Question 1

How does the aggregate demand and aggregate supply model reflect a rise in wage rates?

Accepted Answer

A)  The short-run aggregate-supply curve shifts to the right. 
B)  The short-run aggregate-supply curve shifts to the left. 
C)  The aggregate-demand curve shifts to the right. 
D)  The aggregate-demand curve shifts to the left. 
A)  The short-run aggregate-supply curve shifts to the right. 
B)  The short-run aggregate-supply curve shifts to the left. 
C)  The aggregate-demand curve shifts to the right. 
D)  The aggregate-demand curve shifts to the left.

Question 2

When all prices rise together,there is no change in the overall quantity of goods and services supplied.

Accepted Answer

A) True 
 B)False

Question 3

What did Keynes believe that economies experiencing high unemployment should do?

Accepted Answer

A)  adopt policies to reduce investment expenditures 
B)  adopt policies to reduce government expenditures 
C)  adopt policies to increase aggregate demand 
D)  adopt policies to increase aggregate supply 
A)  adopt policies to reduce investment expenditures 
B)  adopt policies to reduce government expenditures 
C)  adopt policies to increase aggregate demand 
D)  adopt policies to increase aggregate supply

Question 4

Which statement best describes the effects of an increase in the price level?

Accepted Answer

A)  Real exchange rates and interest rates rise. 
B)  Real exchange rates and interest rates fall. 
C)  Real exchange rates fall,and interest rates rise. 
D)  Real exchange rates rise,and interest rates fall. 
A)  Real exchange rates and interest rates rise. 
B)  Real exchange rates and interest rates fall. 
C)  Real exchange rates fall,and interest rates rise. 
D)  Real exchange rates rise,and interest rates fall.

Question 5

In which situation does investment spending decrease?

Accepted Answer

A)  when the price level rises,causing interest rates to rise 
B)  when the price level rises,causing interest rates to fall 
C)  when the price level falls,causing interest rates to rise 
D)  when the price level falls,causing interest rates to fall 
A)  when the price level rises,causing interest rates to rise 
B)  when the price level rises,causing interest rates to fall 
C)  when the price level falls,causing interest rates to rise 
D)  when the price level falls,causing interest rates to fall

Question 6

What does a fall in the economy's overall level of prices tend to do?

Accepted Answer

A)  It tends to raise both the quantity demanded and supplied of goods and services. 
B)  It tends to raise the quantity demanded of goods and services,but lower the quantity supplied. 
C)  It tends to lower the quantity demanded of goods and services,but raise the quantity supplied. 
D)  It tends to lower both the quantity demanded and the quantity supplied of goods and services. 
A)  It tends to raise both the quantity demanded and supplied of goods and services. 
B)  It tends to raise the quantity demanded of goods and services,but lower the quantity supplied. 
C)  It tends to lower the quantity demanded of goods and services,but raise the quantity supplied. 
D)  It tends to lower both the quantity demanded and the quantity supplied of goods and services.

Question 7

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 8

In which situation does investment spending increase?

Accepted Answer

A)  when the price level rises,causing interest rates to rise 
B)  when the price level rises,causing interest rates to fall 
C)  when the price level falls,causing interest rates to rise 
D)  when the price level falls,causing interest rates to fall 
A)  when the price level rises,causing interest rates to rise 
B)  when the price level rises,causing interest rates to fall 
C)  when the price level falls,causing interest rates to rise 
D)  when the price level falls,causing interest rates to fall

Question 9

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption,investme

Question 10

Which of the following explains why production rises in most years?

Accepted Answer

A)  increases in prices of goods and services 
B)  increases in stock prices 
C)  aging population 
D)  technological innovation 
A)  increases in prices of goods and services 
B)  increases in stock prices 
C)  aging population 
D)  technological innovation

Question 11

Suppose there is a decrease in the availability of an important major resource,such as oil.Which shift would most likely occur?

Accepted Answer

A)  The aggregate supply would shift right. 
B)  The aggregate supply would shift left. 
C)  The aggregate demand would shift right. 
D)  The aggregate demand would shift left. 
A)  The aggregate supply would shift right. 
B)  The aggregate supply would shift left. 
C)  The aggregate demand would shift right. 
D)  The aggregate demand would shift left.

Question 12

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)  an increase in the price level 
B)  The Bank of Canada sells bonds in the open market 
C)  an increase in net exports 
D)  an investment tax credit 
A)  an increase in the price level 
B)  The Bank of Canada sells bonds in the open market 
C)  an increase in net exports 
D)  an investment tax credit

Question 13

Scenario 14-1
The economy is in long-run equilibrium.Suddenly,due to improved international relations,a boom experienced by a major trading partner,and the increased confidence of policymakers,citizens become more optimistic about the future and stay this way for a long time.
-Refer to the Scenario 14-1.What is predicted by the aggregate demand and aggregate supply theory?

Accepted Answer

A)  The expected inflation falls.Workers bargain for higher increases in wages. 
B)  The expected inflation falls.Workers bargain for lower increases in wages. 
C)  The expected inflation rises.Workers bargain for higher increases in wages. 
D)  The expected inflation rises.Workers bargain for lower increases in wages. 
A)  The expected inflation falls.Workers bargain for higher increases in wages. 
B)  The expected inflation falls.Workers bargain for lower increases in wages. 
C)  The expected inflation rises.Workers bargain for higher increases in wages. 
D)  The expected inflation rises.Workers bargain for lower increases in wages.

