Question 1

A reduction in regulation will shift the aggregate:

Accepted Answer

A)  supply curve leftward. 
B)  supply curve rightward. 
C)  demand curve leftward. 
D)  demand curve rightward. 
A)  supply curve leftward. 
B)  supply curve rightward. 
C)  demand curve leftward. 
D)  demand curve rightward.

Question 2

Which one of the following factors will most likely cause an increase in aggregate demand?

Accepted Answer

A)  An increase in net exports. 
B)  An increase in the real interest rate. 
C)  A decrease in net exports due to falling incomes abroad. 
D)  A technological development that decreases the cost of producing computer chips. 
A)  An increase in net exports. 
B)  An increase in the real interest rate. 
C)  A decrease in net exports due to falling incomes abroad. 
D)  A technological development that decreases the cost of producing computer chips.

Question 3

Stagflation occurs when the economy experiences:

Accepted Answer

A)  low unemployment and low inflation. 
B)  high unemployment and rapid inflation. 
C)  low unemployment and rapid inflation. 
D)  high unemployment and low inflation. 
A)  low unemployment and low inflation. 
B)  high unemployment and rapid inflation. 
C)  low unemployment and rapid inflation. 
D)  high unemployment and low inflation.

Question 4

Exhibit 14-8 Aggregate demand and supply
  
-In Exhibit 14-8,if aggregate demand shifts from AD₁ to AD₃,

Accepted Answer

A)  real GDP will increase from $3.0 to $4.0, and the price level will increase from 100 to 140. 
B)  real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 140. 
C)  real GDP will increase from $3.0 to $4.0, and the price level does not change. 
D)  real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 120. 
E)  real GDP will not change and the price level will increase from 100 to 140. 
A)  real GDP will increase from $3.0 to $4.0, and the price level will increase from 100 to 140. 
B)  real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 140. 
C)  real GDP will increase from $3.0 to $4.0, and the price level does not change. 
D)  real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 120. 
E)  real GDP will not change and the price level will increase from 100 to 140.

Question 5

How are demand-pull and cost-push inflation reflected in terms of the AD-AS model?

Accepted Answer

Demand-pull inflation is reflected as a

Question 6

When the economy is experiencing high inflation and high unemployment at the same time,then it is experiencing:

Accepted Answer

A)  stagnation. 
B)  deflation. 
C)  reflation. 
D)  stagflation. 
E)  innation. 
A)  stagnation. 
B)  deflation. 
C)  reflation. 
D)  stagflation. 
E)  innation.

Question 7

The interest-rate effect is the impact on real GDP caused by the ____ relationship between the price level and the interest rate.

Accepted Answer

A)  direct 
B)  independent 
C)  linear 
D)  inverse 
A)  direct 
B)  independent 
C)  linear 
D)  inverse

Question 8

Exhibit 14-4 Aggregate supply and demand curves
  
-As the economy moves to the right in Exhibit 14-4 along the upward-sloping aggregate supply curve the:

Accepted Answer

A)  unemployment rate rises. 
B)  unemployment rate falls. 
C)  inflation rate falls. 
D)  none of the above. 
A)  unemployment rate rises. 
B)  unemployment rate falls. 
C)  inflation rate falls. 
D)  none of the above.

Question 9

The interest-rate effect is the impact on real GDP caused by the direct relationship between the interest rate and the:

Accepted Answer

A)  price level. 
B)  exports. 
C)  consumption. 
D)  investment. 
A)  price level. 
B)  exports. 
C)  consumption. 
D)  investment.

Question 10

In the classical range of the aggregate supply curve,greater spending for consumer and investment goods results in:

Accepted Answer

A)  stagflation. 
B)  more unemployment. 
C)  greater output. 
D)  a higher price level. 
A)  stagflation. 
B)  more unemployment. 
C)  greater output. 
D)  a higher price level.

Question 11

Demand-pull inflation is caused by a rightward shift of the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 12

Why does the aggregate demand (AD)curve slope downward? What could cause the AD curve to shift to the right? What impact would a rightward shift of the AD curve have on the economy?

Accepted Answer

The AD curve slopes downward because of

Question 13

Which of the following are beliefs of classical theory?

Accepted Answer

A)  Long-run full employment. 
B)  Inflexible wages. 
C)  Inflexible prices. 
D)  All of the above. 
A)  Long-run full employment. 
B)  Inflexible wages. 
C)  Inflexible prices. 
D)  All of the above.

Question 14

The aggregate demand curve shifts due to changes in consumption expenditures,investment expenditures government spending,and net exports.

Accepted Answer

A) True 
 B)False

Question 15

The aggregate supply curve is horizontal in the intermediate range.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following will not shift the aggregate demand curve to the right?

Accepted Answer

A)  Consumers becoming more optimistic about the future. 
B)  An increase in government spending. 
C)  Business optimism increases. 
D)  Consumers become pessimistic about the future. 
A)  Consumers becoming more optimistic about the future. 
B)  An increase in government spending. 
C)  Business optimism increases. 
D)  Consumers become pessimistic about the future.

Question 17

Exhibit 14-6 Aggregate supply curve
  
-In Exhibit 14-6,when the economy moves from a GDP of $1,000 billion to a GDP of $1,100 billion,

Accepted Answer

A)  higher wages will lower the cost of producing goods. 
B)  real GDP and employment both increase, but only under conditions of constant prices. 
C)  real GDP increases and employment decreases, but only under conditions of price level increases. 
D)  real GDP and employment both increase, but only under conditions of price level increases. 
E)  the economy has reached full employment. 
A)  higher wages will lower the cost of producing goods. 
B)  real GDP and employment both increase, but only under conditions of constant prices. 
C)  real GDP increases and employment decreases, but only under conditions of price level increases. 
D)  real GDP and employment both increase, but only under conditions of price level increases. 
E)  the economy has reached full employment.

Question 18

Exhibit 14-8 Aggregate demand and supply
  
-In Exhibit 14-8,when aggregate demand shifts from AD₄ to AD₅,the economy experiences:

Accepted Answer

A)  cost push-inflation. 
B)  cost-pull inflation. 
C)  demand-push inflation. 
D)  demand-pull inflation. 
E)  price-pull inflation. 
A)  cost push-inflation. 
B)  cost-pull inflation. 
C)  demand-push inflation. 
D)  demand-pull inflation. 
E)  price-pull inflation.

Question 19

An increase in total spending in the economy will shift the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 20

Exhibit 14-1 Aggregate supply curve
  
-In Exhibit 14-1,as production increases,firms resort to offering higher-wage rates to attract the dwindling supply of unemployed resources in:

Accepted Answer

A)  the segment labeled ab. 
B)  the segment labeled bc. 
C)  the segment labeled cd. 
D)  both segment bc and segment cd. 
E)  the entire curve. 
A)  the segment labeled ab. 
B)  the segment labeled bc. 
C)  the segment labeled cd. 
D)  both segment bc and segment cd. 
E)  the entire curve.

Exam 14: Aggregate Demand and Supply

A reduction in regulation will shift the aggregate:

Which one of the following factors will most likely cause an increase in aggregate demand?

Stagflation occurs when the economy experiences:

Exhibit 14-8 Aggregate demand and supply -In Exhibit 14-8,if aggregate demand shifts from AD₁ to AD₃,

How are demand-pull and cost-push inflation reflected in terms of the AD-AS model?

When the economy is experiencing high inflation and high unemployment at the same time,then it is experiencing:

The interest-rate effect is the impact on real GDP caused by the ____ relationship between the price level and the interest rate.

Exhibit 14-4 Aggregate supply and demand curves -As the economy moves to the right in Exhibit 14-4 along the upward-sloping aggregate supply curve the:

The interest-rate effect is the impact on real GDP caused by the direct relationship between the interest rate and the:

In the classical range of the aggregate supply curve,greater spending for consumer and investment goods results in:

Demand-pull inflation is caused by a rightward shift of the aggregate demand curve.

Why does the aggregate demand (AD)curve slope downward? What could cause the AD curve to shift to the right? What impact would a rightward shift of the AD curve have on the economy?

Which of the following are beliefs of classical theory?

The aggregate demand curve shifts due to changes in consumption expenditures,investment expenditures government spending,and net exports.

The aggregate supply curve is horizontal in the intermediate range.

Which of the following will not shift the aggregate demand curve to the right?

Exhibit 14-6 Aggregate supply curve -In Exhibit 14-6,when the economy moves from a GDP of $1,000 billion to a GDP of $1,100 billion,

Exhibit 14-8 Aggregate demand and supply -In Exhibit 14-8,when aggregate demand shifts from AD₄ to AD₅,the economy experiences:

An increase in total spending in the economy will shift the aggregate demand curve to the left.

Exhibit 14-1 Aggregate supply curve -In Exhibit 14-1,as production increases,firms resort to offering higher-wage rates to attract the dwindling supply of unemployed resources in:

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

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

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

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