Question 1

-In the above figure,the short-run aggregate supply curve is SAS₁.If technology advances,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 2

Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded ________.

Accepted Answer

A)  equals potential GDP 
B)  equals full-employment GDP 
C)  does not equal full-employment GDP 
D)  equals the quantity of real GDP supplied 
A)  equals potential GDP 
B)  equals full-employment GDP 
C)  does not equal full-employment GDP 
D)  equals the quantity of real GDP supplied

Question 3

A recessionary gap occurs when

Accepted Answer

A)  real GDP is less than potential GDP. 
B)  nominal GDP is less than potential GDP. 
C)  high rates of inflation occur. 
D)  nominal GDP is greater than potential GDP. 
A)  real GDP is less than potential GDP. 
B)  nominal GDP is less than potential GDP. 
C)  high rates of inflation occur. 
D)  nominal GDP is greater than potential GDP.

Question 4

Other things equal,along the aggregate demand curve,a higher price level is associated with

Accepted Answer

A)  an increase in the quantity of real GDP demanded. 
B)  a decrease in the quantity of real GDP demanded. 
C)  a decrease in the quantity of nominal GDP demanded. 
D)  higher income levels. 
A)  an increase in the quantity of real GDP demanded. 
B)  a decrease in the quantity of real GDP demanded. 
C)  a decrease in the quantity of nominal GDP demanded. 
D)  higher income levels.

Question 5

Which of the following does NOT shift the aggregate demand curve?

Accepted Answer

A)  a decrease in the quantity of money 
B)  an increase in investment 
C)  an increase in the price level 
D)  a decrease in taxes 
A)  a decrease in the quantity of money 
B)  an increase in investment 
C)  an increase in the price level 
D)  a decrease in taxes

Question 6

When the price level rises,the long-run aggregate supply curve ________.

Accepted Answer

A)  shifts rightward 
B)  does not shift 
C)  slopes upward 
D)  shifts leftward 
A)  shifts rightward 
B)  does not shift 
C)  slopes upward 
D)  shifts leftward

Question 7

The U.S.fiscal policy implemented in 2008 was an attempt to

Accepted Answer

A)  give billions of dollars to businesses and low- and middle-income Americans in order stimulate business investment and consumption expenditure, thereby increasing AD. 
B)  give billions of dollars to businesses and low- and middle-income Americans in order stimulate business investment and consumption expenditure, thereby increasing SAS. 
C)  decrease interest rates in order to stimulate business investment and consumption expenditure, thereby increasing AD. 
D)  decrease the exchange rate in order to boost net exports, thereby increasing AD. 
A)  give billions of dollars to businesses and low- and middle-income Americans in order stimulate business investment and consumption expenditure, thereby increasing AD. 
B)  give billions of dollars to businesses and low- and middle-income Americans in order stimulate business investment and consumption expenditure, thereby increasing SAS. 
C)  decrease interest rates in order to stimulate business investment and consumption expenditure, thereby increasing AD. 
D)  decrease the exchange rate in order to boost net exports, thereby increasing AD.

Question 8

A short-run macroeconomic equilibrium occurs

Accepted Answer

A)  at the intersection of the short-run aggregate supply curve and the long-run aggregate supply curve. 
B)  at the intersection of the short-run aggregate supply curve and the aggregate demand curve. 
C)  at the intersection of the short-run aggregate supply curve, the long-run aggregate supply curve, and the aggregate demand curve. 
D)  when the rate at which prices of goods and services increase equals the rate at which money wage rates increase. 
A)  at the intersection of the short-run aggregate supply curve and the long-run aggregate supply curve. 
B)  at the intersection of the short-run aggregate supply curve and the aggregate demand curve. 
C)  at the intersection of the short-run aggregate supply curve, the long-run aggregate supply curve, and the aggregate demand curve. 
D)  when the rate at which prices of goods and services increase equals the rate at which money wage rates increase.

Question 9

How are potential GDP,full employment and the LAS curve related?

Accepted Answer

When the economy is at full em

Question 10

-The figure illustrates aggregate demand and aggregate supply in Sparta.Which of the following events will decrease Sparta's real GDP in the short run?

Accepted Answer

A)  a decrease in taxes 
B)  a fall in resource prices 
C)  a decrease in government expenditure 
D)  an increase in investment 
A)  a decrease in taxes 
B)  a fall in resource prices 
C)  a decrease in government expenditure 
D)  an increase in investment

Question 11

If the money price of a resource such as oil falls,then the

Accepted Answer

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

Question 12

Real GDP supplied
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Price level } & \begin{array} { c } 
\text { Real GDP } \
\text { demanded } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Short run } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Long run } \
\text { (dollars) }
\end{array} \
\hline 90 & 700 & 300 & 600 \
\hline 100 & 600 & 400 & 600 \
\hline 110 & 500 & 500 & 600 \
\hline 120 & 400 & 600 & 600 \
\hline
\end{array}$$
-The table above gives the aggregate demand and aggregate supply schedules in Lotus Land.The short-run macroeconomic equilibrium is a price level of ________ and a real GDP of ________.

Accepted Answer

A)  90; $400 
B)  100; $400 
C)  110; $500 
D)  120; $400 
A)  90; $400 
B)  100; $400 
C)  110; $500 
D)  120; $400

Question 13

In recent years,Japan's capital stock has increased by about 6 percent from one year to the next. As a result,we would expect

Accepted Answer

A)  a leftward shift in Japan's aggregate demand curve. 
B)  a movement up along Japan's short-run aggregate supply curve. 
C)  only Japan's long-run aggregate supply curve to shift rightward. 
D)  rightward shifts in both Japan's short-run aggregate supply and long-run aggregate supply curves. 
A)  a leftward shift in Japan's aggregate demand curve. 
B)  a movement up along Japan's short-run aggregate supply curve. 
C)  only Japan's long-run aggregate supply curve to shift rightward. 
D)  rightward shifts in both Japan's short-run aggregate supply and long-run aggregate supply curves.

Question 14

The quantity of real GDP demanded equals $12.4 trillion when the price level is 95.If the price level falls to 90,the quantity of real GDP demanded equals

Accepted Answer

A)  less than $12.4 trillion. 
B)  $12.4 trillion. 
C)  more than $12.4 trillion. 
D)  more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change. 
A)  less than $12.4 trillion. 
B)  $12.4 trillion. 
C)  more than $12.4 trillion. 
D)  more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change.

Question 15

The level of output at which the short-run aggregate supply curve and the aggregate demand curve intersect is the full employment level of GDP.

Accepted Answer

A) True 
 B)False

Question 16

According to www.oecd.org,the United States spends a larger portion of expenditures on higher education compared to any other country. Increasing the amount of higher education produces I. rightward shifts in the U.S.long-run aggregate supply curve
II) movements up along the U.S.aggregate demand curve
III) increases in U.S.human capital.

Accepted Answer

A)  I and III only. 
B)  I, II and III. 
C)  II and III only. 
D)  III only. 
A)  I and III only. 
B)  I, II and III. 
C)  II and III only. 
D)  III only.

Question 17

-In the above figure,the aggregate demand curve is AD₂,so the long-run equilibrium level of real GDP is

Accepted Answer

A)  $13 trillion. 
B)  $13.5 trillion. 
C)  more than $13 and less than $13.5 trillion. 
D)  None of the above answers is correct. 
A)  $13 trillion. 
B)  $13.5 trillion. 
C)  more than $13 and less than $13.5 trillion. 
D)  None of the above answers is correct.

Question 18

At long-run macroeconomic equilibrium,________.

Accepted Answer

A)  an inflationary gap exists 
B)  real GDP equals potential GDP 
C)  a recessionary gap exists 
D)  real GDP is less than potential GDP but is as close as it is possible to be 
A)  an inflationary gap exists 
B)  real GDP equals potential GDP 
C)  a recessionary gap exists 
D)  real GDP is less than potential GDP but is as close as it is possible to be

Question 19

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

Accepted Answer

A)  the unemployment rate is less than the natural unemployment rate. 
B)  the unemployment rate is greater than the natural unemployment rate. 
C)  money wage rates will rise in long-run. 
D)  the economy is at full employment. 
A)  the unemployment rate is less than the natural unemployment rate. 
B)  the unemployment rate is greater than the natural unemployment rate. 
C)  money wage rates will rise in long-run. 
D)  the economy is at full employment.

Question 20

When talking about aggregate supply,it is necessary to

Accepted Answer

A)  focus on the short run. 
B)  focus on the long run. 
C)  distinguish between long-run aggregate supply and short-run aggregate supply. 
D)  distinguish between long-run full employment and short-run full-employment. 
A)  focus on the short run. 
B)  focus on the long run. 
C)  distinguish between long-run aggregate supply and short-run aggregate supply. 
D)  distinguish between long-run full employment and short-run full-employment.

-In the above figure,the short-run aggregate supply curve is SAS₁.If technology advances,there is

Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded ________.

A recessionary gap occurs when

Other things equal,along the aggregate demand curve,a higher price level is associated with

Which of the following does NOT shift the aggregate demand curve?

When the price level rises,the long-run aggregate supply curve ________.

The U.S.fiscal policy implemented in 2008 was an attempt to

A short-run macroeconomic equilibrium occurs

How are potential GDP,full employment and the LAS curve related?

-The figure illustrates aggregate demand and aggregate supply in Sparta.Which of the following events will decrease Sparta's real GDP in the short run?

If the money price of a resource such as oil falls,then the

In recent years,Japan's capital stock has increased by about 6 percent from one year to the next. As a result,we would expect

The quantity of real GDP demanded equals $12.4 trillion when the price level is 95.If the price level falls to 90,the quantity of real GDP demanded equals

The level of output at which the short-run aggregate supply curve and the aggregate demand curve intersect is the full employment level of GDP.

-In the above figure,the aggregate demand curve is AD₂,so the long-run equilibrium level of real GDP is

At long-run macroeconomic equilibrium,________.

Price level Aggregate demand (trillions of 2005 dollars) Short-run aggregate supply (trillions of 2005 dollars) Long-run aggregate supply (trillions of 2005 dollars) 100 11 7 10 110 10 8 10 120 9 9 10 130 8 10 10 140 7 11 10 -Based on the data in the table above,at the short-run equilibrium

When talking about aggregate supply,it is necessary to

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

-In the above figure,the short-run aggregate supply curve is SAS₁.If technology advances,there is

Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded ________.

A recessionary gap occurs when

Other things equal,along the aggregate demand curve,a higher price level is associated with

Which of the following does NOT shift the aggregate demand curve?

When the price level rises,the long-run aggregate supply curve ________.

The U.S.fiscal policy implemented in 2008 was an attempt to

A short-run macroeconomic equilibrium occurs

How are potential GDP,full employment and the LAS curve related?

-The figure illustrates aggregate demand and aggregate supply in Sparta.Which of the following events will decrease Sparta's real GDP in the short run?

If the money price of a resource such as oil falls,then the

In recent years,Japan's capital stock has increased by about 6 percent from one year to the next. As a result,we would expect

The quantity of real GDP demanded equals $12.4 trillion when the price level is 95.If the price level falls to 90,the quantity of real GDP demanded equals

The level of output at which the short-run aggregate supply curve and the aggregate demand curve intersect is the full employment level of GDP.

-In the above figure,the aggregate demand curve is AD₂,so the long-run equilibrium level of real GDP is

At long-run macroeconomic equilibrium,________.

Price level Aggregate demand (trillions of 2005 dollars) Short-run aggregate supply (trillions of 2005 dollars) Long-run aggregate supply (trillions of 2005 dollars) 100 11 7 10 110 10 8 10 120 9 9 10 130 8 10 10 140 7 11 10 -Based on the data in the table above,at the short-run equilibrium

When talking about aggregate supply,it is necessary to

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