Question 1

A decrease in the money wage rate increases ________ and an increase in the full-employment quantity of labor increases ________.

Accepted Answer

A)  the SAS and the LAS; only the SAS 
B)  the SAS and the LAS; only the LAS 
C)  only the SAS; the SAS and the LAS 
D)  only the LAS; the SAS and the LAS 
A)  the SAS and the LAS; only the SAS 
B)  the SAS and the LAS; only the LAS 
C)  only the SAS; the SAS and the LAS 
D)  only the LAS; the SAS and the LAS

Question 2

In the long-run equilibrium, an increase in the quantity of capital leads to

Accepted Answer

A)  an increase in the equilibrium price level and an increase in equilibrium real GDP. 
B)  a decrease in the equilibrium price level and an increase in equilibrium real GDP. 
C)  a decrease in the equilibrium price level, but no change in equilibrium real GDP. 
D)  no change in the equilibrium price level, but an increase in equilibrium real GDP. 
A)  an increase in the equilibrium price level and an increase in equilibrium real GDP. 
B)  a decrease in the equilibrium price level and an increase in equilibrium real GDP. 
C)  a decrease in the equilibrium price level, but no change in equilibrium real GDP. 
D)  no change in the equilibrium price level, but an increase in equilibrium real GDP.

Question 3

A change in ________ creates a movement along the aggregate demand curve, while a change in ________ shifts the aggregate demand curve.

Accepted Answer

A)  expected profits; tax rates 
B)  the price level; government expenditures 
C)  foreign income; the foreign exchange rate 
D)  real wealth; human capital 
A)  expected profits; tax rates 
B)  the price level; government expenditures 
C)  foreign income; the foreign exchange rate 
D)  real wealth; human capital

Question 4

A Keynesian economist believes that

Accepted Answer

A)  if the economy was left alone, it would rarely operate at full employment. 
B)  the economy is self-regulating and always at full employment. 
C)  the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
D)  the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic. 
A)  if the economy was left alone, it would rarely operate at full employment. 
B)  the economy is self-regulating and always at full employment. 
C)  the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
D)  the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic.

Question 5

-In the above figure, which point corresponds to an increase in human capital?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 6

-In the above figure, which point corresponds to an increase in technology?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 7

A decrease in government expenditure on goods and services

Accepted Answer

A)  increases aggregate demand. 
B)  increases the aggregate quantity demanded. 
C)  decreases the aggregate quantity demanded. 
D)  decreases aggregate demand. 
A)  increases aggregate demand. 
B)  increases the aggregate quantity demanded. 
C)  decreases the aggregate quantity demanded. 
D)  decreases aggregate demand.

Question 8

The long-run aggregate supply curve is ________ because along it, as prices rise, the money wage rate ________.

Accepted Answer

A)  vertical; falls 
B)  vertical; rises 
C)  upward sloping; falls 
D)  upward sloping; stays constant 
A)  vertical; falls 
B)  vertical; rises 
C)  upward sloping; falls 
D)  upward sloping; stays constant

Question 9

In the short run, a rightward shift of the short-run aggregate supply curve ________ real GDP and ________ the price level.

Accepted Answer

A)  decreases; lowers 
B)  increases; raises 
C)  decreases; raises 
D)  increases; lowers 
A)  decreases; lowers 
B)  increases; raises 
C)  decreases; raises 
D)  increases; lowers

Question 10

The country of Stanley is at an above-full-employment equilibrium. Which of the following events will return Stanley to full employment?

Accepted Answer

A)  an increase in government expenditures 
B)  a decrease in the interest rate 
C)  an increase in the money wage rate 
D)  an increase in the quantity of money 
A)  an increase in government expenditures 
B)  a decrease in the interest rate 
C)  an increase in the money wage rate 
D)  an increase in the quantity of money

Question 11

By using only the aggregate demand curve, we can determine

Accepted Answer

A)  only the price level. 
B)  only the quantity of real GDP. 
C)  both the price level and quantity of real GDP. 
D)  neither the price level nor the quantity of real GDP. 
A)  only the price level. 
B)  only the quantity of real GDP. 
C)  both the price level and quantity of real GDP. 
D)  neither the price level nor the quantity of real GDP.

Question 12

If the economy is in long run equilibrium and then aggregate demand increases, in the long run the increase in aggregate demand means that the

Accepted Answer

A)  price level will be higher but real GDP will be unaffected. 
B)  real GDP will be larger but the price level will be unaffected. 
C)  the price level will be higher and real GDP will be larger. 
D)  neither the price level nor real GDP will be unaffected. 
A)  price level will be higher but real GDP will be unaffected. 
B)  real GDP will be larger but the price level will be unaffected. 
C)  the price level will be higher and real GDP will be larger. 
D)  neither the price level nor real GDP will be unaffected.

Question 13

One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,

Accepted Answer

A)  firms produce more goods and services. 
B)  firms produce fewer goods and services. 
C)  people substitute toward more imported goods and services. 
D)  peoples' wealth increases. 
A)  firms produce more goods and services. 
B)  firms produce fewer goods and services. 
C)  people substitute toward more imported goods and services. 
D)  peoples' wealth increases.

Question 14

-The data in the above table show that the economy will be in a short-run macroeconomic equilibrium at a price level of

Accepted Answer

A)  90. 
B)  110. 
C)  100. 
D)  120. 
A)  90. 
B)  110. 
C)  100. 
D)  120.

Question 15

When the price level in France increases while the exchange rate and the price level in the United States remain the same, the result is

Accepted Answer

A)  U.S.-made goods become relatively cheaper compared to French-made goods. 
B)  French citizens are more likely to buy U.S.-made goods. 
C)  U.S. citizens are less likely to buy French-made goods. 
D)  All of the above answers are correct. 
A)  U.S.-made goods become relatively cheaper compared to French-made goods. 
B)  French citizens are more likely to buy U.S.-made goods. 
C)  U.S. citizens are less likely to buy French-made goods. 
D)  All of the above answers are correct.

Question 16

-In the above figure, B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve. If there is an increase in the full-employment quantity of labor, then the long-run aggregate supply curve and the short-run aggregate supply curve

Accepted Answer

A)  remain B and E. 
B)  shift to A and D, respectively. 
C)  shift to C and F, respectively. 
D)  remain at B and shift at F, respectively. 
A)  remain B and E. 
B)  shift to A and D, respectively. 
C)  shift to C and F, respectively. 
D)  remain at B and shift at F, respectively.

Question 17

The aggregate demand curve shows total expenditures at different levels of national income.

Accepted Answer

A) True 
 B)False

Question 18

-The U.S. monetary 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 to stimulate business investment and consumption expenditure and thereby increasing AD. 
B)  decrease interest rates in order to 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 to stimulate business investment and consumption expenditure and thereby increasing AD. 
B)  decrease interest rates in order to 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 19

If real GDP is less than potential GDP, then the economy is ________ equilibrium.

Accepted Answer

A)  at an above-full-employment 
B)  not in short-run macroeconomic 
C)  at a below-full-employment 
D)  in long-run macroeconomic 
A)  at an above-full-employment 
B)  not in short-run macroeconomic 
C)  at a below-full-employment 
D)  in long-run macroeconomic

Question 20

Aggregate demand increases when

Accepted Answer

A)  foreign incomes fall. 
B)  interest rates rise. 
C)  the exchange rate rises. 
D)  None of the above answers is correct. 
A)  foreign incomes fall. 
B)  interest rates rise. 
C)  the exchange rate rises. 
D)  None of the above answers is correct.

A decrease in the money wage rate increases and an increase in the full-employment quantity of labor increases .

In the long-run equilibrium, an increase in the quantity of capital leads to

A change in creates a movement along the aggregate demand curve, while a change in shifts the aggregate demand curve.

A Keynesian economist believes that

-In the above figure, which point corresponds to an increase in human capital?

-In the above figure, which point corresponds to an increase in technology?

A decrease in government expenditure on goods and services

The long-run aggregate supply curve is because along it, as prices rise, the money wage rate .

In the short run, a rightward shift of the short-run aggregate supply curve real GDP and the price level.

The country of Stanley is at an above-full-employment equilibrium. Which of the following events will return Stanley to full employment?

By using only the aggregate demand curve, we can determine

If the economy is in long run equilibrium and then aggregate demand increases, in the long run the increase in aggregate demand means that the

One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,

-The data in the above table show that the economy will be in a short-run macroeconomic equilibrium at a price level of

When the price level in France increases while the exchange rate and the price level in the United States remain the same, the result is

-In the above figure, B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve. If there is an increase in the full-employment quantity of labor, then the long-run aggregate supply curve and the short-run aggregate supply curve

The aggregate demand curve shows total expenditures at different levels of national income.

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

If real GDP is less than potential GDP, then the economy is ________ equilibrium.

Aggregate demand increases when

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 10: Aggregate Supply and Aggregate Demand

A decrease in the money wage rate increases ________ and an increase in the full-employment quantity of labor increases ________.

In the long-run equilibrium, an increase in the quantity of capital leads to

A change in ________ creates a movement along the aggregate demand curve, while a change in ________ shifts the aggregate demand curve.

A Keynesian economist believes that

-In the above figure, which point corresponds to an increase in human capital?

-In the above figure, which point corresponds to an increase in technology?

A decrease in government expenditure on goods and services

The long-run aggregate supply curve is ________ because along it, as prices rise, the money wage rate ________.

In the short run, a rightward shift of the short-run aggregate supply curve ________ real GDP and ________ the price level.

The country of Stanley is at an above-full-employment equilibrium. Which of the following events will return Stanley to full employment?

By using only the aggregate demand curve, we can determine

If the economy is in long run equilibrium and then aggregate demand increases, in the long run the increase in aggregate demand means that the

One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,

-The data in the above table show that the economy will be in a short-run macroeconomic equilibrium at a price level of

When the price level in France increases while the exchange rate and the price level in the United States remain the same, the result is

-In the above figure, B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve. If there is an increase in the full-employment quantity of labor, then the long-run aggregate supply curve and the short-run aggregate supply curve

The aggregate demand curve shows total expenditures at different levels of national income.

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

If real GDP is less than potential GDP, then the economy is ________ equilibrium.

Aggregate demand increases when

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

A decrease in the money wage rate increases and an increase in the full-employment quantity of labor increases .

A change in creates a movement along the aggregate demand curve, while a change in shifts the aggregate demand curve.

The long-run aggregate supply curve is because along it, as prices rise, the money wage rate .

In the short run, a rightward shift of the short-run aggregate supply curve real GDP and the price level.