Question 1

Which of the following variables or policies can influence economic growth in the long run?

Accepted Answer

A) an increase in capital stock 
B) an increase in money supply 
C) an increase in unemployment benefits 
D) a decrease in nominal interest rates 
A) an increase in capital stock 
B) an increase in money supply 
C) an increase in unemployment benefits 
D) a decrease in nominal interest rates A

Question 2

In which of the following situations are people most likely to spend more?

Accepted Answer

A) when their real wealth and interest rates rise 
B) when their real wealth rises and interest rates fall 
C) when their real wealth falls and interest rates rise 
D) when their real wealth and interest rates fall 
A) when their real wealth and interest rates rise 
B) when their real wealth rises and interest rates fall 
C) when their real wealth falls and interest rates rise 
D) when their real wealth and interest rates fall B

Question 3

Which of the following expenditure items is responsible for the decrease in real GDP during a recession?

Accepted Answer

A) mostly investment spending 
B) mostly consumption spending 
C) both consumption and investment spending, equally 
D) sometimes mostly consumption and sometimes mostly investment 
A) mostly investment spending 
B) mostly consumption spending 
C) both consumption and investment spending, equally 
D) sometimes mostly consumption and sometimes mostly investment A

Question 4

Which of the following best describes the effects of an increase in the price level?

Accepted Answer

A) Real exchange rates and interest rates rise. 
B) Real exchange rates and interest rates fall. 
C) Real exchange rates fall, and interest rates rise. 
D) Real exchange rates rise, and interest rates fall. 
A) Real exchange rates and interest rates rise. 
B) Real exchange rates and interest rates fall. 
C) Real exchange rates fall, and interest rates rise. 
D) Real exchange rates rise, and interest rates fall.

Question 5

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Accepted Answer

When the price level increases, the purc

Question 6

When is the aggregate supply curve upward sloping rather than vertical?

Accepted Answer

A) in the short and the long run 
B) in neither the short run nor long run 
C) in the long run, but not in the short run 
D) in the short run, but not in the long run 
A) in the short and the long run 
B) in neither the short run nor long run 
C) in the long run, but not in the short run 
D) in the short run, but not in the long run

Question 7

Which of the following shifts the short-run aggregate supply left?

Accepted Answer

A) an increase in price expectations 
B) an increase in the price level 
C) a decrease in the money supply 
D) a decrease in the price of oil 
A) an increase in price expectations 
B) an increase in the price level 
C) a decrease in the money supply 
D) a decrease in the price of oil

Question 8

Which of the following best defines the classical dichotomy?

Accepted Answer

A) It is the separation of variables that move with the business cycle and variables that do not. 
B) It is the separation of changes in money and changes in government expenditures. 
C) It is the separation of endogenous and exogenous variables. 
D) It is the separation of real and nominal variables. 
A) It is the separation of variables that move with the business cycle and variables that do not. 
B) It is the separation of changes in money and changes in government expenditures. 
C) It is the separation of endogenous and exogenous variables. 
D) It is the separation of real and nominal variables.

Question 9

Suppose that there has been bad weather, a decrease in the availability of oil, or some other temporary increase in firms' costs and the economy has reached its new short-run equilibrium. What happens as the economy moves from this short-run equilibrium to long-run equilibrium?

Accepted Answer

A) Prices and output rise. 
B) Prices and output fall. 
C) Prices rise and output falls. 
D) Prices fall and output rises. 
A) Prices and output rise. 
B) Prices and output fall. 
C) Prices rise and output falls. 
D) Prices fall and output rises.

Question 10

Which of the following would cause prices to rise and real GDP to fall in the short run?

Accepted Answer

A) an increase in the expected price level 
B) an increase in the capital stock 
C) an increase in the quantity of labour available 
D) an increase in money supply 
A) an increase in the expected price level 
B) an increase in the capital stock 
C) an increase in the quantity of labour available 
D) an increase in money supply

Question 11

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

Examples (and variations on examples) in

Question 12

According to the aggregate demand and aggregate supply model, in the long run what is the impact of an increase in the money supply?

Accepted Answer

A) It leads to increased price level and real GDP. 
B) It leads to increased GDP, but there is no change in the price level. 
C) It leads to increased price level, but there is no change in real GDP. 
D) It does not cause a change in either the price level or real GDP. 
A) It leads to increased price level and real GDP. 
B) It leads to increased GDP, but there is no change in the price level. 
C) It leads to increased price level, but there is no change in real GDP. 
D) It does not cause a change in either the price level or real GDP.

Question 13

On average over the past 130 years, at about what rate has the Canadian economy grown?

Accepted Answer

A) 1 percent per year 
B) 2 percent per year 
C) 4 percent per year 
D) 6 percent per year 
A) 1 percent per year 
B) 2 percent per year 
C) 4 percent per year 
D) 6 percent per year

Question 14

What was the main reason for the economic boom of the early 1940s?

Accepted Answer

A) increased government expenditures 
B) falling prices of oil and other natural resources 
C) an increase in the growth rate of the money supply 
D) rapid developments in transportation, electronics, and communication 
A) increased government expenditures 
B) falling prices of oil and other natural resources 
C) an increase in the growth rate of the money supply 
D) rapid developments in transportation, electronics, and communication

Question 15

Which of the following shifts the short-run aggregate and the long-run aggregate supply left?