Question 14

What is the effect of a temporary decrease in the availability of raw materials?

Accepted Answer

A)  Aggregate supply shifts right. 
B)  Output falls in the short run. 
C)  Prices fall in the short run. 
D)  Long-run aggregate supply shifts to the left. 
A)  Aggregate supply shifts right. 
B)  Output falls in the short run. 
C)  Prices fall in the short run. 
D)  Long-run aggregate supply shifts to the left.

Question 15

Which statement is consistent with an increase in the quantity of output supplied,according to the misperceptions theory?

Accepted Answer

A)  The price level increases less than expected so that firms believe the relative price of their output has increased. 
B)  The price level increases less than expected so that firms believe the relative price of their output has decreased. 
C)  The price level increases more than expected so that firms believe the relative price of their output has increased. 
D)  The price level increases more than expected so that firms believe the relative price of their output has decreased. 
A)  The price level increases less than expected so that firms believe the relative price of their output has increased. 
B)  The price level increases less than expected so that firms believe the relative price of their output has decreased. 
C)  The price level increases more than expected so that firms believe the relative price of their output has increased. 
D)  The price level increases more than expected so that firms believe the relative price of their output has decreased.

Question 16

Increased uncertainty and pessimism about the future of the economy decreases investment spending,shifting aggregate demand to the left.

Accepted Answer

A) True 
 B)False

Question 17

What are the effects of a decrease in Canadian interest rates?

Accepted Answer

A)  a depreciation of the dollar and greater net exports 
B)  a depreciation of the dollar and smaller net exports 
C)  an appreciation of the dollar and greater net exports 
D)  an appreciation of the dollar and smaller net exports 
A)  a depreciation of the dollar and greater net exports 
B)  a depreciation of the dollar and smaller net exports 
C)  an appreciation of the dollar and greater net exports 
D)  an appreciation of the dollar and smaller net exports

Question 18

In 1986,OPEC countries increased their production of oil.What was the result?

Accepted Answer

A)  The price level rose. 
B)  Aggregate supply shifted right. 
C)  Unemployment rose. 
D)  Stagflation occurred. 
A)  The price level rose. 
B)  Aggregate supply shifted right. 
C)  Unemployment rose. 
D)  Stagflation occurred.

Question 19

What are the implications of a depreciation of the dollar?

Accepted Answer

A)  The dollar buys more foreign currency,so it buys more foreign goods. 
B)  The dollar buys more foreign currency,so it buys fewer foreign goods. 
C)  The dollar buys less foreign currency,so it buys more foreign goods. 
D)  The dollar buys less foreign currency,so it buys fewer foreign goods. 
A)  The dollar buys more foreign currency,so it buys more foreign goods. 
B)  The dollar buys more foreign currency,so it buys fewer foreign goods. 
C)  The dollar buys less foreign currency,so it buys more foreign goods. 
D)  The dollar buys less foreign currency,so it buys fewer foreign goods.

Question 20

Pessimism about the future leads to falling prices and rising unemployment.

Accepted Answer

A) True 
 B)False

How does the aggregate demand and aggregate supply model reflect a rise in wage rates?

When all prices rise together,there is no change in the overall quantity of goods and services supplied.

What did Keynes believe that economies experiencing high unemployment should do?

Which statement best describes the effects of an increase in the price level?

In which situation does investment spending decrease?

What does a fall in the economy's overall level of prices tend to do?

A change in the money supply changes only nominal variables in the long run.

In which situation does investment spending increase?

Make a list of expenditures whose sum equals GDP.

Which of the following explains why production rises in most years?

Suppose there is a decrease in the availability of an important major resource,such as oil.Which shift would most likely occur?

Which of the following shifts aggregate demand to the left?

What is the effect of a temporary decrease in the availability of raw materials?

Which statement is consistent with an increase in the quantity of output supplied,according to the misperceptions theory?

Increased uncertainty and pessimism about the future of the economy decreases investment spending,shifting aggregate demand to the left.

What are the effects of a decrease in Canadian interest rates?

In 1986,OPEC countries increased their production of oil.What was the result?

What are the implications of a depreciation of the dollar?

Pessimism about the future leads to falling prices and rising unemployment.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 14: Aggregate Demand and Aggregate Supply

How does the aggregate demand and aggregate supply model reflect a rise in wage rates?

When all prices rise together,there is no change in the overall quantity of goods and services supplied.

What did Keynes believe that economies experiencing high unemployment should do?

Which statement best describes the effects of an increase in the price level?

In which situation does investment spending decrease?

What does a fall in the economy's overall level of prices tend to do?

A change in the money supply changes only nominal variables in the long run.

In which situation does investment spending increase?

Make a list of expenditures whose sum equals GDP.

Which of the following explains why production rises in most years?

Suppose there is a decrease in the availability of an important major resource,such as oil.Which shift would most likely occur?

Which of the following shifts aggregate demand to the left?

What is the effect of a temporary decrease in the availability of raw materials?

Which statement is consistent with an increase in the quantity of output supplied,according to the misperceptions theory?

Increased uncertainty and pessimism about the future of the economy decreases investment spending,shifting aggregate demand to the left.

What are the effects of a decrease in Canadian interest rates?

In 1986,OPEC countries increased their production of oil.What was the result?

What are the implications of a depreciation of the dollar?

Pessimism about the future leads to falling prices and rising unemployment.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters