Question 1

What are three causes of supply-side inflation?

Accepted Answer

Shifting the LRAS to the left can be cau

Question 2

The long-run aggregate supply curve

Accepted Answer

A) shifts to the right when there is a tax increase. 
B) indicates the level of output (GDP)that occurs when resources are fully employed. 
C) indicates that an increase in the overall price level will cause an increase in production. 
D) shifts to the right when the Federal Reserve increases the money supply. 
A) shifts to the right when there is a tax increase. 
B) indicates the level of output (GDP)that occurs when resources are fully employed. 
C) indicates that an increase in the overall price level will cause an increase in production. 
D) shifts to the right when the Federal Reserve increases the money supply.

Question 3

The total of all planned production for the economy is

Accepted Answer

A) determined only by individuals and firms. 
B) determined only by the government. 
C) aggregate demand. 
D) aggregate supply. 
A) determined only by individuals and firms. 
B) determined only by the government. 
C) aggregate demand. 
D) aggregate supply.

Question 4

An individual holds $10,000 in a non-interest-earning checking account, and the overall price level rises significantly. Other things being constant, we would expect

Accepted Answer

A) the individual's real wealth to decrease and consumption to decline. 
B) the individual's stock of real wealth to decrease but real national income to increase. 
C) no change in the individual's real wealth but a decline in real national product. 
D) the individual's wealth to increase. 
A) the individual's real wealth to decrease and consumption to decline. 
B) the individual's stock of real wealth to decrease but real national income to increase. 
C) no change in the individual's real wealth but a decline in real national product. 
D) the individual's wealth to increase.

Question 5

Steadily improving improvements in technology, other things being equal, will result in

Accepted Answer

A) no change in the price level and steadily increasing output. 
B) persistent deflation 
C) steadily rising price level (inflation)and steadily increasing output. 
D) a steadily falling price level with no change in output. 
A) no change in the price level and steadily increasing output. 
B) persistent deflation 
C) steadily rising price level (inflation)and steadily increasing output. 
D) a steadily falling price level with no change in output.

Question 6

The natural rate of unemployment will help determine

Accepted Answer

A) the open economy effect. 
B) the position of the long-run aggregate supply curve. 
C) the level of economic growth in the economy. 
D) low levels of inflation. 
A) the open economy effect. 
B) the position of the long-run aggregate supply curve. 
C) the level of economic growth in the economy. 
D) low levels of inflation.

Question 7

If the current price level is lower than the equilibrium price level, then it must be true that total planned

Accepted Answer

A) government spending is less than total planned tax revenues. 
B) government spending exceeds total planned tax revenues. 
C) real expenditures are less than total planned production. 
D) real expenditures exceed total planned production. 
A) government spending is less than total planned tax revenues. 
B) government spending exceeds total planned tax revenues. 
C) real expenditures are less than total planned production. 
D) real expenditures exceed total planned production.

Question 8

One impact of a rise in the dollar's value is that

Accepted Answer

A) imports become cheaper for the U.S. consumer. 
B) exports will increase sharply. 
C) U.S. goods will become cheaper overseas. 
D) U.S. goods are cheaper domestically. 
A) imports become cheaper for the U.S. consumer. 
B) exports will increase sharply. 
C) U.S. goods will become cheaper overseas. 
D) U.S. goods are cheaper domestically.

Question 9

A persistent decline in the price level resulting from economic growth in the presence of stable aggregate demand is known as

Accepted Answer

A) demand-side deflation. 
B) the interest rate effect. 
C) secular deflation. 
D) the real balance effect. 
A) demand-side deflation. 
B) the interest rate effect. 
C) secular deflation. 
D) the real balance effect.

Question 10

Which of the following will result in secular deflation?

Accepted Answer

A) a one-time rightward shift of the aggregate demand curve 
B) continuous rightward shifts of the aggregate demand curve 
C) a one-time rightward shift of the long-run aggregate supply curve 
D) continuous rightward shifts of the long-run aggregate supply curve 
A) a one-time rightward shift of the aggregate demand curve 
B) continuous rightward shifts of the aggregate demand curve 
C) a one-time rightward shift of the long-run aggregate supply curve 
D) continuous rightward shifts of the long-run aggregate supply curve

Question 11

The wealth effect is another term for the

Accepted Answer

A) substitution effect. 
B) the indirect effect. 
C) the real-balance effect. 
D) the interest rate effect. 
A) substitution effect. 
B) the indirect effect. 
C) the real-balance effect. 
D) the interest rate effect.

Question 12

Which of the following would unambiguously generate inflation?

Accepted Answer

A) a decrease in aggregate demand accompanied by an increase in aggregate supply 
B) an increase in aggregate demand accompanied by an increase in aggregate supply 
C) a decrease in aggregate demand accompanied by a decrease in aggregate supply 
D) an increase in aggregate demand accompanied by a decrease in aggregate supply 
A) a decrease in aggregate demand accompanied by an increase in aggregate supply 
B) an increase in aggregate demand accompanied by an increase in aggregate supply 
C) a decrease in aggregate demand accompanied by a decrease in aggregate supply 
D) an increase in aggregate demand accompanied by a decrease in aggregate supply

Question 13

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

Accepted Answer

A) prices 
B) real Gross Domestic Product (GDP) 
C) real wealth 
D) nominal income 
A) prices 
B) real Gross Domestic Product (GDP) 
C) real wealth 
D) nominal income

Question 14

The total of all planned expenditures in the entire economy is

Accepted Answer

A) the open economy effect. 
B) LRAS. 
C) aggregate supply. 
D) aggregate demand. 
A) the open economy effect. 
B) LRAS. 
C) aggregate supply. 
D) aggregate demand.

Question 15

If you have $5000 and the GDP deflator decreases from 100 to 80

Accepted Answer

A) the $5000 will buy 20 percent less of the goods and services produced by society. 
B) the $5000 will buy 20 percent more of the goods and services produced by society. 
C) the value of the $5000 decreases. 
D) the value of the $5000 remains constant. 
A) the $5000 will buy 20 percent less of the goods and services produced by society. 
B) the $5000 will buy 20 percent more of the goods and services produced by society. 
C) the value of the $5000 decreases. 
D) the value of the $5000 remains constant.

Question 16

Which of the following is TRUE about how the aggregate demand curve differs from the individual's demand curve?

Accepted Answer

A) The individual's demand curve shows the relationship between price and quantity demanded while the aggregate demand curve is not influenced by price. 
B) For the individual's demand curve equilibrium is determined by the intersection of supply and demand while for the aggregate demand curve equilibrium is determined by the real balance effect. 
C) The individual's demand curve is just for an individual while the aggregate demand curve looks at the entire circular flow of income. 
D) The individual's demand curve will shift when there is a change in taxes while the aggregate demand curve will not. 
A) The individual's demand curve shows the relationship between price and quantity demanded while the aggregate demand curve is not influenced by price. 
B) For the individual's demand curve equilibrium is determined by the intersection of supply and demand while for the aggregate demand curve equilibrium is determined by the real balance effect. 
C) The individual's demand curve is just for an individual while the aggregate demand curve looks at the entire circular flow of income. 
D) The individual's demand curve will shift when there is a change in taxes while the aggregate demand curve will not.

Question 17

Which of the following is NOT true about the aggregate demand curve?

Accepted Answer

A) The production possibilities curve determines the slope of the aggregate demand curve. 
B) The aggregate demand curve shows total planned real expenditures at different price levels. 
C) Changes in the economic conditions in other countries will lead to a shift of the aggregate demand curve. 
D) The aggregate demand curve considers the entire circular flow of income. 
A) The production possibilities curve determines the slope of the aggregate demand curve. 
B) The aggregate demand curve shows total planned real expenditures at different price levels. 
C) Changes in the economic conditions in other countries will lead to a shift of the aggregate demand curve. 
D) The aggregate demand curve considers the entire circular flow of income.

Question 18

The U.S. economy has had persistent inflation in recent decades. A possible explanation for the inflation is that

Accepted Answer

A) there have been decreases in the growth rate while aggregate demand has remained unchanged. 
B) there have been increases in the growth rate while aggregate demand has remained unchanged. 
C) there have been decreases in aggregate demand while aggregate supply has remained unchanged. 
D) growth in aggregate demand has been greater than growth in aggregate supply. 
A) there have been decreases in the growth rate while aggregate demand has remained unchanged. 
B) there have been increases in the growth rate while aggregate demand has remained unchanged. 
C) there have been decreases in aggregate demand while aggregate supply has remained unchanged. 
D) growth in aggregate demand has been greater than growth in aggregate supply.

Question 19

-The above figure shows a

Accepted Answer

A) short-run aggregate demand curve. 
B) short-run aggregate supply curve. 
C) long-run aggregate demand curve. 
D) long-run aggregate supply curve. 
A) short-run aggregate demand curve. 
B) short-run aggregate supply curve. 
C) long-run aggregate demand curve. 
D) long-run aggregate supply curve.

Question 20

The aggregate demand curve will shift to the left if

Accepted Answer

A) people are more optimistic about their future. 
B) a reduction in the price level pushes down borrowing costs. 
C) government expenditures increase. 
D) the nation's exports decrease. 
A) people are more optimistic about their future. 
B) a reduction in the price level pushes down borrowing costs. 
C) government expenditures increase. 
D) the nation's exports decrease.

What are three causes of supply-side inflation?

The long-run aggregate supply curve

The total of all planned production for the economy is

An individual holds $10,000 in a non-interest-earning checking account, and the overall price level rises significantly. Other things being constant, we would expect

Steadily improving improvements in technology, other things being equal, will result in

The natural rate of unemployment will help determine

If the current price level is lower than the equilibrium price level, then it must be true that total planned

One impact of a rise in the dollar's value is that

A persistent decline in the price level resulting from economic growth in the presence of stable aggregate demand is known as

Which of the following will result in secular deflation?

The wealth effect is another term for the

Which of the following would unambiguously generate inflation?

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

The total of all planned expenditures in the entire economy is

If you have $5000 and the GDP deflator decreases from 100 to 80

Which of the following is TRUE about how the aggregate demand curve differs from the individual's demand curve?

Which of the following is NOT true about the aggregate demand curve?

The U.S. economy has had persistent inflation in recent decades. A possible explanation for the inflation is that

-The above figure shows a

The aggregate demand curve will shift to the left if

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

What are three causes of supply-side inflation?

The long-run aggregate supply curve

The total of all planned production for the economy is

An individual holds $10,000 in a non-interest-earning checking account, and the overall price level rises significantly. Other things being constant, we would expect

Steadily improving improvements in technology, other things being equal, will result in

The natural rate of unemployment will help determine

If the current price level is lower than the equilibrium price level, then it must be true that total planned

One impact of a rise in the dollar's value is that

A persistent decline in the price level resulting from economic growth in the presence of stable aggregate demand is known as

Which of the following will result in secular deflation?

The wealth effect is another term for the

Which of the following would unambiguously generate inflation?

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

The total of all planned expenditures in the entire economy is

If you have $5000 and the GDP deflator decreases from 100 to 80

Which of the following is TRUE about how the aggregate demand curve differs from the individual's demand curve?

Which of the following is NOT true about the aggregate demand curve?

The U.S. economy has had persistent inflation in recent decades. A possible explanation for the inflation is that

-The above figure shows a

The aggregate demand curve will shift to the left if

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