Question 1

Which of the following shifts the aggregate demand curve rightward?

Accepted Answer

A)  a decrease in government expenditure 
B)  expectations that future incomes will fall 
C)  a decrease in the quantity of money and an increase in interest rates 
D)  a tax cut 
A)  a decrease in government expenditure 
B)  expectations that future incomes will fall 
C)  a decrease in the quantity of money and an increase in interest rates 
D)  a tax cut

Question 2

Economic growth in India has averaged about 8.5 percent in recent years and while inflation averaged almost 9 percent. The AS-AD model shows this process as

Accepted Answer

A)  rightward shifts in the short-run aggregate supply curve. 
B)  rightward shifts in the both the aggregate demand and long-run aggregate supply curves. 
C)  movements upward along the aggregate demand curve. 
D)  rightward shifts in the aggregate demand curve and leftward shifts in the short-run aggregate supply curve. 
A)  rightward shifts in the short-run aggregate supply curve. 
B)  rightward shifts in the both the aggregate demand and long-run aggregate supply curves. 
C)  movements upward along the aggregate demand curve. 
D)  rightward shifts in the aggregate demand curve and leftward shifts in the short-run aggregate supply curve.

Question 3

In short-run macroeconomic equilibrium

Accepted Answer

A)  real GDP equals potential GDP and aggregate demand determines the price level. 
B)  the price level is fixed and short-run aggregate supply determines real GDP. 
C)  real GDP and the price level are determined by short-run aggregate supply and aggregate demand. 
D)  real GDP is less than potential GDP. 
A)  real GDP equals potential GDP and aggregate demand determines the price level. 
B)  the price level is fixed and short-run aggregate supply determines real GDP. 
C)  real GDP and the price level are determined by short-run aggregate supply and aggregate demand. 
D)  real GDP is less than potential GDP.

Question 4

The SAS curve shifts if there is a change in

Accepted Answer

A)  the price level. 
B)  real GDP. 
C)  nominal GDP. 
D)  potential GDP. 
A)  the price level. 
B)  real GDP. 
C)  nominal GDP. 
D)  potential GDP.

Question 5

If the money wage rate and other resource prices do not change when the price level rises by 10 percent,________.

Accepted Answer

A)  the long-run aggregate supply curve shifts leftward 
B)  the short-run aggregate supply curve shifts leftward 
C)  the long-run aggregate supply curve shifts rightward 
D)  there is movement along the short-run aggregate supply curve 
A)  the long-run aggregate supply curve shifts leftward 
B)  the short-run aggregate supply curve shifts leftward 
C)  the long-run aggregate supply curve shifts rightward 
D)  there is movement along the short-run aggregate supply curve

Question 6

Moving along which curve does the money wage rate and the price level change in the same proportions?

Accepted Answer

A)  the AD curve 
B)  the SAS curve 
C)  the LAS curve 
D)  None of the above because there is no curve along which both the money wage rate and the price level change in the same proportions. 
A)  the AD curve 
B)  the SAS curve 
C)  the LAS curve 
D)  None of the above because there is no curve along which both the money wage rate and the price level change in the same proportions.

Question 7

-In the above figure,if the economy is at point A,which of the following is true?

Accepted Answer

A)  Point A is the long-run equilibrium point. 
B)  The economy is in a recession. 
C)  Money wages can be expected to fall. 
D)  The economy might be at point A as a result of a recent cut in the tax rate. 
A)  Point A is the long-run equilibrium point. 
B)  The economy is in a recession. 
C)  Money wages can be expected to fall. 
D)  The economy might be at point A as a result of a recent cut in the tax rate.

Question 8

In the macroeconomic long run,

Accepted Answer

A)  real GDP equals potential GDP. 
B)  the economy is at full employment. 
C)  regardless of the price level, the economy is producing at potential GDP. 
D)  All of the above are correct. 
A)  real GDP equals potential GDP. 
B)  the economy is at full employment. 
C)  regardless of the price level, the economy is producing at potential GDP. 
D)  All of the above are correct.

Question 9

-In the above figure,if the economy is at point A,which of the following is true?

Accepted Answer

A)  There is a recessionary gap. 
B)  There is an inflationary gap. 
C)  Point A is the long-run equilibrium point. 
D)  None of the above answers are correct. 
A)  There is a recessionary gap. 
B)  There is an inflationary gap. 
C)  Point A is the long-run equilibrium point. 
D)  None of the above answers are correct.

Question 10

-In the above figure,the economy is initially at point B.If taxes increase,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 11

-In the above figure,the economy is at point A.Then the price level falls to 90 while the money wage rate does not change.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 12

Which of the following is true about the long-run aggregate supply curve?

Accepted Answer

A)  It is vertical at the level of potential GDP. 
B)  It shows the relationship between the price level and real GDP when the economy is at full employment. 
C)  It does not shift in response to temporary changes in aggregate demand. 
D)  All of the above are true. 
A)  It is vertical at the level of potential GDP. 
B)  It shows the relationship between the price level and real GDP when the economy is at full employment. 
C)  It does not shift in response to temporary changes in aggregate demand. 
D)  All of the above are true.

Question 13

$$\begin{array} { | c | c | c | c | } 
\hline \text { Price level } & \begin{array} { c } 
\text { Aggregate demand } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Short-run aggregate } \
\text { supply (trillions of } \
2005 \text { dollars) }
\end{array} & \begin{array} { c } 
\text { Long-run aggregate } \
\text { supply (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 100 & 11 & 7 & 10 \
\hline 110 & 10 & 8 & 10 \
\hline 120 & 9 & 9 & 10 \
\hline 130 & 8 & 10 & 10 \
\hline 140 & 7 & 11 & 10 \
\hline
\end{array}$$
-Based on the data in the table above,in the adjustment towards the long-run equilibrium

Accepted Answer

A)  money wage rates will rise. 
B)  the aggregate demand curve will shift leftward. 
C)  the short-run aggregate supply curve will shift leftward. 
D)  the short-run aggregate supply curve will shift rightward. 
A)  money wage rates will rise. 
B)  the aggregate demand curve will shift leftward. 
C)  the short-run aggregate supply curve will shift leftward. 
D)  the short-run aggregate supply curve will shift rightward.

Question 14

The aggregate demand curve shows that,if other factors are held constant,a

Accepted Answer

A)  higher price level results in a decrease in the quantity of real GDP demanded. 
B)  higher price level results in an increase in the quantity of real GDP demanded. 
C)  higher price level results in a lower interest rate. 
D)  lower price level results in inflationary conditions. 
A)  higher price level results in a decrease in the quantity of real GDP demanded. 
B)  higher price level results in an increase in the quantity of real GDP demanded. 
C)  higher price level results in a lower interest rate. 
D)  lower price level results in inflationary conditions.

Question 15

What are fiscal and monetary policies?
Do they have an immediate effect on the AD curve or the SAS curve?

Accepted Answer

Fiscal policy is defined as changes in g

Question 16

An increase 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 17

Long-run aggregate supply will decrease for all of the following reasons EXCEPT

Accepted Answer

A)  reduced money wages. 
B)  decreased human capital. 
C)  decrease in the level of full employment. 
D)  decreased capital. 
A)  reduced money wages. 
B)  decreased human capital. 
C)  decrease in the level of full employment. 
D)  decreased capital.

Question 18

The aggregate demand curve shows

Accepted Answer

A)  total expenditures at different levels of national income. 
B)  the quantity of real GDP demanded at different price levels. 
C)  that real income is directly (positively) related to the price level. 
D)  All of the above answers are correct. 
A)  total expenditures at different levels of national income. 
B)  the quantity of real GDP demanded at different price levels. 
C)  that real income is directly (positively) related to the price level. 
D)  All of the above answers are correct.

Question 19

When an increase in aggregate demand exceeds the increase in aggregate supply,

Accepted Answer

A)  real GDP decreases while nominal GDP increases. 
B)  the price level falls while real GDP increases. 
C)  nominal GDP decreases and real GDP decreases. 
D)  the economy will experience inflation as the price level rises. 
A)  real GDP decreases while nominal GDP increases. 
B)  the price level falls while real GDP increases. 
C)  nominal GDP decreases and real GDP decreases. 
D)  the economy will experience inflation as the price level rises.

Question 20

If the money wage rate increases,the short-run aggregate supply curve shifts rightward.

Accepted Answer

A) True 
 B)False

Which of the following shifts the aggregate demand curve rightward?

Economic growth in India has averaged about 8.5 percent in recent years and while inflation averaged almost 9 percent. The AS-AD model shows this process as

In short-run macroeconomic equilibrium

The SAS curve shifts if there is a change in

If the money wage rate and other resource prices do not change when the price level rises by 10 percent,________.

Moving along which curve does the money wage rate and the price level change in the same proportions?

-In the above figure,if the economy is at point A,which of the following is true?

In the macroeconomic long run,

-In the above figure,if the economy is at point A,which of the following is true?

-In the above figure,the economy is initially at point B.If taxes increase,there is

-In the above figure,the economy is at point A.Then the price level falls to 90 while the money wage rate does not change.Firms will be willing to supply output equal to

Which of the following is true about the long-run aggregate supply curve?

The aggregate demand curve shows that,if other factors are held constant,a

What are fiscal and monetary policies? Do they have an immediate effect on the AD curve or the SAS curve?

An increase in government expenditure on goods and services

Long-run aggregate supply will decrease for all of the following reasons EXCEPT

The aggregate demand curve shows

When an increase in aggregate demand exceeds the increase in aggregate supply,

If the money wage rate increases,the short-run aggregate supply curve shifts rightward.

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 aggregate demand curve rightward?

Economic growth in India has averaged about 8.5 percent in recent years and while inflation averaged almost 9 percent. The AS-AD model shows this process as

In short-run macroeconomic equilibrium

The SAS curve shifts if there is a change in

If the money wage rate and other resource prices do not change when the price level rises by 10 percent,________.

Moving along which curve does the money wage rate and the price level change in the same proportions?

-In the above figure,if the economy is at point A,which of the following is true?

In the macroeconomic long run,

-In the above figure,if the economy is at point A,which of the following is true?

-In the above figure,the economy is initially at point B.If taxes increase,there is

-In the above figure,the economy is at point A.Then the price level falls to 90 while the money wage rate does not change.Firms will be willing to supply output equal to

Which of the following is true about the long-run aggregate supply curve?

The aggregate demand curve shows that,if other factors are held constant,a

What are fiscal and monetary policies? Do they have an immediate effect on the AD curve or the SAS curve?

An increase in government expenditure on goods and services

Long-run aggregate supply will decrease for all of the following reasons EXCEPT

The aggregate demand curve shows

When an increase in aggregate demand exceeds the increase in aggregate supply,

If the money wage rate increases,the short-run aggregate supply curve shifts rightward.

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