Question 1

The positive relationship between short-run aggregate supply and the price level indicates that,in the short run,

Accepted Answer

A)  firms produce more output as the price level falls. 
B)  firms produce more output as the price level rises. 
C)  the money wage rate increases when moving along the short-run aggregate supply curve. 
D)  lower price levels are more profitable for firms. 
A)  firms produce more output as the price level falls. 
B)  firms produce more output as the price level rises. 
C)  the money wage rate increases when moving along the short-run aggregate supply curve. 
D)  lower price levels are more profitable for firms.

Question 2

-The curve labeled A in the above figure will shift rightward when

Accepted Answer

A)  the price level falls. 
B)  technology increases. 
C)  population falls. 
D)  the price level rises. 
A)  the price level falls. 
B)  technology increases. 
C)  population falls. 
D)  the price level rises.

Question 3

A decrease in short-run aggregate supply ________ the equilibrium price level and ________ the equilibrium quantity of real GDP.

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 4

A change in the money wage rate shifts

Accepted Answer

A)  both the SAS and LAS curves. 
B)  the LAS curve but not the SAS curve. 
C)  the SAS curve but not the LAS curve. 
D)  neither the SAS nor the LAS curve. 
A)  both the SAS and LAS curves. 
B)  the LAS curve but not the SAS curve. 
C)  the SAS curve but not the LAS curve. 
D)  neither the SAS nor the LAS curve.

Question 5

Higher resource prices shift the

Accepted Answer

A)  long-run aggregate supply curve leftward, decreasing real GDP and increasing potential GDP. 
B)  short-run aggregate supply curve leftward, raising the price level and decreasing potential GDP. 
C)  short-run aggregate supply curve leftward, raising the price level and decreasing real GDP so it is less than potential GDP. 
D)  short-run aggregate supply curve rightward, raising the price level and decreasing real GDP so it is less than potential GDP. 
A)  long-run aggregate supply curve leftward, decreasing real GDP and increasing potential GDP. 
B)  short-run aggregate supply curve leftward, raising the price level and decreasing potential GDP. 
C)  short-run aggregate supply curve leftward, raising the price level and decreasing real GDP so it is less than potential GDP. 
D)  short-run aggregate supply curve rightward, raising the price level and decreasing real GDP so it is less than potential GDP.

Question 6

As the price level falls and other things remain the same,real wealth ________ and ________.

Accepted Answer

A)  decreases; short-run aggregate supply decreases 
B)  decreases; the quantity of real GDP demanded decreases 
C)  increases; aggregate demand increases 
D)  increases; the quantity of real GDP demanded increases 
A)  decreases; short-run aggregate supply decreases 
B)  decreases; the quantity of real GDP demanded decreases 
C)  increases; aggregate demand increases 
D)  increases; the quantity of real GDP demanded increases

Question 7

Along a short-run aggregate supply curve,a decrease in the price level means that

Accepted Answer

A)  more output is produced as consumer demand increases. 
B)  less output is produced as firms decrease production. 
C)  more output is produced as firms increase production because wages fall more than the price level falls, making it profitable to hire more workers. 
D)  output does not change because firms do not change the quantity they produce. 
A)  more output is produced as consumer demand increases. 
B)  less output is produced as firms decrease production. 
C)  more output is produced as firms increase production because wages fall more than the price level falls, making it profitable to hire more workers. 
D)  output does not change because firms do not change the quantity they produce.

Question 8

-In the above figure,what is the short-run equilibrium real GDP and the short-run equilibrium price level?

Accepted Answer

The short-run equilibrium occu

Question 9

By using only the aggregate demand curve,we can determine

Accepted Answer

A)  only the price level. 
B)  only the quantity of real GDP. 
C)  both the price level and quantity of real GDP. 
D)  neither the price level nor the quantity of real GDP. 
A)  only the price level. 
B)  only the quantity of real GDP. 
C)  both the price level and quantity of real GDP. 
D)  neither the price level nor the quantity of real GDP.

Question 10

In 2008,the dollar appreciated relative to the euro. This appreciation caused ________ and a ________.

Accepted Answer

A)  a movement up along the U.S. aggregate demand curve; decrease in U.S. exports to Europe 
B)  a decrease in U.S. exports to Europe; leftward shift in the U.S. aggregate demand curve 
C)  an increase in U.S. exports to Europe; movement up along the U.S. aggregate demand curve 
D)  a decrease in U.S. exports to Europe; a movement up along the U.S. aggregate demand curve 
A)  a movement up along the U.S. aggregate demand curve; decrease in U.S. exports to Europe 
B)  a decrease in U.S. exports to Europe; leftward shift in the U.S. aggregate demand curve 
C)  an increase in U.S. exports to Europe; movement up along the U.S. aggregate demand curve 
D)  a decrease in U.S. exports to Europe; a movement up along the U.S. aggregate demand curve

Question 11

-In the above figure,B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve.If there is an increase in the full-employment quantity of labor,then the long-run aggregate supply curve and the short-run aggregate supply curve

Accepted Answer

A)  remain B and E. 
B)  shift to A and D, respectively. 
C)  shift to C and F, respectively. 
D)  shift to A and F, respectively. 
A)  remain B and E. 
B)  shift to A and D, respectively. 
C)  shift to C and F, respectively. 
D)  shift to A and F, respectively.

Question 12

If the economy is in short run equilibrium then

Accepted Answer

A)  real GDP equals potential GDP. 
B)  nominal GDP equals potential GDP. 
C)  real GDP cannot be equal to potential GDP. 
D)  real GDP can be greater than, less than, or equal to potential GDP. 
A)  real GDP equals potential GDP. 
B)  nominal GDP equals potential GDP. 
C)  real GDP cannot be equal to potential GDP. 
D)  real GDP can be greater than, less than, or equal to potential GDP.

Question 13

An economy currently has a inflationary gap.An increase in the money wage rate will ________ the inflationary gap and ________ the price level.

Accepted Answer

A)  decrease; decrease 
B)  increase; increase 
C)  increase; decrease 
D)  decrease; increase 
A)  decrease; decrease 
B)  increase; increase 
C)  increase; decrease 
D)  decrease; increase

Question 14

How do changes in the money wage rate affect the LAS and SAS curves?
Explain your answer.

Accepted Answer

If the money wage rate changes,the LAS c

Question 15

-In the above figure,the economy is initially at point B.If the Fed increases the quantity of money,there is

Accepted Answer

A)  a movement to point C. 
B)  a movement to point A. 
C)  a shift to AD₂. 
D)  a shift to AD₁. 
A)  a movement to point C. 
B)  a movement to point A. 
C)  a shift to AD₂. 
D)  a shift to AD₁.

Question 16

A change in ________ creates a movement along the aggregate demand curve,while a change in ________ shifts the aggregate demand curve.

Accepted Answer

A)  expected profits; tax rates 
B)  the price level; government expenditures 
C)  foreign income; the foreign exchange rate 
D)  real wealth; human capital 
A)  expected profits; tax rates 
B)  the price level; government expenditures 
C)  foreign income; the foreign exchange rate 
D)  real wealth; human capital

Question 17

$$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { level }
\end{array} & \begin{array} { c } 
\text { Aggregate } \
\text { demand } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Short-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Long-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 140 & 4 & 8 & 7 \
\hline 130 & 5 & 7 & 7 \
\hline 120 & 6 & 6 & 7 \
\hline 110 & 7 & 5 & 7 \
\hline 100 & 8 & 4 & 7 \
\hline
\end{array}$$
-The data in the above table show that when the price level is 120,if aggregate demand does not change then the

Accepted Answer

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

Question 18

In 2008,Japan's economy suffered as world economies slowed. If authorities in Japan followed the monetarist viewpoint,________ to bring the economy back to full employment.

