Question 1

Which of the following shifts the short-run aggregate supply curve?
I. changes in the size of the labor force
II. changes in the money wage rate

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 2

-In the above figure,the curve labeled A shifts rightward if

Accepted Answer

A)  expected future profits decrease. 
B)  the quantity of money decreases. 
C)  the substitution effect occurs. 
D)  taxes decrease. 
A)  expected future profits decrease. 
B)  the quantity of money decreases. 
C)  the substitution effect occurs. 
D)  taxes decrease.

Question 3

-In the above figure,the economy initially is at point B.Then price level rises by 10.The wealth effect will help

Accepted Answer

A)  move the economy to point A. 
B)  move the economy to point C. 
C)  move the economy to point D. 
D)  keep the economy to point B. 
A)  move the economy to point A. 
B)  move the economy to point C. 
C)  move the economy to point D. 
D)  keep the economy to point B.

Question 4

A monetarist economist believes that

Accepted Answer

A)  if the economy was left alone, it would rarely operate at full employment. 
B)  the economy is self-regulating and always at full employment. 
C)  the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
D)  the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic. 
A)  if the economy was left alone, it would rarely operate at full employment. 
B)  the economy is self-regulating and always at full employment. 
C)  the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
D)  the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic.

Question 5

An inflationary gap means that short-run macroeconomic equilibrium GDP

Accepted Answer

A)  is less than full-employment GDP. 
B)  equals full-employment GDP. 
C)  is more than full-employment GDP. 
D)  may be less than, more than, or the same as full-employment GDP depending on the level of potential GDP. 
A)  is less than full-employment GDP. 
B)  equals full-employment GDP. 
C)  is more than full-employment GDP. 
D)  may be less than, more than, or the same as full-employment GDP depending on the level of potential GDP.

Question 6

The long-run aggregate supply curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 7

Suppose the economy is experiencing a recessionary gap.In the long run,if aggregate demand does not change the money wage rate ________,unemployment ________,and the price level ________.

Accepted Answer

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

Question 8

Explain the reasons why the AD curve slopes downward.

Accepted Answer

There are two reasons why the AD curve s

Question 9

Aggregate demand is the relationship between the quantity of real GDP demanded and the ________.

Accepted Answer

A)  price level 
B)  money wage rate 
C)  real wage rate 
D)  nominal GDP demanded 
A)  price level 
B)  money wage rate 
C)  real wage rate 
D)  nominal GDP demanded

Question 10

The aggregate demand curve shows total expenditures at different levels of national income.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following shifts the aggregate demand curve leftward?

Accepted Answer

A)  an increase in consumption expenditures 
B)  a decrease in taxes 
C)  a decrease in government expenditures on goods and services 
D)  an increase in net exports of goods and services 
A)  an increase in consumption expenditures 
B)  a decrease in taxes 
C)  a decrease in government expenditures on goods and services 
D)  an increase in net exports of goods and services

Question 12

According to the wealth effect,if real wealth decreases then people

Accepted Answer

A)  decrease their consumption expenditure. 
B)  increase their consumption expenditure. 
C)  do not respond if their nominal wealth does not change. 
D)  decrease their consumption expenditure only if their nominal wealth also decreases. 
A)  decrease their consumption expenditure. 
B)  increase their consumption expenditure. 
C)  do not respond if their nominal wealth does not change. 
D)  decrease their consumption expenditure only if their nominal wealth also decreases.

Question 13

Moving along the aggregate demand curve,a decrease in the quantity of real GDP demanded is a result of

Accepted Answer

A)  an increase in the price level. 
B)  a decrease in the price level. 
C)  an increase in income. 
D)  a decrease in income. 
A)  an increase in the price level. 
B)  a decrease in the price level. 
C)  an increase in income. 
D)  a decrease in income.

Question 14

-Use the figure above to answer this question. At a price level of 90,

Accepted Answer

A)  people will be forced to cut consumption so that aggregate demand will decrease. 
B)  the aggregate quantity demanded exceeds real GDP and inventories will decrease. 
C)  inventories increase and firms will increase production. 
D)  the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise. 
A)  people will be forced to cut consumption so that aggregate demand will decrease. 
B)  the aggregate quantity demanded exceeds real GDP and inventories will decrease. 
C)  inventories increase and firms will increase production. 
D)  the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise.

Question 15

-In the above figure,the economy is initially at point B.If the government decreases transfer payments,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

The long-run aggregate supply curve is

Accepted Answer

A)  horizontal at the full employment price level. 
B)  vertical at the full employment level of real GDP. 
C)  upward sloping because of the effects of price level changes on real GDP. 
D)  the same as the short-run aggregate supply curve. 
A)  horizontal at the full employment price level. 
B)  vertical at the full employment level of real GDP. 
C)  upward sloping because of the effects of price level changes on real GDP. 
D)  the same as the short-run aggregate supply curve.

Question 17

________ economists believe that the economy is self-regulating and always at full employment.

Accepted Answer

A)  Keynesian 
B)  Monetarist 
C)  Classical 
D)  All 
A)  Keynesian 
B)  Monetarist 
C)  Classical 
D)  All

Question 18

If you have $1,000 in wealth and the price level increases 20 percent,then

Accepted Answer

A)  the $1,000 will buy fewer goods and services. 
B)  the $1,000 dollars will buy 20 percent more goods and services. 
C)  the real value of the $1,000 increases. 
D)  you will be able to buy fewer goods, but the real value of those goods will increase. 
A)  the $1,000 will buy fewer goods and services. 
B)  the $1,000 dollars will buy 20 percent more goods and services. 
C)  the real value of the $1,000 increases. 
D)  you will be able to buy fewer goods, but the real value of those goods will increase.

Question 19

Which of the following does NOT shift the short-run aggregate supply curve?

Accepted Answer

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

Question 20

In 2009,just after taking office,President Obama approved an $800 billion stimulus package of tax cuts and increased government spending to combat the recession brought on by the financial crisis of 2007. Which group of economists most approved of President Obama's actions?

Accepted Answer

A)  Keynesian economists 
B)  classical economists 
C)  monetarists 
D)  free market economists 
A)  Keynesian economists 
B)  classical economists 
C)  monetarists 
D)  free market economists

Which of the following shifts the short-run aggregate supply curve? I. changes in the size of the labor force II. changes in the money wage rate

-In the above figure,the curve labeled A shifts rightward if

-In the above figure,the economy initially is at point B.Then price level rises by 10.The wealth effect will help

A monetarist economist believes that

An inflationary gap means that short-run macroeconomic equilibrium GDP

The long-run aggregate supply curve is upward sloping.

Suppose the economy is experiencing a recessionary gap.In the long run,if aggregate demand does not change the money wage rate ,unemployment ,and the price level .

Explain the reasons why the AD curve slopes downward.

Aggregate demand is the relationship between the quantity of real GDP demanded and the ________.

The aggregate demand curve shows total expenditures at different levels of national income.

Which of the following shifts the aggregate demand curve leftward?

According to the wealth effect,if real wealth decreases then people

Moving along the aggregate demand curve,a decrease in the quantity of real GDP demanded is a result of

-Use the figure above to answer this question. At a price level of 90,

-In the above figure,the economy is initially at point B.If the government decreases transfer payments,there is

The long-run aggregate supply curve is

________ economists believe that the economy is self-regulating and always at full employment.

If you have $1,000 in wealth and the price level increases 20 percent,then

Which of the following does NOT shift the short-run aggregate supply curve?

In 2009,just after taking office,President Obama approved an $800 billion stimulus package of tax cuts and increased government spending to combat the recession brought on by the financial crisis of 2007. Which group of economists most approved of President Obama's actions?

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

Which of the following shifts the short-run aggregate supply curve? I. changes in the size of the labor force II. changes in the money wage rate

-In the above figure,the curve labeled A shifts rightward if

-In the above figure,the economy initially is at point B.Then price level rises by 10.The wealth effect will help

A monetarist economist believes that

An inflationary gap means that short-run macroeconomic equilibrium GDP

The long-run aggregate supply curve is upward sloping.

Suppose the economy is experiencing a recessionary gap.In the long run,if aggregate demand does not change the money wage rate ________,unemployment ________,and the price level ________.

Explain the reasons why the AD curve slopes downward.

Aggregate demand is the relationship between the quantity of real GDP demanded and the ________.

The aggregate demand curve shows total expenditures at different levels of national income.

Which of the following shifts the aggregate demand curve leftward?

According to the wealth effect,if real wealth decreases then people

Moving along the aggregate demand curve,a decrease in the quantity of real GDP demanded is a result of

-Use the figure above to answer this question. At a price level of 90,

-In the above figure,the economy is initially at point B.If the government decreases transfer payments,there is

The long-run aggregate supply curve is

________ economists believe that the economy is self-regulating and always at full employment.

If you have $1,000 in wealth and the price level increases 20 percent,then

Which of the following does NOT shift the short-run aggregate supply curve?

In 2009,just after taking office,President Obama approved an $800 billion stimulus package of tax cuts and increased government spending to combat the recession brought on by the financial crisis of 2007. Which group of economists most approved of President Obama's actions?

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

Suppose the economy is experiencing a recessionary gap.In the long run,if aggregate demand does not change the money wage rate ,unemployment ,and the price level .