Question 1

-Refer to the above diagram.If the equilibrium price level is P1,then:

Accepted Answer

A)  aggregate demand is AD2. 
B)  the equilibrium output level is Q3. 
C)  the equilibrium output level is Q2. 
D)  producers will supply output level Q1. 
A)  aggregate demand is AD2. 
B)  the equilibrium output level is Q3. 
C)  the equilibrium output level is Q2. 
D)  producers will supply output level Q1.

Question 2

-In the above figure AD1 and AS1 represent the original aggregate supply and demand curves and AD2 and AS2 show the new aggregate demand and supply curves.At the original equilibrium price and quantity,this economy is experiencing:

Accepted Answer

A)  inflation. 
B)  economic growth. 
C)  full employment. 
D)  less than full-capacity output. 
A)  inflation. 
B)  economic growth. 
C)  full employment. 
D)  less than full-capacity output.

Question 3

-Refer to the above diagrams.Assuming a constant price level,an increase in aggregate expenditures from AE1 to AE2 would:

Accepted Answer

A)  Refer to the above diagrams.Assuming a constant price level,an increase in aggregate expenditures from AE1 to AE2 would: 
B)  move the economy from B to A along AD1. 
C)  increase aggregate demand from AD1 to AD2. 
D)  decrease aggregate demand from AD2 to AD1. 
A)  Refer to the above diagrams.Assuming a constant price level,an increase in aggregate expenditures from AE1 to AE2 would: 
B)  move the economy from B to A along AD1. 
C)  increase aggregate demand from AD1 to AD2. 
D)  decrease aggregate demand from AD2 to AD1.

Question 4

Suppose the aggregate demand and short-run aggregate supply schedules for a hypothetical economy are as shown below:
  
(a)What will be the equilibrium price and real output level in this hypothetical economy? Is this level of real GDP also the full-employment level of output? Explain.
(b)Why won't a price level of 100 be the equilibrium price level? Why won't a price level of 110 index be the equilibrium price level?
(c)Suppose aggregate demand increases by $120 billion at each price level.What will be the new equilibrium price and output levels?
(d)What factors might cause aggregate demand to increase?
(e)Suppose short-run aggregate supply increases by $120 billion at each price level.What will be the new equilibrium price and output levels?

Accepted Answer

(a)The equilibrium real GDP is $180 bil

Question 5

-Refer to the above diagram.When output increases from Q1 and the price level decreases from P1,this change will:

Accepted Answer

A)  be caused by a shift in the aggregate supply curve from AS1 to AS2. 
B)  be caused by a shift in the aggregate supply curve from AS1 to AS3. 
C)  result in a movement along the aggregate demand curve from e1 to e2. 
D)  result in a movement along the aggregate demand curve from e3 to e1. 
A)  be caused by a shift in the aggregate supply curve from AS1 to AS2. 
B)  be caused by a shift in the aggregate supply curve from AS1 to AS3. 
C)  result in a movement along the aggregate demand curve from e1 to e2. 
D)  result in a movement along the aggregate demand curve from e3 to e1.

Question 6

Refer to the data below.The vertical range of the aggregate supply curve is associated with price levels:
The following aggregate demand and supply schedules are for a hypothetical economy:

Accepted Answer

A)  150 and 200. 
B)  150 and 300. 
C)  200 and 250. 
D)  250 and 300. 
A)  150 and 200. 
B)  150 and 300. 
C)  200 and 250. 
D)  250 and 300.

Question 7

Other things equal,an improvement in productivity will:

Accepted Answer

A)  tend to increase the equilibrium price level. 
B)  shift the aggregate supply curve to the left. 
C)  shift the aggregate supply curve to the right. 
D)  shift the aggregate demand curve to the left. 
A)  tend to increase the equilibrium price level. 
B)  shift the aggregate supply curve to the left. 
C)  shift the aggregate supply curve to the right. 
D)  shift the aggregate demand curve to the left.

Question 8

Refer to the table below.If this nation's aggregate supply schedule graphs as a vertical line at the $25 billion level of real GDP,its price level will be:
The following table is for a particular country in which C is consumption expenditures,Ig is gross investment expenditures,G is government expenditures,X is exports,and M is imports.All figures are in billions of dollars.

Accepted Answer

A)  128 
B)  125 
C)  122 
D)  119 
A)  128 
B)  125 
C)  122 
D)  119

Question 9

Refer to the above diagram.If the price level rises above P1 because of an increase in aggregate demand,the:

Accepted Answer

A)  economy will move up along curve B and output will temporarily increase. 
B)  long-run aggregate supply curve C will shift upward. 
C)  short-run aggregate supply curve B will automatically shift to the right. 
D)  economy's output first will decline,then increase,and finally return to Q1. 
A)  economy will move up along curve B and output will temporarily increase. 
B)  long-run aggregate supply curve C will shift upward. 
C)  short-run aggregate supply curve B will automatically shift to the right. 
D)  economy's output first will decline,then increase,and finally return to Q1.

