Question 1

A persistent decline in the price level resulting from economic growth in the presence of stable aggregate demand is known as

Accepted Answer

A)  demand-side deflation. 
B)  the interest rate effect. 
C)  secular deflation. 
D)  the real balance effect. 
A)  demand-side deflation. 
B)  the interest rate effect. 
C)  secular deflation. 
D)  the real balance effect.

Question 2

The long-run aggregate supply curve

Accepted Answer

A)  shifts to the right when there is a tax increase. 
B)  indicates the level of output (GDP) that occurs when resources are fully employed. 
C)  indicates that an increase in the overall price level will cause an increase in production. 
D)  shifts to the right when the Federal Reserve increases the money supply. 
A)  shifts to the right when there is a tax increase. 
B)  indicates the level of output (GDP) that occurs when resources are fully employed. 
C)  indicates that an increase in the overall price level will cause an increase in production. 
D)  shifts to the right when the Federal Reserve increases the money supply.

Question 3

Which of the following does NOT affect the long-run aggregate supply curve?

Accepted Answer

A)  Technology 
B)  Production possibilities curve 
C)  Endowments of resources 
D)  Price level 
A)  Technology 
B)  Production possibilities curve 
C)  Endowments of resources 
D)  Price level

Question 4

An increase in U.S. prices relative to Japanese prices will

Accepted Answer

A)  increase total planned spending on U.S. goods and services. 
B)  increase U.S. imports and decrease U.S. exports. 
C)  decrease U.S. imports and increase U.S. exports. 
D)  decrease both U.S. exports and imports. 
A)  increase total planned spending on U.S. goods and services. 
B)  increase U.S. imports and decrease U.S. exports. 
C)  decrease U.S. imports and increase U.S. exports. 
D)  decrease both U.S. exports and imports.

Question 5

A long-run aggregate supply curve may graphically be represented as a

Accepted Answer

A)  vertical line. 
B)  horizontal line. 
C)  an upward sloping line. 
D)  a downward sloping line. 
A)  vertical line. 
B)  horizontal line. 
C)  an upward sloping line. 
D)  a downward sloping line.

Question 6

One impact of a rise in the dollar's value is that

Accepted Answer

A)  imports become cheaper for the U.S. consumer. 
B)  exports will increase sharply. 
C)  U.S. goods will become cheaper overseas. 
D)  U.S. goods are cheaper domestically. 
A)  imports become cheaper for the U.S. consumer. 
B)  exports will increase sharply. 
C)  U.S. goods will become cheaper overseas. 
D)  U.S. goods are cheaper domestically.

Question 7

Which one of the following would NOT increase aggregate demand?

Accepted Answer

A)  an increase in long-run aggregate supply 
B)  a reduction in real interest rates 
C)  tax decreases 
D)  an increase in the amount of money in circulation 
A)  an increase in long-run aggregate supply 
B)  a reduction in real interest rates 
C)  tax decreases 
D)  an increase in the amount of money in circulation

Question 8

When investors buy more capital goods because the interest rates have fallen, the aggregate demand curve

Accepted Answer

A)  shifts right. 
B)  shifts left. 
C)  does not shift. 
D)  stays the same. 
A)  shifts right. 
B)  shifts left. 
C)  does not shift. 
D)  stays the same.

Question 9

When the price level is below the level at which the aggregate demand curve crosses the long run aggregate supply curve,

Accepted Answer

A)  there will be no price level change. 
B)  there will be pressures that will lead to a shift of either the aggregate demand or the long run aggregate supply curves. 
C)  actual real GDP would be less than total planned real expenditures, and the price level will rise. 
D)  actual real GDP would exceed total planned real expenditures, and the price level will fall. 
A)  there will be no price level change. 
B)  there will be pressures that will lead to a shift of either the aggregate demand or the long run aggregate supply curves. 
C)  actual real GDP would be less than total planned real expenditures, and the price level will rise. 
D)  actual real GDP would exceed total planned real expenditures, and the price level will fall.

Question 10

An assumption on the LRAS curve is

Accepted Answer

A)  technology remains unchanged. 
B)  an increase in the average price level occurs. 
C)  the economy is operating to the right of the production possibilities curve. 
D)  labor productivity is increasing. 
A)  technology remains unchanged. 
B)  an increase in the average price level occurs. 
C)  the economy is operating to the right of the production possibilities curve. 
D)  labor productivity is increasing.

Exam 10: Real GDP and the Price Level in the Long Run

A persistent decline in the price level resulting from economic growth in the presence of stable aggregate demand is known as

The long-run aggregate supply curve

Which of the following does NOT affect the long-run aggregate supply curve?

An increase in U.S. prices relative to Japanese prices will

A long-run aggregate supply curve may graphically be represented as a

One impact of a rise in the dollar's value is that

Which one of the following would NOT increase aggregate demand?

When investors buy more capital goods because the interest rates have fallen, the aggregate demand curve

When the price level is below the level at which the aggregate demand curve crosses the long run aggregate supply curve,

An assumption on the LRAS curve is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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