Question 1

The country of Stanley is at an above-full employment equilibrium.Which of the following events will return Stanley to full-employment?

Accepted Answer

A)  an increase in government expenditures 
B)  a decrease in the interest rate 
C)  an increase in the money wage rate 
D)  an increase in the quantity of money 
A)  an increase in government expenditures 
B)  a decrease in the interest rate 
C)  an increase in the money wage rate 
D)  an increase in the quantity of money

Question 2

Which of the following statements is FALSE?

Accepted Answer

A)  Fiscal policy is the attempt to influence the economy using taxes, transfer payments, and government expenditures. 
B)  Government expenditure affects aggregate demand directly because government expenditure is a component of aggregate demand. 
C)  Taxes and transfer payments affect aggregate demand by changing disposable income. 
D)  An increase in disposable income leads to a decrease in aggregate demand. 
A)  Fiscal policy is the attempt to influence the economy using taxes, transfer payments, and government expenditures. 
B)  Government expenditure affects aggregate demand directly because government expenditure is a component of aggregate demand. 
C)  Taxes and transfer payments affect aggregate demand by changing disposable income. 
D)  An increase in disposable income leads to a decrease in aggregate demand.

Question 3

Disposable income ________ when ________.

Accepted Answer

A)  decreases; taxes increase 
B)  decreases; transfer payments increase 
C)  increases; government expenditures decrease 
D)  decreases; aggregate income increases 
A)  decreases; taxes increase 
B)  decreases; transfer payments increase 
C)  increases; government expenditures decrease 
D)  decreases; aggregate income increases

Question 4

Economic growth is best defined as

Accepted Answer

A)  decreases in potential GDP. 
B)  increases in potential GDP. 
C)  rightward shifts of the AD curve. 
D)  rightward shifts of the SAS curve. 
A)  decreases in potential GDP. 
B)  increases in potential GDP. 
C)  rightward shifts of the AD curve. 
D)  rightward shifts of the SAS curve.

Question 5

If the money prices of resources changes,

Accepted Answer

A)  the LAS curve shifts. 
B)  the SAS curve shifts. 
C)  the AD curve shifts. 
D)  the macroeconomic equilibrium is unaffected. 
A)  the LAS curve shifts. 
B)  the SAS curve shifts. 
C)  the AD curve shifts. 
D)  the macroeconomic equilibrium is unaffected.

Question 6

Moving along the short-run aggregate supply curve,________.

Accepted Answer

A)  the real wage rate is constant 
B)  real GDP equals potential GDP 
C)  the money wage rate, the prices of other resources, and potential GDP remain constant 
D)  real GDP equals nominal GDP 
A)  the real wage rate is constant 
B)  real GDP equals potential GDP 
C)  the money wage rate, the prices of other resources, and potential GDP remain constant 
D)  real GDP equals nominal GDP

Question 7

If aggregate demand grows only slightly faster than potential GDP,then the economy will ________.

Accepted Answer

A)  experience economic growth with high inflation 
B)  experience recession 
C)  experience economic growth with low inflation 
D)  be at a business-cycle peak 
A)  experience economic growth with high inflation 
B)  experience recession 
C)  experience economic growth with low inflation 
D)  be at a business-cycle peak

Question 8

Suppose there is a increase in short-run aggregate supply with no change in long-run aggregate supply. This situation could be the result of

Accepted Answer

A)  an increase in the price of oil. 
B)  a decrease in the money wage rate. 
C)  a technological advancement. 
D)  an increase in the quantity of capital. 
A)  an increase in the price of oil. 
B)  a decrease in the money wage rate. 
C)  a technological advancement. 
D)  an increase in the quantity of capital.

Question 9

When the price level in France increases while the exchange rate and the price level in the United States remain the same,the result is

Accepted Answer

A)  U.S.-made goods become relatively cheaper compared to French-made goods. 
B)  French citizens are more likely to buy U.S.-made goods. 
C)  U.S. citizens are less likely to buy French-made goods. 
D)  All of the above answers are correct. 
A)  U.S.-made goods become relatively cheaper compared to French-made goods. 
B)  French citizens are more likely to buy U.S.-made goods. 
C)  U.S. citizens are less likely to buy French-made goods. 
D)  All of the above answers are correct.

Question 10

A lower price level combined with a decrease in real GDP occurs when the

Accepted Answer

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

Question 11

A change in the price level does not shift the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 12

The short-run aggregate supply curve

Accepted Answer

A)  is vertical. 
B)  has a negative slope. 
C)  has a positive slope. 
D)  is horizontal. 
A)  is vertical. 
B)  has a negative slope. 
C)  has a positive slope. 
D)  is horizontal.

Question 13

-In the above figure,at the price level of 140 and real GDP of

Accepted Answer

A)  $12 trillion, firms will not be able to sell all their output. 
B)  $4 trillion, firms will not be able to sell all their output. 
C)  $4 trillion, consumers will not be able to buy all the goods and services they demand. 
D)  $12 trillion, consumers will not be able to buy all the goods and services they demand. 
A)  $12 trillion, firms will not be able to sell all their output. 
B)  $4 trillion, firms will not be able to sell all their output. 
C)  $4 trillion, consumers will not be able to buy all the goods and services they demand. 
D)  $12 trillion, consumers will not be able to buy all the goods and services they demand.

Question 14

Long-run macroeconomic equilibrium is achieved when the money wage rate has adjusted so that employment is such that real GDP equals potential GDP.

Accepted Answer

A) True 
 B)False

Question 15

An aggregate supply curve depicts the relationship between

Accepted Answer

A)  the price level and nominal GDP. 
B)  household expenditures and household income. 
C)  the price level and the aggregate quantity supplied. 
D)  the price level and the aggregate quantity demanded. 
A)  the price level and nominal GDP. 
B)  household expenditures and household income. 
C)  the price level and the aggregate quantity supplied. 
D)  the price level and the aggregate quantity demanded.

Question 16

If aggregate demand decreases and neither short-run nor long-run aggregate supply changes,then

Accepted Answer

A)  the price level increases in the short-run and decreases in the long-run. 
B)  there is an inflationary gap. 
C)  there is a recessionary gap. 
D)  in the long run, the long-run aggregate supply will decrease. 
A)  the price level increases in the short-run and decreases in the long-run. 
B)  there is an inflationary gap. 
C)  there is a recessionary gap. 
D)  in the long run, the long-run aggregate supply will decrease.

Question 17

Starting at full employment,a business cycle can be described by the following sequence: ________ equilibrium,________ equilibrium,________ equilibrium.

Accepted Answer

A)  full-employment; below full-employment; above full-employment 
B)  below full-employment; full-employment; above full-employment 
C)  above full-employment; below full-employment; full-employment 
D)  below full-employment; full-employment; below full-employment 
A)  full-employment; below full-employment; above full-employment 
B)  below full-employment; full-employment; above full-employment 
C)  above full-employment; below full-employment; full-employment 
D)  below full-employment; full-employment; below full-employment

Question 18

In the macroeconomic long run,

Accepted Answer

A)  GDP always is below potential GDP. 
B)  there is full employment with no unemployment. 
C)  output always is above potential GDP. 
D)  there is full employment and real GDP is equal to potential GDP. 
A)  GDP always is below potential GDP. 
B)  there is full employment with no unemployment. 
C)  output always is above potential GDP. 
D)  there is full employment and real GDP is equal to potential GDP.

Question 19

-Suppose the economy is at point B.If a recession in another country decreases exports,to what point might economy move in the short run?

Accepted Answer

A)  It stays at point B. 
B)  It shifts to a point such as A. 
C)  It shifts to a point such as C. 
D)  None of the above answers are correct because it is the SAS curve that shifts, not the AD curve. 
A)  It stays at point B. 
B)  It shifts to a point such as A. 
C)  It shifts to a point such as C. 
D)  None of the above answers are correct because it is the SAS curve that shifts, not the AD curve.

Question 20

In the short run,the intersection of the aggregate demand and the short-run aggregate supply curves,

Accepted Answer

A)  determines the equilibrium price level. 
B)  is a point where there is neither a surplus nor a shortage of goods. 
C)  determines the equilibrium level of real GDP. 
D)  All of the above answers are correct. 
A)  determines the equilibrium price level. 
B)  is a point where there is neither a surplus nor a shortage of goods. 
C)  determines the equilibrium level of real GDP. 
D)  All of the above answers are correct.

The country of Stanley is at an above-full employment equilibrium.Which of the following events will return Stanley to full-employment?

Which of the following statements is FALSE?

Disposable income when .

Economic growth is best defined as

If the money prices of resources changes,

Moving along the short-run aggregate supply curve,________.

If aggregate demand grows only slightly faster than potential GDP,then the economy will ________.

Suppose there is a increase in short-run aggregate supply with no change in long-run aggregate supply. This situation could be the result of

When the price level in France increases while the exchange rate and the price level in the United States remain the same,the result is

A lower price level combined with a decrease in real GDP occurs when the

A change in the price level does not shift the aggregate demand curve.

The short-run aggregate supply curve

-In the above figure,at the price level of 140 and real GDP of

Long-run macroeconomic equilibrium is achieved when the money wage rate has adjusted so that employment is such that real GDP equals potential GDP.

An aggregate supply curve depicts the relationship between

If aggregate demand decreases and neither short-run nor long-run aggregate supply changes,then

Starting at full employment,a business cycle can be described by the following sequence: equilibrium, equilibrium, equilibrium.

In the macroeconomic long run,

-Suppose the economy is at point B.If a recession in another country decreases exports,to what point might economy move in the short run?

In the short run,the intersection of the aggregate demand and the short-run aggregate supply curves,

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 country of Stanley is at an above-full employment equilibrium.Which of the following events will return Stanley to full-employment?

Which of the following statements is FALSE?

Disposable income ________ when ________.

Economic growth is best defined as

If the money prices of resources changes,

Moving along the short-run aggregate supply curve,________.

If aggregate demand grows only slightly faster than potential GDP,then the economy will ________.

Suppose there is a increase in short-run aggregate supply with no change in long-run aggregate supply. This situation could be the result of

When the price level in France increases while the exchange rate and the price level in the United States remain the same,the result is

A lower price level combined with a decrease in real GDP occurs when the

A change in the price level does not shift the aggregate demand curve.

The short-run aggregate supply curve

-In the above figure,at the price level of 140 and real GDP of

Long-run macroeconomic equilibrium is achieved when the money wage rate has adjusted so that employment is such that real GDP equals potential GDP.

An aggregate supply curve depicts the relationship between

If aggregate demand decreases and neither short-run nor long-run aggregate supply changes,then

Starting at full employment,a business cycle can be described by the following sequence: ________ equilibrium,________ equilibrium,________ equilibrium.

In the macroeconomic long run,

-Suppose the economy is at point B.If a recession in another country decreases exports,to what point might economy move in the short run?

In the short run,the intersection of the aggregate demand and the short-run aggregate supply curves,

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

Disposable income when .

Starting at full employment,a business cycle can be described by the following sequence: equilibrium, equilibrium, equilibrium.