Question 1

Disposable income ________ when ________.

Accepted Answer

A)  decreases; taxes increase 
B)  decreases; transfer payments increase 
C)  increases; government expenditures decrease 
D)  decreases; aggregate income increases 
A)  decreases; taxes increase 
B)  decreases; transfer payments increase 
C)  increases; government expenditures decrease 
D)  decreases; aggregate income increases

Question 2

An above full-employment equilibrium is

Accepted Answer

A)  a theoretical possibility but cannot happen in reality. 
B)  the equilibrium in which the economy is in most of the time. 
C)  when real GDP exceeds potential GDP. 
D)  the period of time when prices are falling. 
A)  a theoretical possibility but cannot happen in reality. 
B)  the equilibrium in which the economy is in most of the time. 
C)  when real GDP exceeds potential GDP. 
D)  the period of time when prices are falling.

Question 3

In the United States, of the following decades economic growth was most rapid during the ________.

Accepted Answer

A)  1960s 
B)  1990s 
C)  1970s 
D)  2000s 
A)  1960s 
B)  1990s 
C)  1970s 
D)  2000s

Question 4

Wealth and substitution effects explain why the aggregate demand curve has a positive slope.

Accepted Answer

A) True 
 B)False

Question 5

________ economists believe that the economy is self-regulating and will be at full employment as long as monetary policy is not erratic.

Accepted Answer

A)  Keynesian 
B)  Monetarist 
C)  Classical 
D)  All 
A)  Keynesian 
B)  Monetarist 
C)  Classical 
D)  All

Question 6

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

Accepted Answer

A)  a decrease in the labor force 
B)  a fall in the price level 
C)  a rise in number of college graduates in the labor force 
D)  a tax hike that reduces the capital stock 
A)  a decrease in the labor force 
B)  a fall in the price level 
C)  a rise in number of college graduates in the labor force 
D)  a tax hike that reduces the capital stock

Question 7

-In the above figure, the economy is currently at point A. Suppose that the money wage rate and the price level both fall by 10 percent. Firms will be willing to supply output equal to

Accepted Answer

A)  less than $16.0 trillion. 
B)  $16.0 trillion. 
C)  more than $16.0 trillion. 
D)  Without more information, it is impossible to determine which of the above answers is correct. 
A)  less than $16.0 trillion. 
B)  $16.0 trillion. 
C)  more than $16.0 trillion. 
D)  Without more information, it is impossible to determine which of the above answers is correct.

Question 8

The long-run aggregate supply curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 9

If the price level in Great Britain increases from 102 to 105 (holding all else constant), real wealth ________ and there is a movement ________ along Great Britain's aggregate demand curve.

Accepted Answer

A)  decreases; upward 
B)  increases; upward 
C)  decreases; downward 
D)  increases; downward 
A)  decreases; upward 
B)  increases; upward 
C)  decreases; downward 
D)  increases; downward

Question 10

The SAS curve and the LAS curve

Accepted Answer

A)  intersect at potential GDP. 
B)  are parallel at potential GDP. 
C)  are perpendicular to one another at potential GDP. 
D)  None of the above answers is correct. 
A)  intersect at potential GDP. 
B)  are parallel at potential GDP. 
C)  are perpendicular to one another at potential GDP. 
D)  None of the above answers is correct.

Question 11

Which of the following increases aggregate demand?

Accepted Answer

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

Question 12

The intertemporal substitution effect of the price level on aggregate demand

Accepted Answer

A)  is the same as the real wealth effect. 
B)  is one reason that the aggregate demand curve has a negative slope. 
C)  explains why aggregate demand increases when the amount of money increases. 
D)  is one reason that the aggregate demand curve has a positive slope. 
A)  is the same as the real wealth effect. 
B)  is one reason that the aggregate demand curve has a negative slope. 
C)  explains why aggregate demand increases when the amount of money increases. 
D)  is one reason that the aggregate demand curve has a positive slope.

Question 13

Which of the following increases aggregate demand and shifts the AD curve rightward?

Accepted Answer

A)  a fall in the price level 
B)  an increase in the quantity of money and a resulting fall in the interest rate 
C)  predictions of a recession that lead to expectations of lower future income 
D)  an increase in the exchange rate that makes imports less expensive 
A)  a fall in the price level 
B)  an increase in the quantity of money and a resulting fall in the interest rate 
C)  predictions of a recession that lead to expectations of lower future income 
D)  an increase in the exchange rate that makes imports less expensive

Question 14

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

Accepted Answer

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

Question 15

The quantity of real GDP demanded equals $16.2 trillion when the price level is 90. If the price level rises to 95, the quantity of real GDP demanded equals

Accepted Answer

A)  less than $16.2 trillion. 
B)  $16.2 trillion. 
C)  more than $16.2 trillion. 
D)  more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change. 
A)  less than $16.2 trillion. 
B)  $16.2 trillion. 
C)  more than $16.2 trillion. 
D)  more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change.

Question 16

When the exchange rises, then the

Accepted Answer

A)  AD curve shifts rightward. 
B)  AD curve shifts leftward. 
C)  LAS curve shifts rightward. 
D)  LAS curve shifts leftward. 
A)  AD curve shifts rightward. 
B)  AD curve shifts leftward. 
C)  LAS curve shifts rightward. 
D)  LAS curve shifts leftward.

Question 17

Suppose there is an increase in the short-run aggregate supply with no change in the long-run aggregate supply. This situation could be the result of

Accepted Answer

A)  an increase in the price of oil. 
B)  a decrease in the money wage rate. 
C)  a technological advancement. 
D)  an increase in the quantity of capital. 
A)  an increase in the price of oil. 
B)  a decrease in the money wage rate. 
C)  a technological advancement. 
D)  an increase in the quantity of capital.

Question 18

Which of the following events will increase long-run aggregate supply?

Accepted Answer

A)  an increase in the interest rate 
B)  an increase in resource prices 
C)  a decrease in expected profit 
D)  an advance in technology 
A)  an increase in the interest rate 
B)  an increase in resource prices 
C)  a decrease in expected profit 
D)  an advance in technology

Question 19

-Based on the table above,
a)What is the equilibrium price level and real GDP?
b)If potential GDP is $11.0 trillion, what does that imply about the economy's level of employment?
c)If potential GDP is $9.0 trillion, what does that imply about the economy's level of employment?

Accepted Answer

a)The equilibrium price level is 105; th

Question 20

Moving along which curve does the money wage rate and the price level change in the same proportions?

Accepted Answer

A)  the AD curve 
B)  the SAS curve 
C)  the LAS curve 
D)  None of the above because there is no curve along which both the money wage rate and the price level change in the same proportions. 
A)  the AD curve 
B)  the SAS curve 
C)  the LAS curve 
D)  None of the above because there is no curve along which both the money wage rate and the price level change in the same proportions.

Disposable income when .

An above full-employment equilibrium is

In the United States, of the following decades economic growth was most rapid during the ________.

Wealth and substitution effects explain why the aggregate demand curve has a positive slope.

________ economists believe that the economy is self-regulating and will be at full employment as long as monetary policy is not erratic.

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

-In the above figure, the economy is currently at point A. Suppose that the money wage rate and the price level both fall by 10 percent. Firms will be willing to supply output equal to

The long-run aggregate supply curve is upward sloping.

If the price level in Great Britain increases from 102 to 105 (holding all else constant), real wealth and there is a movement along Great Britain's aggregate demand curve.

The SAS curve and the LAS curve

Which of the following increases aggregate demand?

The intertemporal substitution effect of the price level on aggregate demand

Which of the following increases aggregate demand and shifts the AD curve rightward?

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

The quantity of real GDP demanded equals $16.2 trillion when the price level is 90. If the price level rises to 95, the quantity of real GDP demanded equals

When the exchange rises, then the

Suppose there is an increase in the short-run aggregate supply with no change in the long-run aggregate supply. This situation could be the result of

Which of the following events will increase long-run aggregate supply?

-Based on the table above, a)What is the equilibrium price level and real GDP? b)If potential GDP is $11.0 trillion, what does that imply about the economy's level of employment? c)If potential GDP is $9.0 trillion, what does that imply about the economy's level of employment?

Moving along which curve does the money wage rate and the price level change in the same proportions?

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

Disposable income ________ when ________.

An above full-employment equilibrium is

In the United States, of the following decades economic growth was most rapid during the ________.

Wealth and substitution effects explain why the aggregate demand curve has a positive slope.

________ economists believe that the economy is self-regulating and will be at full employment as long as monetary policy is not erratic.

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

-In the above figure, the economy is currently at point A. Suppose that the money wage rate and the price level both fall by 10 percent. Firms will be willing to supply output equal to

The long-run aggregate supply curve is upward sloping.

If the price level in Great Britain increases from 102 to 105 (holding all else constant), real wealth ________ and there is a movement ________ along Great Britain's aggregate demand curve.

The SAS curve and the LAS curve

Which of the following increases aggregate demand?

The intertemporal substitution effect of the price level on aggregate demand

Which of the following increases aggregate demand and shifts the AD curve rightward?

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

The quantity of real GDP demanded equals $16.2 trillion when the price level is 90. If the price level rises to 95, the quantity of real GDP demanded equals

When the exchange rises, then the

Suppose there is an increase in the short-run aggregate supply with no change in the long-run aggregate supply. This situation could be the result of

Which of the following events will increase long-run aggregate supply?

-Based on the table above, a)What is the equilibrium price level and real GDP? b)If potential GDP is $11.0 trillion, what does that imply about the economy's level of employment? c)If potential GDP is $9.0 trillion, what does that imply about the economy's level of employment?

Moving along which curve does the money wage rate and the price level change in the same proportions?

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

Disposable income when .

If the price level in Great Britain increases from 102 to 105 (holding all else constant), real wealth and there is a movement along Great Britain's aggregate demand curve.

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