Question 1

A change in ________ creates a movement along the aggregate demand curve but does not shift the aggregate demand curve.

Accepted Answer

A)  tax rates 
B)  the price level 
C)  fiscal policy 
D)  None of the above because they all shift the aggregate demand curve. 
A)  tax rates 
B)  the price level 
C)  fiscal policy 
D)  None of the above because they all shift the aggregate demand curve. B

Question 2

One reason that the aggregate demand curve has a negative slope is because

Accepted Answer

A)  people buy fewer goods and save more when the price level rises because their real wealth decreases. 
B)  firms produce more when the price rises. 
C)  people earn more money when output rises. 
D)  The premise of the question is wrong because the aggregate demand curve has a positive slope. 
A)  people buy fewer goods and save more when the price level rises because their real wealth decreases. 
B)  firms produce more when the price rises. 
C)  people earn more money when output rises. 
D)  The premise of the question is wrong because the aggregate demand curve has a positive slope. A

Question 3

Suppose the current situation is such that the price level is 120,real GDP is $13 trillion,and GDP along the long-run aggregate supply curve is $12.6 trillion.What will take place to restore the long-run equilibrium?

Accepted Answer

A)  The price level will fall until long-run aggregate supply increases to $13 trillion. 
B)  The price level will fall and money wage rates will rise until real GDP along the long-run aggregate supply curve is $13 trillion. 
C)  Money wage rates will rise until real GDP is $12.6 trillion. 
D)  Aggregate demand will increase until both short-run and long-run aggregate supply equal $13 trillion. 
A)  The price level will fall until long-run aggregate supply increases to $13 trillion. 
B)  The price level will fall and money wage rates will rise until real GDP along the long-run aggregate supply curve is $13 trillion. 
C)  Money wage rates will rise until real GDP is $12.6 trillion. 
D)  Aggregate demand will increase until both short-run and long-run aggregate supply equal $13 trillion. C

Question 4

The short-run aggregate supply curve

Accepted Answer

A)  shows what each producer is willing and able to produce at each level of income holding constant potential GDP and all resource prices. 
B)  shows the relationship between aggregate production and the price level holding constant potential GDP and all resource prices. 
C)  becomes vertical if there is excess production capacity within the economy. 
D)  shows a negative relationship between the price level and real national income holding constant potential GDP and all resource prices. 
A)  shows what each producer is willing and able to produce at each level of income holding constant potential GDP and all resource prices. 
B)  shows the relationship between aggregate production and the price level holding constant potential GDP and all resource prices. 
C)  becomes vertical if there is excess production capacity within the economy. 
D)  shows a negative relationship between the price level and real national income holding constant potential GDP and all resource prices.

Question 5

When the economy is at an above full-employment equilibrium,________.

Accepted Answer

A)  nominal GDP exceeds real GDP 
B)  an inflationary gap exists 
C)  a recessionary gap exists 
D)  real GDP is less than potential GDP 
A)  nominal GDP exceeds real GDP 
B)  an inflationary gap exists 
C)  a recessionary gap exists 
D)  real GDP is less than potential GDP

Question 6

-In the above figure,which part corresponds to a fall in the money wage rate?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 7

From the data in the above table,when the economy is at its short-run equilibrium,if aggregate demand does not change,then as time passes the

Accepted Answer

A)  short-run aggregate supply curve shifts rightward. 
B)  short-run aggregate supply curve shifts leftward. 
C)  long-run aggregate supply curve shifts rightward. 
D)  long-run aggregate supply curve shifts leftward. 
A)  short-run aggregate supply curve shifts rightward. 
B)  short-run aggregate supply curve shifts leftward. 
C)  long-run aggregate supply curve shifts rightward. 
D)  long-run aggregate supply curve shifts leftward.

Question 8

-In the above figure,point A represents

Accepted Answer

A)  a recessionary gap. 
B)  a full-employment equilibrium. 
C)  an inflationary gap. 
D)  an increase in aggregate demand. 
A)  a recessionary gap. 
B)  a full-employment equilibrium. 
C)  an inflationary gap. 
D)  an increase in aggregate demand.

Question 9

-In the above figure,the economy is at point A.Then the price level rises to 110 while the money wage rate remains constant.Firms will be willing to supply output equal to

Accepted Answer

A)  less than $13.0 trillion 
B)  $13.0 trillion 
C)  more than $13.0 trillion 
D)  Without more information, it is impossible to determine which of the above answers is correct. 
A)  less than $13.0 trillion 
B)  $13.0 trillion 
C)  more than $13.0 trillion 
D)  Without more information, it is impossible to determine which of the above answers is correct.