Question 10

-Refer to the above diagram.If AD1 shifts to AD2,then the equilibrium output and price level are:

Accepted Answer

A)  P1 and Q3. 
B)  P2 and Q3. 
C)  P1 and Q2. 
D)  P2 and Q2. 
A)  P1 and Q3. 
B)  P2 and Q3. 
C)  P1 and Q2. 
D)  P2 and Q2.

Question 11

Changes in which of the two factors below would most likely cause a change in consumer spending?
The following list of factors,are related to the aggregate demand curve.

Accepted Answer

A)  1 and 3 
B)  2 and 4 
C)  5 and 10 
D)  8 and 9 
A)  1 and 3 
B)  2 and 4 
C)  5 and 10 
D)  8 and 9

Question 12

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy.
  
-Refer to the above table.The equilibrium price level and quantity of real domestic output will be:

Accepted Answer

A)  150 and $1000. 
B)  150 and $1500. 
C)  200 and $2000. 
D)  250 and $2500. 
A)  150 and $1000. 
B)  150 and $1500. 
C)  200 and $2000. 
D)  250 and $2500.

Question 13

Describe the change in short-run aggregate supply that should result from each of the following changes in determinants.Assume that nothing else is changing besides the identified change.(Use "Decrease" or "Increase.")
(a)A rise in the average price of inputs;
(b)An increase in worker productivity;
(c)Government antipollution regulations become stricter;
(d)A new subsidy program is enacted for new business investment in productive equipment;
(e)Energy prices decline.

Accepted Answer

(a)Decrease;
(b)Increase;
(c)Decrease (u

Question 14

The aggregate demand curve can be derived from the aggregate expenditures model as indicated by the fact that:

Accepted Answer

A)  a decrease in the price level shifts the aggregate expenditures schedule downward and decreases real GDP. 
B)  a decrease in the price level shifts the aggregate expenditures schedule upward and decreases real GDP. 
C)  an increase in the price level shifts the aggregate expenditures schedule upward and increases real GDP. 
D)  an increase in the price level shifts the aggregate expenditures schedule downward and decreases real GDP. 
A)  a decrease in the price level shifts the aggregate expenditures schedule downward and decreases real GDP. 
B)  a decrease in the price level shifts the aggregate expenditures schedule upward and decreases real GDP. 
C)  an increase in the price level shifts the aggregate expenditures schedule upward and increases real GDP. 
D)  an increase in the price level shifts the aggregate expenditures schedule downward and decreases real GDP.

Question 15

A rightward shift in the aggregate supply curve might best be explained by:

Accepted Answer

A)  an increase in business taxes. 
B)  a decrease in productivity. 
C)  an increase in nominal wages. 
D)  a decrease in the price of imported resources. 
A)  an increase in business taxes. 
B)  a decrease in productivity. 
C)  an increase in nominal wages. 
D)  a decrease in the price of imported resources.

Question 16

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf.In the long run,demand-pull inflation could best be shown as:

Accepted Answer

A)  a move from b to c on AS2. 
B)  a move from b to f to d. 
C)  a change of aggregate supply from AS2 to AS1. 
D)  a move from b to d. 
A)  a move from b to c on AS2. 
B)  a move from b to f to d. 
C)  a change of aggregate supply from AS2 to AS1. 
D)  a move from b to d.

Question 17

Using the aggregate demand-aggregate supply (short-run)model,explain the impact of the public's expectations of severe inflation on real GDP and the price level.

Accepted Answer

Increased expectations of severe inflati

Question 18

The interest-rate effect suggests that:

Accepted Answer

A)  a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending. 
B)  an increase in the price level will increase the demand for money,reduce interest rates,and decrease consumption and investment spending. 
C)  an increase in the price level will increase the demand for money,increase interest rates,and decrease consumption and investment spending. 
D)  an increase in the price level will decrease the demand for money,reduce interest rates,and increase consumption and investment spending. 
A)  a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending. 
B)  an increase in the price level will increase the demand for money,reduce interest rates,and decrease consumption and investment spending. 
C)  an increase in the price level will increase the demand for money,increase interest rates,and decrease consumption and investment spending. 
D)  an increase in the price level will decrease the demand for money,reduce interest rates,and increase consumption and investment spending.

Question 19

An increase in aggregate expenditures resulting from a decrease in the price level is equivalent to a:

Accepted Answer

A)  rightward shift of the aggregate demand curve. 
B)  leftward shift of the aggregate demand curve. 
C)  movement downward along a fixed aggregate demand curve. 
D)  decrease in aggregate supply. 
A)  rightward shift of the aggregate demand curve. 
B)  leftward shift of the aggregate demand curve. 
C)  movement downward along a fixed aggregate demand curve. 
D)  decrease in aggregate supply.

Question 20

-Which of the above diagrams best portrays the effects of an increase in foreign spending on our products?

Accepted Answer

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

-Refer to the above diagram.If the equilibrium price level is P₁,then:

-In the above figure AD₁ and AS₁ represent the original aggregate supply and demand curves and AD₂ and AS₂ show the new aggregate demand and supply curves.At the original equilibrium price and quantity,this economy is experiencing:

-Refer to the above diagrams.Assuming a constant price level,an increase in aggregate expenditures from AE₁ to AE₂ would:

-Refer to the above diagram.When output increases from Q₁ and the price level decreases from P₁,this change will:

Refer to the data below.The vertical range of the aggregate supply curve is associated with price levels: The following aggregate demand and supply schedules are for a hypothetical economy:

Other things equal,an improvement in productivity will:

Refer to the above diagram.If the price level rises above P₁ because of an increase in aggregate demand,the:

-Refer to the above diagram.If AD₁ shifts to AD₂,then the equilibrium output and price level are:

Changes in which of the two factors below would most likely cause a change in consumer spending? The following list of factors,are related to the aggregate demand curve.

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. -Refer to the above table.The equilibrium price level and quantity of real domestic output will be:

The aggregate demand curve can be derived from the aggregate expenditures model as indicated by the fact that:

A rightward shift in the aggregate supply curve might best be explained by:

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In the long run,demand-pull inflation could best be shown as:

Using the aggregate demand-aggregate supply (short-run)model,explain the impact of the public's expectations of severe inflation on real GDP and the price level.

The interest-rate effect suggests that:

An increase in aggregate expenditures resulting from a decrease in the price level is equivalent to a:

-Which of the above diagrams best portrays the effects of an increase in foreign spending on our products?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 12: Aggregate Demand and Aggregate Supply

-Refer to the above diagram.If the equilibrium price level is P1,then:

-In the above figure AD1 and AS1 represent the original aggregate supply and demand curves and AD2 and AS2 show the new aggregate demand and supply curves.At the original equilibrium price and quantity,this economy is experiencing:

-Refer to the above diagrams.Assuming a constant price level,an increase in aggregate expenditures from AE1 to AE2 would:

-Refer to the above diagram.When output increases from Q1 and the price level decreases from P1,this change will:

Refer to the data below.The vertical range of the aggregate supply curve is associated with price levels: The following aggregate demand and supply schedules are for a hypothetical economy:

Other things equal,an improvement in productivity will:

Refer to the above diagram.If the price level rises above P1 because of an increase in aggregate demand,the:

-Refer to the above diagram.If AD1 shifts to AD2,then the equilibrium output and price level are:

Changes in which of the two factors below would most likely cause a change in consumer spending? The following list of factors,are related to the aggregate demand curve.

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. -Refer to the above table.The equilibrium price level and quantity of real domestic output will be:

The aggregate demand curve can be derived from the aggregate expenditures model as indicated by the fact that:

A rightward shift in the aggregate supply curve might best be explained by:

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf.In the long run,demand-pull inflation could best be shown as:

Using the aggregate demand-aggregate supply (short-run)model,explain the impact of the public's expectations of severe inflation on real GDP and the price level.

The interest-rate effect suggests that:

An increase in aggregate expenditures resulting from a decrease in the price level is equivalent to a:

-Which of the above diagrams best portrays the effects of an increase in foreign spending on our products?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

-Refer to the above diagram.If the equilibrium price level is P₁,then:

-In the above figure AD₁ and AS₁ represent the original aggregate supply and demand curves and AD₂ and AS₂ show the new aggregate demand and supply curves.At the original equilibrium price and quantity,this economy is experiencing:

-Refer to the above diagrams.Assuming a constant price level,an increase in aggregate expenditures from AE₁ to AE₂ would:

-Refer to the above diagram.When output increases from Q₁ and the price level decreases from P₁,this change will:

Refer to the above diagram.If the price level rises above P₁ because of an increase in aggregate demand,the:

-Refer to the above diagram.If AD₁ shifts to AD₂,then the equilibrium output and price level are:

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In the long run,demand-pull inflation could best be shown as: