Question 1

An explanation for why the short-run aggregate supply curve is upward-sloping is because:

Accepted Answer

A)  the quantity of real output supplied is inversely related to the aggregate supply curve. 
B)  nominal incomes are fixed. 
C)  the capital-output ratio is fixed. 
D)  an increase in price will increase the marginal aggregate output. 
A)  the quantity of real output supplied is inversely related to the aggregate supply curve. 
B)  nominal incomes are fixed. 
C)  the capital-output ratio is fixed. 
D)  an increase in price will increase the marginal aggregate output.

Question 2

Which of the following would produce a rightward shift in the short-run aggregate supply curve?

Accepted Answer

A)  An increase in consumption spending. 
B)  A decrease in investment. 
C)  A decrease in government spending. 
D)  A decrease in net exports. 
E)  None of the above. 
A)  An increase in consumption spending. 
B)  A decrease in investment. 
C)  A decrease in government spending. 
D)  A decrease in net exports. 
E)  None of the above.

Question 3

Along the short-run supply curve (SRAS),a decrease in the aggregate demand curve will decrease:

Accepted Answer

A)  both the price level and real GDP. 
B)  real GDP without raising the price level. 
C)  the price level without affecting real GDP. 
D)  the price level but reduce real GDP. 
A)  both the price level and real GDP. 
B)  real GDP without raising the price level. 
C)  the price level without affecting real GDP. 
D)  the price level but reduce real GDP.

Question 4

TYP: SA
Exhibit 14A-3 Macro AD-AS Model
  
-In Exhibit 14A-3,the level of real GDP represented by Yp:

Accepted Answer

A)  is potential real GDP for this economy. 
B)  indicates that the economy is experiencing zero inflation. 
C)  indicates that the economy is experiencing a recessionary gap. 
D)  would be associated with considerable unemployment. 
A)  is potential real GDP for this economy. 
B)  indicates that the economy is experiencing zero inflation. 
C)  indicates that the economy is experiencing a recessionary gap. 
D)  would be associated with considerable unemployment.

Question 5

Exhibit 14A-6 Aggregate demand and supply model
  
-Beginning from long-run equilibrium at point E₁ in Exhibit 14A-6,the aggregate demand curve shifts to AD₂.The real GDP and price level (CPI)in short-run equilibrium will be:

Accepted Answer

A)  $10 billion and 200. 
B)  $10 billion and 150. 
C)  $10 billion and 100. 
D)  $4 billion and 150. 
A)  $10 billion and 200. 
B)  $10 billion and 150. 
C)  $10 billion and 100. 
D)  $4 billion and 150.

Question 6

Economic growth is represented by a rightward shift of the long-run aggregate supply curve (LRAS).

Accepted Answer

A) True 
 B)False

Question 7

If an economy is operating at short-run equilibrium below the level of real GDP,the self-correction model result is that:

Accepted Answer

A)  unemployment increases. 
B)  unemployment falls. 
C)  cyclical unemployment increases. 
D)  frictional and structural unemployment increase. 
A)  unemployment increases. 
B)  unemployment falls. 
C)  cyclical unemployment increases. 
D)  frictional and structural unemployment increase.

Question 8

The long-run aggregate supply curve (LRAS)is:

Accepted Answer

A)  a vertical curve that relates the level of real GDP produced to the price level in the long run. 
B)  an upward sloping curve that relates the level of real GDP produced to the price level in the long run. 
C)  an infinite curve that relates the level of real GDP produced to the price level in the long run. 
D)  none of the above are true. 
A)  a vertical curve that relates the level of real GDP produced to the price level in the long run. 
B)  an upward sloping curve that relates the level of real GDP produced to the price level in the long run. 
C)  an infinite curve that relates the level of real GDP produced to the price level in the long run. 
D)  none of the above are true.

Question 9

In the long run,a decrease in aggregate demand causes the price level to ____ and the long-run aggregate supply curve to ____.

Accepted Answer

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

Question 10

TYP: SA
Exhibit 14A-3 Macro AD-AS Model
  
-In Exhibit 14A-3,the self-correction argument is that in the long run competition:

Accepted Answer

A)  from unemployed workers causes an increase in nominal wages and a leftward shift in SRAS. 
B)  from unemployment workers causes a rightward shift in LRAS. 
C)  among firms for workers increases nominal wages and this causes a leftward shift in SRAS. 
D)  among consumers causes an increase in the CPI and a rightward shift in SRAS. 
A)  from unemployed workers causes an increase in nominal wages and a leftward shift in SRAS. 
B)  from unemployment workers causes a rightward shift in LRAS. 
C)  among firms for workers increases nominal wages and this causes a leftward shift in SRAS. 
D)  among consumers causes an increase in the CPI and a rightward shift in SRAS.

Question 11

Given the shift of the aggregate demand curve from AD₁ to AD₂ in Exhibit 14A-1,the real GDP and price level (CPI)in long-run equilibrium will be:

Accepted Answer

A)  $8 billion and 150. 
B)  $12 billion and 200. 
C)  $8 billion and 250. 
D)  $8 billion and 200. 
A)  $8 billion and 150. 
B)  $12 billion and 200. 
C)  $8 billion and 250. 
D)  $8 billion and 200.

Question 12

Beginning from long-run equilibrium at point E₁ in Exhibit 14A-1,the aggregate demand curve shifts to AD₂ .The real GDP and price level (CPI)in short-run equilibrium will be:

Accepted Answer

A)  $12 billion and 200. 
B)  $8 billion and 250. 
C)  $8 billion and 150. 
D)  $12 billion and 250. 
A)  $12 billion and 200. 
B)  $8 billion and 250. 
C)  $8 billion and 150. 
D)  $12 billion and 250.

Question 13

Economic growth is measured by the percentage change in:

Accepted Answer

A)  potential nominal GDP. 
B)  structural unemployment. 
C)  the rule of 72. 
D)  potential real GDP (LRAS). 
A)  potential nominal GDP. 
B)  structural unemployment. 
C)  the rule of 72. 
D)  potential real GDP (LRAS).

Question 14

Beginning from a position of long-run equilibrium,suppose there is an increase in the aggregate demand curve.After adjustment and comparing the economy's new long-run equilibrium with its original long-run position,the result would be an increase in:

Accepted Answer

A)  real GDP. 
B)  the price level (CPI). 
C)  the unemployment rate. 
D)  a and b, but not 
A)  real GDP. 
B)  the price level (CPI). 
C)  the unemployment rate. 
D)  a and b, but not

Question 15

Exhibit 14A-4 Macro AD-AS Model
  
-In Exhibit 14A-4,the self-correction argument is that in the long run competition:

Accepted Answer

A)  from unemployed workers causes an increase in nominal wages and a leftward shift in SRAS. 
B)  from unemployed workers causes a rightward shift in SRAS. 
C)  among firms for workers increases nominal wages and this causes a leftward shift in SRAS. 
D)  among consumers causes an increase in the CPI and a rightward shift in SRAS. 
A)  from unemployed workers causes an increase in nominal wages and a leftward shift in SRAS. 
B)  from unemployed workers causes a rightward shift in SRAS. 
C)  among firms for workers increases nominal wages and this causes a leftward shift in SRAS. 
D)  among consumers causes an increase in the CPI and a rightward shift in SRAS.

Question 16

A decrease in nominal incomes cause a:

Accepted Answer

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

Question 17

Exhibit 14A-6 Aggregate demand and supply model
  
-Beginning from a point of short-run equilibrium at point E₂ in Exhibit 14A-6,the economy's movement to a new position of long-run equilibrium from that point would best be described as:

Accepted Answer

A)  a movement along the AD₂ curve caused by a shift in the SRAS₁ curve to SRAS₂. 
B)  a movement along the SRAS₂ curve with a shift in the AD₂ curve. 
C)  a shift in the LRAS curve to an intersection at E₃. 
D)  no shift of any kind. 
A)  a movement along the AD₂ curve caused by a shift in the SRAS₁ curve to SRAS₂. 
B)  a movement along the SRAS₂ curve with a shift in the AD₂ curve. 
C)  a shift in the LRAS curve to an intersection at E₃. 
D)  no shift of any kind.

Question 18

Exhibit 14A-6 Aggregate demand and supply model
  
-Beginning in Exhibit 14A-6 from long-run equilibrium at point E₁,the aggregate demand curve shifts to AD₂.The economy's path to a new long-run equilibrium is represented by a movement from:

Accepted Answer

A)  E₃ to E₁ to E₂. 
B)  E₁ to E₃ to E₂. 
C)  E₂ to E₁ to E₂. 
D)  E₁ to E₂ to E₃. 
A)  E₃ to E₁ to E₂. 
B)  E₁ to E₃ to E₂. 
C)  E₂ to E₁ to E₂. 
D)  E₁ to E₂ to E₃.

Question 19

Long-run full-employment equilibrium assumes:

Accepted Answer

A)  a downward-sloping production function. 
B)  a downward-sloping long-run supply curve (LRAS). 
C)  the CPI index price level equals the equilibrium wage rate. 
D)  the CPI equals aggregate demand (A
D)  equals short-run aggregate supply (SRAS) equals long-run aggregate supply (LRAS). 
A)  a downward-sloping production function. 
B)  a downward-sloping long-run supply curve (LRAS). 
C)  the CPI index price level equals the equilibrium wage rate. 
D)  the CPI equals aggregate demand (A
D)  equals short-run aggregate supply (SRAS) equals long-run aggregate supply (LRAS).

Question 20

Economic growth can be represented by a(n):

Accepted Answer

A)  percentage change in real GDP. 
B)  rightward shift of the long-run aggregate supply curve (LRAS). 
C)  outward shift of a production possibilities curve. 
D)  all of the above. 
A)  percentage change in real GDP. 
B)  rightward shift of the long-run aggregate supply curve (LRAS). 
C)  outward shift of a production possibilities curve. 
D)  all of the above.

Exam 14: A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

An explanation for why the short-run aggregate supply curve is upward-sloping is because:

Which of the following would produce a rightward shift in the short-run aggregate supply curve?

Along the short-run supply curve (SRAS),a decrease in the aggregate demand curve will decrease:

TYP: SA Exhibit 14A-3 Macro AD-AS Model -In Exhibit 14A-3,the level of real GDP represented by Yp:

Exhibit 14A-6 Aggregate demand and supply model -Beginning from long-run equilibrium at point E₁ in Exhibit 14A-6,the aggregate demand curve shifts to AD₂.The real GDP and price level (CPI)in short-run equilibrium will be:

Economic growth is represented by a rightward shift of the long-run aggregate supply curve (LRAS).

If an economy is operating at short-run equilibrium below the level of real GDP,the self-correction model result is that:

The long-run aggregate supply curve (LRAS)is:

In the long run,a decrease in aggregate demand causes the price level to ____ and the long-run aggregate supply curve to ____.

TYP: SA Exhibit 14A-3 Macro AD-AS Model -In Exhibit 14A-3,the self-correction argument is that in the long run competition:

Given the shift of the aggregate demand curve from AD₁ to AD₂ in Exhibit 14A-1,the real GDP and price level (CPI)in long-run equilibrium will be:

Beginning from long-run equilibrium at point E₁ in Exhibit 14A-1,the aggregate demand curve shifts to AD₂ .The real GDP and price level (CPI)in short-run equilibrium will be:

Economic growth is measured by the percentage change in:

Beginning from a position of long-run equilibrium,suppose there is an increase in the aggregate demand curve.After adjustment and comparing the economy's new long-run equilibrium with its original long-run position,the result would be an increase in:

Exhibit 14A-4 Macro AD-AS Model -In Exhibit 14A-4,the self-correction argument is that in the long run competition:

A decrease in nominal incomes cause a:

Exhibit 14A-6 Aggregate demand and supply model -Beginning from a point of short-run equilibrium at point E₂ in Exhibit 14A-6,the economy's movement to a new position of long-run equilibrium from that point would best be described as:

Exhibit 14A-6 Aggregate demand and supply model -Beginning in Exhibit 14A-6 from long-run equilibrium at point E₁,the aggregate demand curve shifts to AD₂.The economy's path to a new long-run equilibrium is represented by a movement from:

Long-run full-employment equilibrium assumes:

Economic growth can be represented by a(n):

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

In the long run,a decrease in aggregate demand causes the price level to and the long-run aggregate supply curve to .