures. 
D) both B and C are correct.

Question 15

The long-run aggregate supply curve assumes that

Accepted Answer

A) the unemployment rate is more than 9 percent. 
B) all factors of production are fully employed. 
C) only laborers are fully employed. 
D) there is no government purchasing of goods and services. 
A) the unemployment rate is more than 9 percent. 
B) all factors of production are fully employed. 
C) only laborers are fully employed. 
D) there is no government purchasing of goods and services.

Question 16

The open economy effect suggests that

Accepted Answer

A) a decrease in domestic price level will cause foreign residents to buy fewer domestic goods, increasing net exports. 
B) a decrease in domestic price level will cause foreign residents to buy more domestic goods, increasing net exports. 
C) a rise in domestic price level will cause foreign residents to buy more domestic goods. 
D) a rise in domestic price level will cause domestic residents to buy fewer imported goods. 
A) a decrease in domestic price level will cause foreign residents to buy fewer domestic goods, increasing net exports. 
B) a decrease in domestic price level will cause foreign residents to buy more domestic goods, increasing net exports. 
C) a rise in domestic price level will cause foreign residents to buy more domestic goods. 
D) a rise in domestic price level will cause domestic residents to buy fewer imported goods.

Question 17

When investors buy more capital goods because the interest rates have fallen, the aggregate demand curve

Accepted Answer

A) shifts right. 
B) shifts left. 
C) does not shift. 
D) stays the same. 
A) shifts right. 
B) shifts left. 
C) does not shift. 
D) stays the same.

Question 18

Which of the following would cause the long-run aggregate supply curve to shift to the right?

Accepted Answer

A) an increase in wages 
B) an increase in demand 
C) an increase in productivity 
D) an increase in taxes on profits 
A) an increase in wages 
B) an increase in demand 
C) an increase in productivity 
D) an increase in taxes on profits

Question 19

When interest rates rise,

Accepted Answer

A) borrowing costs increase, and total planned real expenditures decline. 
B) borrowing costs increase and total planned real expenditures increase. 
C) borrowing costs decline, and total planned real expenditures increase. 
D) borrowing costs decline, and total planned real expenditures decline. 
A) borrowing costs increase, and total planned real expenditures decline. 
B) borrowing costs increase and total planned real expenditures increase. 
C) borrowing costs decline, and total planned real expenditures increase. 
D) borrowing costs decline, and total planned real expenditures decline.

Question 20

An increase in the amount of money in circulation would cause a

Accepted Answer

A) shift of the aggregate demand curve to the right. 
B) shift of the aggregate demand curve to the left. 
C) movement up the aggregate demand curve. 
D) movement down the aggregate demand curve. 
A) shift of the aggregate demand curve to the right. 
B) shift of the aggregate demand curve to the left. 
C) movement up the aggregate demand curve. 
D) movement down the aggregate demand curve.

An economy experiences real growth over time with stable aggregate demand. This would likely result in

What has caused persistent inflation in the United States?

-Refer to the above figure. A movement from B to C would be NOT be the result of

The intersection of aggregate demand and long-run aggregate supply identify the price level at which total planned

Which of the following is the most likely explanation for inflation in the United States?

At each price level, the aggregate demand curve indicates

-In the above figure, a movement from point B to point C could be explained by

Which of the following statements is TRUE about the interest rate effect?

Which of the following would likely result in a shift of the aggregate demand curve to the right?

The change in total planned real expenditures resulting from a change in the real value of money balances when the price level changes, all other things held constant, is

An increase in U.S. prices relative to Japanese prices will

The long-run aggregate supply curve

Aggregate demand reflects

The total level of all planned expenditures in the economy best describes

The long-run aggregate supply curve assumes that

The open economy effect suggests that

When investors buy more capital goods because the interest rates have fallen, the aggregate demand curve

Which of the following would cause the long-run aggregate supply curve to shift to the right?

When interest rates rise,

An increase in the amount of money in circulation would cause a

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

An economy experiences real growth over time with stable aggregate demand. This would likely result in

What has caused persistent inflation in the United States?

-Refer to the above figure. A movement from B to C would be NOT be the result of

The intersection of aggregate demand and long-run aggregate supply identify the price level at which total planned

Which of the following is the most likely explanation for inflation in the United States?

At each price level, the aggregate demand curve indicates

-In the above figure, a movement from point B to point C could be explained by

Which of the following statements is TRUE about the interest rate effect?

Which of the following would likely result in a shift of the aggregate demand curve to the right?

The change in total planned real expenditures resulting from a change in the real value of money balances when the price level changes, all other things held constant, is

An increase in U.S. prices relative to Japanese prices will

The long-run aggregate supply curve

Aggregate demand reflects

The total level of all planned expenditures in the economy best describes

The long-run aggregate supply curve assumes that

The open economy effect suggests that

When investors buy more capital goods because the interest rates have fallen, the aggregate demand curve

Which of the following would cause the long-run aggregate supply curve to shift to the right?

When interest rates rise,

An increase in the amount of money in circulation would cause a

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