Accepted Answer

A)  taxes would be decreased and the money supply should be increased 
B)  nothing should be done 
C)  aggregate supply would shift leftward 
D)  the money supply would be kept growing at a steady pace 
A)  taxes would be decreased and the money supply should be increased 
B)  nothing should be done 
C)  aggregate supply would shift leftward 
D)  the money supply would be kept growing at a steady pace

Question 19

A decrease in government expenditure on goods and services

Accepted Answer

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

Question 20

With an increase in the capital stock,the short-run aggregate supply curve

Accepted Answer

A)  remains as it is. 
B)  shifts rightward. 
C)  shifts leftward. 
D)  becomes steeper. 
A)  remains as it is. 
B)  shifts rightward. 
C)  shifts leftward. 
D)  becomes steeper.

The positive relationship between short-run aggregate supply and the price level indicates that,in the short run,

-The curve labeled A in the above figure will shift rightward when

A decrease in short-run aggregate supply the equilibrium price level and the equilibrium quantity of real GDP.

A change in the money wage rate shifts

Higher resource prices shift the

As the price level falls and other things remain the same,real wealth and .

Along a short-run aggregate supply curve,a decrease in the price level means that

-In the above figure,what is the short-run equilibrium real GDP and the short-run equilibrium price level?

By using only the aggregate demand curve,we can determine

In 2008,the dollar appreciated relative to the euro. This appreciation caused and a .

-In the above figure,B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve.If there is an increase in the full-employment quantity of labor,then the long-run aggregate supply curve and the short-run aggregate supply curve

If the economy is in short run equilibrium then

An economy currently has a inflationary gap.An increase in the money wage rate will the inflationary gap and the price level.

How do changes in the money wage rate affect the LAS and SAS curves? Explain your answer.

-In the above figure,the economy is initially at point B.If the Fed increases the quantity of money,there is

A change in creates a movement along the aggregate demand curve,while a change in shifts the aggregate demand curve.

In 2008,Japan's economy suffered as world economies slowed. If authorities in Japan followed the monetarist viewpoint,________ to bring the economy back to full employment.

A decrease in government expenditure on goods and services

With an increase in the capital stock,the short-run aggregate supply 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

The positive relationship between short-run aggregate supply and the price level indicates that,in the short run,

-The curve labeled A in the above figure will shift rightward when

A decrease in short-run aggregate supply ________ the equilibrium price level and ________ the equilibrium quantity of real GDP.

A change in the money wage rate shifts

Higher resource prices shift the

As the price level falls and other things remain the same,real wealth ________ and ________.

Along a short-run aggregate supply curve,a decrease in the price level means that

-In the above figure,what is the short-run equilibrium real GDP and the short-run equilibrium price level?

By using only the aggregate demand curve,we can determine

In 2008,the dollar appreciated relative to the euro. This appreciation caused ________ and a ________.

-In the above figure,B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve.If there is an increase in the full-employment quantity of labor,then the long-run aggregate supply curve and the short-run aggregate supply curve

If the economy is in short run equilibrium then

An economy currently has a inflationary gap.An increase in the money wage rate will ________ the inflationary gap and ________ the price level.

How do changes in the money wage rate affect the LAS and SAS curves? Explain your answer.

-In the above figure,the economy is initially at point B.If the Fed increases the quantity of money,there is

A change in ________ creates a movement along the aggregate demand curve,while a change in ________ shifts the aggregate demand curve.

In 2008,Japan's economy suffered as world economies slowed. If authorities in Japan followed the monetarist viewpoint,________ to bring the economy back to full employment.

A decrease in government expenditure on goods and services

With an increase in the capital stock,the short-run aggregate supply 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

A decrease in short-run aggregate supply the equilibrium price level and the equilibrium quantity of real GDP.

As the price level falls and other things remain the same,real wealth and .

In 2008,the dollar appreciated relative to the euro. This appreciation caused and a .

An economy currently has a inflationary gap.An increase in the money wage rate will the inflationary gap and the price level.

A change in creates a movement along the aggregate demand curve,while a change in shifts the aggregate demand curve.