Accepted Answer

A) a decrease in the price level 
B) a decrease in the expected price level 
C) a decrease in the capital stock 
D) a decrease in the money supply 
A) a decrease in the price level 
B) a decrease in the expected price level 
C) a decrease in the capital stock 
D) a decrease in the money supply

Question 16

Which of the following best describes the effects of a fall in the price level?

Accepted Answer

A) Dollars become more valuable, and interest rates rise. 
B) Dollars become more valuable, and interest rates fall. 
C) Dollars become less valuable, and interest rates rise. 
D) Dollars become less valuable, and interest rates fall. 
A) Dollars become more valuable, and interest rates rise. 
B) Dollars become more valuable, and interest rates fall. 
C) Dollars become less valuable, and interest rates rise. 
D) Dollars become less valuable, and interest rates fall.

Question 17

What happens when the dollar depreciates?

Accepted Answer

A) Canadian exports and imports increase. 
B) Canadian exports increase, while imports decrease. 
C) Canadian exports decrease, while imports increase. 
D) Canadian exports and imports decrease. 
A) Canadian exports and imports increase. 
B) Canadian exports increase, while imports decrease. 
C) Canadian exports decrease, while imports increase. 
D) Canadian exports and imports decrease.

Question 18

Which of the following characterizes the long-run aggregate supply curve?

Accepted Answer

A) It is determined by the things that determine output in the classical model. 
B) It is located at the point where unemployment is zero. 
C) It shifts to the right when the price level increases. 
D) It is positioned at the point where the economy would cease to grow. 
A) It is determined by the things that determine output in the classical model. 
B) It is located at the point where unemployment is zero. 
C) It shifts to the right when the price level increases. 
D) It is positioned at the point where the economy would cease to grow.

Question 19

How do prices change due to an economic contraction that is caused by a shift in aggregate demand?

Accepted Answer

A) They rise in the short run, and rise even more in the long run. 
B) They rise in the short run, and fall back to their original level in the long run. 
C) They fall in the short run, and fall even more in the long run. 
D) They fall in the short run, and rise back to their original level in the long run. 
A) They rise in the short run, and rise even more in the long run. 
B) They rise in the short run, and fall back to their original level in the long run. 
C) They fall in the short run, and fall even more in the long run. 
D) They fall in the short run, and rise back to their original level in the long run.

Question 20

According to misperceptions theory, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, how the firm may be affected?

Accepted Answer

A) It may believe that the relative price has increased, so it would increase production. 
B) It may believe that the relative price has increased, so it would decrease production. 
C) It may believe that the relative price has decreased, so it would increase production. 
D) It may believe that the relative price has increased, so it would decrease production 
A) It may believe that the relative price has increased, so it would increase production. 
B) It may believe that the relative price has increased, so it would decrease production. 
C) It may believe that the relative price has decreased, so it would increase production. 
D) It may believe that the relative price has increased, so it would decrease production

Which of the following variables or policies can influence economic growth in the long run?

In which of the following situations are people most likely to spend more?

Which of the following expenditure items is responsible for the decrease in real GDP during a recession?

Which of the following best describes the effects of an increase in the price level?

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

When is the aggregate supply curve upward sloping rather than vertical?

Which of the following shifts the short-run aggregate supply left?

Which of the following best defines the classical dichotomy?

Suppose that there has been bad weather, a decrease in the availability of oil, or some other temporary increase in firms' costs and the economy has reached its new short-run equilibrium. What happens as the economy moves from this short-run equilibrium to long-run equilibrium?

Which of the following would cause prices to rise and real GDP to fall in the short run?

Make a list of things that would shift the aggregate demand curve to the right.

According to the aggregate demand and aggregate supply model, in the long run what is the impact of an increase in the money supply?

On average over the past 130 years, at about what rate has the Canadian economy grown?

What was the main reason for the economic boom of the early 1940s?

Which of the following shifts the short-run aggregate and the long-run aggregate supply left?

Which of the following best describes the effects of a fall in the price level?

What happens when the dollar depreciates?

Which of the following characterizes the long-run aggregate supply curve?

How do prices change due to an economic contraction that is caused by a shift in aggregate demand?

According to misperceptions theory, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, how the firm may be affected?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 14: Aggregate Demand and Aggregate Supply

Which of the following variables or policies can influence economic growth in the long run?

In which of the following situations are people most likely to spend more?

Which of the following expenditure items is responsible for the decrease in real GDP during a recession?

Which of the following best describes the effects of an increase in the price level?

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

When is the aggregate supply curve upward sloping rather than vertical?

Which of the following shifts the short-run aggregate supply left?

Which of the following best defines the classical dichotomy?

Suppose that there has been bad weather, a decrease in the availability of oil, or some other temporary increase in firms' costs and the economy has reached its new short-run equilibrium. What happens as the economy moves from this short-run equilibrium to long-run equilibrium?

Which of the following would cause prices to rise and real GDP to fall in the short run?

Make a list of things that would shift the aggregate demand curve to the right.

According to the aggregate demand and aggregate supply model, in the long run what is the impact of an increase in the money supply?

On average over the past 130 years, at about what rate has the Canadian economy grown?

What was the main reason for the economic boom of the early 1940s?

Which of the following shifts the short-run aggregate and the long-run aggregate supply left?

Which of the following best describes the effects of a fall in the price level?

What happens when the dollar depreciates?

Which of the following characterizes the long-run aggregate supply curve?

How do prices change due to an economic contraction that is caused by a shift in aggregate demand?

According to misperceptions theory, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, how the firm may be affected?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters