Question 1

An increase in the money wage rate

Accepted Answer

A)  increases the long-run aggregate supply. 
B)  decreases the long-run aggregate supply. 
C)  increases the short-run aggregate supply. 
D)  decreases the short-run aggregate supply. 
A)  increases the long-run aggregate supply. 
B)  decreases the long-run aggregate supply. 
C)  increases the short-run aggregate supply. 
D)  decreases the short-run aggregate supply.

Question 2

Aggregate demand is the relationship between the quantity of real GDP demanded and the ________.

Accepted Answer

A)  price level 
B)  money wage rate 
C)  real wage rate 
D)  nominal GDP demanded 
A)  price level 
B)  money wage rate 
C)  real wage rate 
D)  nominal GDP demanded

Question 3

If the money wage rate and other resource prices do not change when the price level rises by 10 percent, ________.

Accepted Answer

A)  the long-run aggregate supply curve shifts leftward 
B)  the short-run aggregate supply curve shifts leftward 
C)  the long-run aggregate supply curve shifts rightward 
D)  there is movement along the short-run aggregate supply curve 
A)  the long-run aggregate supply curve shifts leftward 
B)  the short-run aggregate supply curve shifts leftward 
C)  the long-run aggregate supply curve shifts rightward 
D)  there is movement along the short-run aggregate supply curve

Question 4

The government increases taxes. As a result, in the short run, real GDP ________ and the price level ________.

Accepted Answer

A)  increases; rises 
B)  decreases; falls 
C)  decreases; rises 
D)  increases; falls 
A)  increases; rises 
B)  decreases; falls 
C)  decreases; rises 
D)  increases; falls

Question 5

-The figure illustrates aggregate demand and aggregate supply in Sparta. Which of the following events will decrease Sparta's real GDP in the short run?

Accepted Answer

A)  a decrease in taxes 
B)  a fall in resource prices 
C)  a decrease in government expenditure 
D)  an increase in investment 
A)  a decrease in taxes 
B)  a fall in resource prices 
C)  a decrease in government expenditure 
D)  an increase in investment

Question 6

-In the above figure, the short-run macroeconomic equilibrium is at the price level ________ and the real GDP level ________.

Accepted Answer

A)  110; $16.5 trillion 
B)  120; $16 trillion 
C)  100; $16 trillion 
D)  110; $16 trillion 
A)  110; $16.5 trillion 
B)  120; $16 trillion 
C)  100; $16 trillion 
D)  110; $16 trillion

Question 7

-In the above figure, at the point where AD equals SAS

Accepted Answer

A)  real GDP exceeds potential GDP. 
B)  potential GDP exceeds real GDP. 
C)  the economy is in a recession. 
D)  the unemployment rate is zero. 
A)  real GDP exceeds potential GDP. 
B)  potential GDP exceeds real GDP. 
C)  the economy is in a recession. 
D)  the unemployment rate is zero.

Question 8

In 2008, the Bank of England increased the country's money supply and lowered its interest rate. This policy was designed to

Accepted Answer

A)  encourage people to buy more goods and services. 
B)  shift the aggregate demand curve rightward. 
C)  cause a movement up along the aggregate demand curve. 
D)  Both A and B are correct. 
A)  encourage people to buy more goods and services. 
B)  shift the aggregate demand curve rightward. 
C)  cause a movement up along the aggregate demand curve. 
D)  Both A and B are correct.

Question 9

-The data in the above table show that when the price level is 120

Accepted Answer

A)  the unemployment rate is below its natural rate. 
B)  the unemployment rate is above its natural rate. 
C)  money wages rates will rise in the future. 
D)  the long-run aggregate supply curve will shift leftward in the future. 
A)  the unemployment rate is below its natural rate. 
B)  the unemployment rate is above its natural rate. 
C)  money wages rates will rise in the future. 
D)  the long-run aggregate supply curve will shift leftward in the future.

Question 10

In the macroeconomic long run

Accepted Answer

A)  real GDP equals potential GDP. 
B)  the economy is at full employment. 
C)  regardless of the price level, the economy is producing at potential GDP. 
D)  All of the above are correct. 
A)  real GDP equals potential GDP. 
B)  the economy is at full employment. 
C)  regardless of the price level, the economy is producing at potential GDP. 
D)  All of the above are correct.

Question 11

-In the above figure, the short-run aggregate supply curve is SAS1. If the prices of resources fall, there is

Accepted Answer

A)  an upward movement along SAS1. 
B)  a downward movement along SAS1. 
C)  a shift to SAS0. 
D)  a shift to SAS2. 
A)  an upward movement along SAS1. 
B)  a downward movement along SAS1. 
C)  a shift to SAS0. 
D)  a shift to SAS2.

Question 12

Other things constant, the economy's aggregate demand curve shows that

Accepted Answer

A)  as the price level falls, real GDP decreases. 
B)  any change in the price level shifts the aggregate demand curve. 
C)  the quantity of real GDP demanded decreases when the price level rises. 
D)  the quantity of real GDP demanded and the price level are not related. 
A)  as the price level falls, real GDP decreases. 
B)  any change in the price level shifts the aggregate demand curve. 
C)  the quantity of real GDP demanded decreases when the price level rises. 
D)  the quantity of real GDP demanded and the price level are not related.

Question 13

-In the above figure, when the economy is in a long-run equilibrium, the price level will be

Accepted Answer

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

Question 14

-Using the data in the above table, in the short-run macroeconomic equilibrium, the price level is ________ and the level of real GDP is ________.

Accepted Answer

A)  105; $10 trillion 
B)  110; $10 trillion 
C)  110; $11 trillion 
D)  115; $10 trillion 
A)  105; $10 trillion 
B)  110; $10 trillion 
C)  110; $11 trillion 
D)  115; $10 trillion

Question 15

In long-run macroeconomic equilibrium, the

Accepted Answer

A)  real wage rate has adjusted so that the economy is on the short-run aggregate supply curve but not on the long-run aggregate supply curve. 
B)  long-run aggregate supply curve has shifted in response to a money wage rate increase so that potential GDP equals real GDP. 
C)  aggregate demand curve adjusts to the point where the long-run aggregate supply curve and the short-run aggregate supply curve intersect. 
D)  None of the above answers is correct. 
A)  real wage rate has adjusted so that the economy is on the short-run aggregate supply curve but not on the long-run aggregate supply curve. 
B)  long-run aggregate supply curve has shifted in response to a money wage rate increase so that potential GDP equals real GDP. 
C)  aggregate demand curve adjusts to the point where the long-run aggregate supply curve and the short-run aggregate supply curve intersect. 
D)  None of the above answers is correct.

Question 16

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion. What happens if the current price level equals 125?

Accepted Answer

The quantity of real GDP demanded is gre

Question 17

What are the factors that can shift the short-run aggregate supply curve but not the long-run aggregate supply curve? Explain your answer.

Accepted Answer

The only factor that shifts the short-ru

Question 18

-In the above figure, when the economy is in a long-run equilibrium, real GDP will be

Accepted Answer

A)  $15.5 trillion. 
B)  $16.0 trillion. 
C)  $17.5 trillion. 
D)  $17.0 trillion. 
A)  $15.5 trillion. 
B)  $16.0 trillion. 
C)  $17.5 trillion. 
D)  $17.0 trillion.

Question 19

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees.
 
The economy is experiencing ________ gap and firms will ________.

Accepted Answer

A)  an inflationary gap; increase production 
B)  an inflationary gap; increase money wages paid to workers 
C)  a recessionary gap; increase production 
D)  a recessionary gap; decrease money wages paid to workers 
A)  an inflationary gap; increase production 
B)  an inflationary gap; increase money wages paid to workers 
C)  a recessionary gap; increase production 
D)  a recessionary gap; decrease money wages paid to workers

Question 20

-The data in the above table show that when the price level is 120, if aggregate demand does not change then the

Accepted Answer

A)  money wage rate will rise in the future. 
B)  money wage rate will fall in the future. 
C)  short-run aggregate supply curve will shift leftward. 
D)  long-run aggregate supply curve will shift leftward. 
A)  money wage rate will rise in the future. 
B)  money wage rate will fall in the future. 
C)  short-run aggregate supply curve will shift leftward. 
D)  long-run aggregate supply curve will shift leftward.

An increase in the money wage rate

Aggregate demand is the relationship between the quantity of real GDP demanded and the ________.

If the money wage rate and other resource prices do not change when the price level rises by 10 percent, ________.

The government increases taxes. As a result, in the short run, real GDP and the price level .

-The figure illustrates aggregate demand and aggregate supply in Sparta. Which of the following events will decrease Sparta's real GDP in the short run?

-In the above figure, the short-run macroeconomic equilibrium is at the price level and the real GDP level .

-In the above figure, at the point where AD equals SAS

In 2008, the Bank of England increased the country's money supply and lowered its interest rate. This policy was designed to

-The data in the above table show that when the price level is 120

In the macroeconomic long run

-In the above figure, the short-run aggregate supply curve is SAS1. If the prices of resources fall, there is

Other things constant, the economy's aggregate demand curve shows that

-In the above figure, when the economy is in a long-run equilibrium, the price level will be

-Using the data in the above table, in the short-run macroeconomic equilibrium, the price level is and the level of real GDP is .

In long-run macroeconomic equilibrium, the

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion. What happens if the current price level equals 125?

What are the factors that can shift the short-run aggregate supply curve but not the long-run aggregate supply curve? Explain your answer.

-In the above figure, when the economy is in a long-run equilibrium, real GDP will be

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees. The economy is experiencing gap and firms will .

-The data in the above table show that when the price level is 120, if aggregate demand does not change then the

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

An increase in the money wage rate

Aggregate demand is the relationship between the quantity of real GDP demanded and the ________.

If the money wage rate and other resource prices do not change when the price level rises by 10 percent, ________.

The government increases taxes. As a result, in the short run, real GDP ________ and the price level ________.

-The figure illustrates aggregate demand and aggregate supply in Sparta. Which of the following events will decrease Sparta's real GDP in the short run?

-In the above figure, the short-run macroeconomic equilibrium is at the price level ________ and the real GDP level ________.

-In the above figure, at the point where AD equals SAS

In 2008, the Bank of England increased the country's money supply and lowered its interest rate. This policy was designed to

-The data in the above table show that when the price level is 120

In the macroeconomic long run

-In the above figure, the short-run aggregate supply curve is SAS1. If the prices of resources fall, there is

Other things constant, the economy's aggregate demand curve shows that

-In the above figure, when the economy is in a long-run equilibrium, the price level will be

-Using the data in the above table, in the short-run macroeconomic equilibrium, the price level is ________ and the level of real GDP is ________.

In long-run macroeconomic equilibrium, the

Assume the equilibrium price level is 140 and the equilibrium real GDP is $15 trillion. What happens if the current price level equals 125?

What are the factors that can shift the short-run aggregate supply curve but not the long-run aggregate supply curve? Explain your answer.

-In the above figure, when the economy is in a long-run equilibrium, real GDP will be

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees. The economy is experiencing ________ gap and firms will ________.

-The data in the above table show that when the price level is 120, if aggregate demand does not change then the

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

The government increases taxes. As a result, in the short run, real GDP and the price level .

-In the above figure, the short-run macroeconomic equilibrium is at the price level and the real GDP level .

-Using the data in the above table, in the short-run macroeconomic equilibrium, the price level is and the level of real GDP is .

The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees. The economy is experiencing gap and firms will .