Question 1

All of the following shift the short-run aggregate supply curve EXCEPT

Accepted Answer

A)  a change in the price level. 
B)  a change in the money wage rate. 
C)  a change in the price of a raw material. 
D)  technological progress. 
A)  a change in the price level. 
B)  a change in the money wage rate. 
C)  a change in the price of a raw material. 
D)  technological progress.

Question 2

In Japan in 2000 the price level fell by 5 percent and the money wage rate did not change. As a result,there was a

Accepted Answer

A)  movement down along Japan's short-run aggregate demand curve. 
B)  movement down along Japan's short-run aggregate supply curve. 
C)  rightward shift in Japan's short-run aggregate supply curve. 
D)  movement down along Japan's long-run aggregate supply curve. 
A)  movement down along Japan's short-run aggregate demand curve. 
B)  movement down along Japan's short-run aggregate supply curve. 
C)  rightward shift in Japan's short-run aggregate supply curve. 
D)  movement down along Japan's long-run aggregate supply curve.

Question 3

The table below shows data for India's economy. Real GDP is measured in millions of rupees.Suppose that full employment occurs when real GDP is 27,000 million rupees. $$\begin{array} { | c | c | c | c | } 
\hline & \text { Price level } & \begin{array} { c } 
\text { Real GDP } \
\text { supplied in the short } \
\text { run }
\end{array} & \text { Real GDP demanded } \
\hline \text { a } & 114 & 23,501 & 35,898 \
\hline \text { b } & 120 & 25,355 & 32,341 \
\hline \text { c } & 125 & 27,670 & 27,670 \
\hline \text { d } & 131 & 30,366 & 18,569 \
\hline \text { e } & 138 & 33,164 & 15,898 \
\hline
\end{array}$$
The economy is experiencing ________ gap and firms will ________.

Accepted Answer

A)  an inflationary gap; increase production 
B)  an inflationary gap; increase money wages paid to workers 
C)  a recessionary gap; increase production 
D)  a recessionary gap; decrease money wages paid to workers 
A)  an inflationary gap; increase production 
B)  an inflationary gap; increase money wages paid to workers 
C)  a recessionary gap; increase production 
D)  a recessionary gap; decrease money wages paid to workers

Question 4

An increase in foreign incomes

Accepted Answer

A)  increases aggregate demand in the United States. 
B)  increases the aggregate quantity demanded in the United States. 
C)  decreases the aggregate quantity demanded in the United States. 
D)  decreases aggregate demand in the United States. 
A)  increases aggregate demand in the United States. 
B)  increases the aggregate quantity demanded in the United States. 
C)  decreases the aggregate quantity demanded in the United States. 
D)  decreases aggregate demand in the United States.

Question 5

What are the components of fiscal policy?
Explain how fiscal policy affects aggregate demand.

Accepted Answer

Fiscal policy affects aggregate demand t

Question 6

We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve.In the long run

Accepted Answer

A)  technology is fixed but not in the short run. 
B)  the price level is constant but in the short run it fluctuates. 
C)  the aggregate supply curve is horizontal while in the short run it is upward sloping. 
D)  real GDP equals potential GDP. 
A)  technology is fixed but not in the short run. 
B)  the price level is constant but in the short run it fluctuates. 
C)  the aggregate supply curve is horizontal while in the short run it is upward sloping. 
D)  real GDP equals potential GDP.

Question 7

If there is an increase in technology,the long-run aggregate supply curve shifts rightward,but the short-run aggregate supply curve does not shift.

Accepted Answer

A) True 
 B)False

Question 8

-In the above figure,the short-run aggregate supply curve is SAS and the aggregate demand curve is AD.An inflationary gap exists

Accepted Answer

A)  if the long-run aggregate supply curve is LAS₁. 
B)  if the long-run aggregate supply curve is LAS₂. 
C)  if the long-run aggregate supply curve is LAS₃. 
D)  All of the above answers are correct. 
A)  if the long-run aggregate supply curve is LAS₁. 
B)  if the long-run aggregate supply curve is LAS₂. 
C)  if the long-run aggregate supply curve is LAS₃. 
D)  All of the above answers are correct.

Question 9

$$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { level }
\end{array} & \begin{array} { c } 
\text { Aggregate } \
\text { demand } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Short-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Long-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 130 & 8 & 12 & 10 \
\hline 120 & 9 & 11 & 10 \
\hline 110 & 10 & 10 & 10 \
\hline 100 & 11 & 9 & 10 \
\hline 90 & 12 & 8 & 10 \
\hline
\end{array}$$
-The data in the above table indicate that when the price level is 120,

Accepted Answer

A)  inventories fall and the price level rises. 
B)  the economy is in a long-run macroeconomic equilibrium. 
C)  inventories rise and the price level falls. 
D)  the unemployment rate is at its equilibrium level. 
A)  inventories fall and the price level rises. 
B)  the economy is in a long-run macroeconomic equilibrium. 
C)  inventories rise and the price level falls. 
D)  the unemployment rate is at its equilibrium level.

Question 10

In the short run,an increase in government expenditure on goods and services ________ 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 11

-In the above figure,the economy is at point A when changes occur.If the new equilibrium has a price level of 100 and real GDP of $14.0 trillion,then it must be the case that

Accepted Answer

A)  aggregate demand has decreased. 
B)  aggregate supply has decreased. 
C)  aggregate demand has increased. 
D)  aggregate supply has increased. 
A)  aggregate demand has decreased. 
B)  aggregate supply has decreased. 
C)  aggregate demand has increased. 
D)  aggregate supply has increased.

Question 12

If the money prices of resources changes,the SAS curve shifts.

Accepted Answer

A) True 
 B)False

Question 13

-In the above figure,which part corresponds to a destruction of part of the nation's capital stock?

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 14

When the exchange rises,then the

Accepted Answer

A)  AD curve shifts rightward. 
B)  AD curve shifts leftward. 
C)  LAS curve shifts rightward. 
D)  LAS curve shifts leftward. 
A)  AD curve shifts rightward. 
B)  AD curve shifts leftward. 
C)  LAS curve shifts rightward. 
D)  LAS curve shifts leftward.

Question 15

Suppose that during 2009,the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos.What sort of equilibrium existed in Chile?

Accepted Answer

Chile's actual real GDP exceed

Question 16

-In the above figure,the short-run aggregate supply curve is SAS₁.If the money wage rate increases,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 17

The aggregate demand curve shows that,if other factors are held constant,the higher the price level,the

Accepted Answer

A)  greater the quantity of real GDP demanded. 
B)  smaller the quantity of real GDP demanded. 
C)  larger consumption expenditure. 
D)  None of the above answers is correct. 
A)  greater the quantity of real GDP demanded. 
B)  smaller the quantity of real GDP demanded. 
C)  larger consumption expenditure. 
D)  None of the above answers is correct.

Question 18

$$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { level }
\end{array} & \begin{array} { c } 
\text { Aggregate } \
\text { demand } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Short-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Long-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 130 & 8 & 12 & 10 \
\hline 120 & 9 & 11 & 10 \
\hline 110 & 10 & 10 & 10 \
\hline 100 & 11 & 9 & 10 \
\hline 90 & 12 & 8 & 10 \
\hline
\end{array}$$
-The data in the above table indicate that when the price level is 120,

Accepted Answer

A)  firms have unexpectedly low inventories, so prices will rise. 
B)  inventories are at levels planned by firms. 
C)  firms will plan to increase the level of output. 
D)  firms have unexpectedly high inventories, so prices fall. 
A)  firms have unexpectedly low inventories, so prices will rise. 
B)  inventories are at levels planned by firms. 
C)  firms will plan to increase the level of output. 
D)  firms have unexpectedly high inventories, so prices fall.

Question 19

In the short-run,a decrease in government expenditure ________ real GDP and ________ the price level.

Accepted Answer

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

Question 20

-The above figure depicts an economy

Accepted Answer

A)  with an inflationary gap. 
B)  with a recessionary gap. 
C)  producing at full employment. 
D)  None of the above answers is correct. 
A)  with an inflationary gap. 
B)  with a recessionary gap. 
C)  producing at full employment. 
D)  None of the above answers is correct.

All of the following shift the short-run aggregate supply curve EXCEPT

In Japan in 2000 the price level fell by 5 percent and the money wage rate did not change. As a result,there was a

An increase in foreign incomes

What are the components of fiscal policy? Explain how fiscal policy affects aggregate demand.

We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve.In the long run

If there is an increase in technology,the long-run aggregate supply curve shifts rightward,but the short-run aggregate supply curve does not shift.

-In the above figure,the short-run aggregate supply curve is SAS and the aggregate demand curve is AD.An inflationary gap exists

Price level Aggregate demand (trillions of 2005 dollars) Short-run aggregate supply (trillions of 2005 dollars) Long-run aggregate supply (trillions of 2005 dollars) 130 8 12 10 120 9 11 10 110 10 10 10 100 11 9 10 90 12 8 10 -The data in the above table indicate that when the price level is 120,

In the short run,an increase in government expenditure on goods and services real GDP and the price level.

-In the above figure,the economy is at point A when changes occur.If the new equilibrium has a price level of 100 and real GDP of $14.0 trillion,then it must be the case that

If the money prices of resources changes,the SAS curve shifts.

-In the above figure,which part corresponds to a destruction of part of the nation's capital stock?

When the exchange rises,then the

Suppose that during 2009,the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos.What sort of equilibrium existed in Chile?

-In the above figure,the short-run aggregate supply curve is SAS₁.If the money wage rate increases,there is

The aggregate demand curve shows that,if other factors are held constant,the higher the price level,the

Price level Aggregate demand (trillions of 2005 dollars) Short-run aggregate supply (trillions of 2005 dollars) Long-run aggregate supply (trillions of 2005 dollars) 130 8 12 10 120 9 11 10 110 10 10 10 100 11 9 10 90 12 8 10 -The data in the above table indicate that when the price level is 120,

In the short-run,a decrease in government expenditure real GDP and the price level.

-The above figure depicts an economy

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

All of the following shift the short-run aggregate supply curve EXCEPT

In Japan in 2000 the price level fell by 5 percent and the money wage rate did not change. As a result,there was a

An increase in foreign incomes

What are the components of fiscal policy? Explain how fiscal policy affects aggregate demand.

We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve.In the long run

If there is an increase in technology,the long-run aggregate supply curve shifts rightward,but the short-run aggregate supply curve does not shift.

-In the above figure,the short-run aggregate supply curve is SAS and the aggregate demand curve is AD.An inflationary gap exists

Price level Aggregate demand (trillions of 2005 dollars) Short-run aggregate supply (trillions of 2005 dollars) Long-run aggregate supply (trillions of 2005 dollars) 130 8 12 10 120 9 11 10 110 10 10 10 100 11 9 10 90 12 8 10 -The data in the above table indicate that when the price level is 120,

In the short run,an increase in government expenditure on goods and services ________ real GDP and ________ the price level.

-In the above figure,the economy is at point A when changes occur.If the new equilibrium has a price level of 100 and real GDP of $14.0 trillion,then it must be the case that

If the money prices of resources changes,the SAS curve shifts.

-In the above figure,which part corresponds to a destruction of part of the nation's capital stock?

When the exchange rises,then the

Suppose that during 2009,the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos.What sort of equilibrium existed in Chile?

-In the above figure,the short-run aggregate supply curve is SAS₁.If the money wage rate increases,there is

The aggregate demand curve shows that,if other factors are held constant,the higher the price level,the

Price level Aggregate demand (trillions of 2005 dollars) Short-run aggregate supply (trillions of 2005 dollars) Long-run aggregate supply (trillions of 2005 dollars) 130 8 12 10 120 9 11 10 110 10 10 10 100 11 9 10 90 12 8 10 -The data in the above table indicate that when the price level is 120,

In the short-run,a decrease in government expenditure ________ real GDP and ________ the price level.

-The above figure depicts an economy

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

In the short run,an increase in government expenditure on goods and services real GDP and the price level.

In the short-run,a decrease in government expenditure real GDP and the price level.