Question 10

-Use the figure above to answer this question.At a price level of 110,

Accepted Answer

A)  real GDP is greater than the aggregate quantity demanded and firms will cut production. 
B)  real GDP is less than the aggregate quantity demanded and firms will increase production. 
C)  inventories will decrease. 
D)  real GDP less than the aggregate quantity demanded and firms will increase prices. 
A)  real GDP is greater than the aggregate quantity demanded and firms will cut production. 
B)  real GDP is less than the aggregate quantity demanded and firms will increase production. 
C)  inventories will decrease. 
D)  real GDP less than the aggregate quantity demanded and firms will increase prices.

Question 11

Which of the following can be said about economic growth?
I. Economic growth is the result of increases in long-run aggregate supply.
II. Economic growth is the result of increases in aggregate demand.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  neither I or II 
A)  I only 
B)  II only 
C)  I and II 
D)  neither I or II

Question 12

-In the above figure,the short-run aggregate supply curve is SAS₁.Suppose that the price level in the economy increases.As a result there is

Accepted Answer

A)  an upward movement along SAS₁. 
B)  a downward movement along SAS₁. 
C)  a shift to SAS₀. 
D)  a shift to SAS₂. 
A)  an upward movement along SAS₁. 
B)  a downward movement along SAS₁. 
C)  a shift to SAS₀. 
D)  a shift to SAS₂.

Question 13

Which of the following shifts the aggregate demand curve rightward?

Accepted Answer

A)  a decrease in consumption 
B)  an increase in investment 
C)  a decrease in net exports 
D)  a decrease in government expenditure on goods and services 
A)  a decrease in consumption 
B)  an increase in investment 
C)  a decrease in net exports 
D)  a decrease in government expenditure on goods and services

Question 14

As world economies start to recover from the 2008 financial crisis and firms expect profits to increase,

Accepted Answer

A)  the price level in the U.S. will decrease as firms increase investment. 
B)  the U.S. short-run aggregate supply curve immediately will shift rightward. 
C)  investment will increase and there will be a movement up along the aggregate demand curve. 
D)  both investment and aggregate demand will increase. 
A)  the price level in the U.S. will decrease as firms increase investment. 
B)  the U.S. short-run aggregate supply curve immediately will shift rightward. 
C)  investment will increase and there will be a movement up along the aggregate demand curve. 
D)  both investment and aggregate demand will increase.

Question 15

The long-run aggregate supply curve illustrates the

Accepted Answer

A)  relationship of the price level and real GDP when the economy is at full employment. 
B)  relationship of aggregate supply and aggregate demand. 
C)  amount of products producers offer at various prices when money wages and other resource prices do not change. 
D)  surpluses, shortages and equilibrium level of GDP. 
A)  relationship of the price level and real GDP when the economy is at full employment. 
B)  relationship of aggregate supply and aggregate demand. 
C)  amount of products producers offer at various prices when money wages and other resource prices do not change. 
D)  surpluses, shortages and equilibrium level of GDP.

Question 16

The Federal Reserve lowers interest rates.As a result,in the short run,real GDP ________ and the price level ________.

Accepted Answer

A)  increases; rises 
B)  increases; falls 
C)  decreases; rises 
D)  decreases; falls 
A)  increases; rises 
B)  increases; falls 
C)  decreases; rises 
D)  decreases; falls

Question 17

The quantity of real GDP demanded equals $12.2 trillion when the price level is 90.If the price level rises to 95,the quantity of real GDP demanded equals

Accepted Answer

A)  less than $12.2 trillion. 
B)  $12.2 trillion. 
C)  more than $12.2 trillion. 
D)  more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change. 
A)  less than $12.2 trillion. 
B)  $12.2 trillion. 
C)  more than $12.2 trillion. 
D)  more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change.

Question 18

In the macroeconomic short run,

Accepted Answer

A)  actual real GDP may be less than or more than potential GDP. 
B)  the unemployment rate is zero. 
C)  by definition, the economy is always moving away from full employment. 
D)  actual real GDP always equals potential GDP. 
A)  actual real GDP may be less than or more than potential GDP. 
B)  the unemployment rate is zero. 
C)  by definition, the economy is always moving away from full employment. 
D)  actual real GDP always equals potential GDP.

Question 19

For movements along the long-run aggregate supply curve,

Accepted Answer

A)  potential GDP is dependent on the price level. 
B)  the prices of goods and services change while the prices of productive resources hold steady. 
C)  the price level and the money wage rate change by the same percentage. 
D)  All of the above are correct. 
A)  potential GDP is dependent on the price level. 
B)  the prices of goods and services change while the prices of productive resources hold steady. 
C)  the price level and the money wage rate change by the same percentage. 
D)  All of the above are correct.

Question 20

Which of the following would NOT shift the U.S.aggregate demand curve?

Accepted Answer

A)  a change in income in Canada 
B)  a change in the quantity of capital in the United States 
C)  an expectation that inflation will be lower in the future 
D)  U.S. monetary and fiscal policy 
A)  a change in income in Canada 
B)  a change in the quantity of capital in the United States 
C)  an expectation that inflation will be lower in the future 
D)  U.S. monetary and fiscal policy

A change in ________ creates a movement along the aggregate demand curve but does not shift the aggregate demand curve.

One reason that the aggregate demand curve has a negative slope is because

Suppose the current situation is such that the price level is 120,real GDP is $13 trillion,and GDP along the long-run aggregate supply curve is $12.6 trillion.What will take place to restore the long-run equilibrium?

The short-run aggregate supply curve

When the economy is at an above full-employment equilibrium,________.

-In the above figure,which part corresponds to a fall in the money wage rate?

From the data in the above table,when the economy is at its short-run equilibrium,if aggregate demand does not change,then as time passes the

-In the above figure,point A represents

-In the above figure,the economy is at point A.Then the price level rises to 110 while the money wage rate remains constant.Firms will be willing to supply output equal to

-Use the figure above to answer this question.At a price level of 110,

Which of the following can be said about economic growth? I. Economic growth is the result of increases in long-run aggregate supply. II. Economic growth is the result of increases in aggregate demand.

-In the above figure,the short-run aggregate supply curve is SAS₁.Suppose that the price level in the economy increases.As a result there is

Which of the following shifts the aggregate demand curve rightward?

As world economies start to recover from the 2008 financial crisis and firms expect profits to increase,

The long-run aggregate supply curve illustrates the

The Federal Reserve lowers interest rates.As a result,in the short run,real GDP and the price level .

The quantity of real GDP demanded equals $12.2 trillion when the price level is 90.If the price level rises to 95,the quantity of real GDP demanded equals

In the macroeconomic short run,

For movements along the long-run aggregate supply curve,

Which of the following would NOT shift the U.S.aggregate demand curve?

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 10: Aggregate Supply and Aggregate Demand

A change in ________ creates a movement along the aggregate demand curve but does not shift the aggregate demand curve.

One reason that the aggregate demand curve has a negative slope is because

Suppose the current situation is such that the price level is 120,real GDP is $13 trillion,and GDP along the long-run aggregate supply curve is $12.6 trillion.What will take place to restore the long-run equilibrium?

The short-run aggregate supply curve

When the economy is at an above full-employment equilibrium,________.

-In the above figure,which part corresponds to a fall in the money wage rate?

From the data in the above table,when the economy is at its short-run equilibrium,if aggregate demand does not change,then as time passes the

-In the above figure,point A represents

-In the above figure,the economy is at point A.Then the price level rises to 110 while the money wage rate remains constant.Firms will be willing to supply output equal to

-Use the figure above to answer this question.At a price level of 110,

Which of the following can be said about economic growth? I. Economic growth is the result of increases in long-run aggregate supply. II. Economic growth is the result of increases in aggregate demand.

-In the above figure,the short-run aggregate supply curve is SAS₁.Suppose that the price level in the economy increases.As a result there is

Which of the following shifts the aggregate demand curve rightward?

As world economies start to recover from the 2008 financial crisis and firms expect profits to increase,

The long-run aggregate supply curve illustrates the

The Federal Reserve lowers interest rates.As a result,in the short run,real GDP ________ and the price level ________.

The quantity of real GDP demanded equals $12.2 trillion when the price level is 90.If the price level rises to 95,the quantity of real GDP demanded equals

In the macroeconomic short run,

For movements along the long-run aggregate supply curve,

Which of the following would NOT shift the U.S.aggregate demand curve?

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

The Federal Reserve lowers interest rates.As a result,in the short run,real GDP and the price level .