Question 1

What would happen to Canadian net exports and aggregate demand if countries that imported from Canada went into recession?

Accepted Answer

A)  Net exports would rise,and aggregate demand would shift right. 
B)  Net exports would rise,and aggregate demand would shift left. 
C)  Net exports would fall,and aggregate demand would shift right. 
D)  Net exports would fall,and aggregate demand would shift left. 
A)  Net exports would rise,and aggregate demand would shift right. 
B)  Net exports would rise,and aggregate demand would shift left. 
C)  Net exports would fall,and aggregate demand would shift right. 
D)  Net exports would fall,and aggregate demand would shift left.

Question 2

According to the sticky-wage theory,which statement is consistent with an unexpected increase in the price level?

Accepted Answer

A)  The real wage rises,and employment rises. 
B)  The real wage rises,and employment falls. 
C)  The real wage falls,and employment rises. 
D)  The real wage falls,and employment falls. 
A)  The real wage rises,and employment rises. 
B)  The real wage rises,and employment falls. 
C)  The real wage falls,and employment rises. 
D)  The real wage falls,and employment falls.

Question 3

Keynes thought that the behaviour of the economy in the short run was influenced by what he called "animal spirits." By this he meant that businesspeople sometimes felt good about the economy,and carried out lots of investment,and at other times felt bad about the economy,and so cut back on their investment spending.Explain how such fluctuations in investment would lead to fluctuations in GDP and prices.

Accepted Answer

Fluctuations in investment cause the agg

Question 4

We know the theories that explain why the short-run aggregate-supply is upward sloping.But what determines how steep is the short-run aggregate-supply curve,and why is this important?

Accepted Answer

I will only refer to one of the short-ru

Question 5

What would cause prices and real GDP to rise in the short run?

Accepted Answer

A)  an increase in the expected price level 
B)  an increase in the money supply 
C)  a decrease in the capital stock 
D)  an import tariff 
A)  an increase in the expected price level 
B)  an increase in the money supply 
C)  a decrease in the capital stock 
D)  an import tariff

Question 6

Which situation would induce a shift of the aggregate demand to the right?

Accepted Answer

A)  price level and government expenditures decreased 
B)  price level decreased,and the government instituted an investment tax credit 
C)  stock prices and the money supply increased 
D)  bank rate increased,and the dollar appreciated 
A)  price level and government expenditures decreased 
B)  price level decreased,and the government instituted an investment tax credit 
C)  stock prices and the money supply increased 
D)  bank rate increased,and the dollar appreciated

Question 7

Figure 14-1    
-Refer to the Figure 14-1.How would an increase in the money supply move the economy in the short and long run?

Accepted Answer

A)  from C to B in the short run and the long run 
B)  from C to D in the short run and the long run 
C)  from C to B in the short run and to A in the long run 
D)  from C to D in the short run and back to C in the long run 
A)  from C to B in the short run and the long run 
B)  from C to D in the short run and the long run 
C)  from C to B in the short run and to A in the long run 
D)  from C to D in the short run and back to C in the long run

Question 8

In which situation are people most likely to spend more?

Accepted Answer

A)  when stock prices and interest rates rise 
B)  when their real wealth rises and interest rates fall 
C)  when stock prices fall and interest rates rise 
D)  when their real wealth and interest rates fall 
A)  when stock prices and interest rates rise 
B)  when their real wealth rises and interest rates fall 
C)  when stock prices fall and interest rates rise 
D)  when their real wealth and interest rates fall

Question 9

What happens to aggregate demand if people want to save more for retirement and the government raises taxes?

Accepted Answer

A)  Aggregate demand shifts right. 
B)  Aggregate demand shifts left. 
C)  If people save more,aggregate demand shifts right; if the government raises taxes,aggregate demand shifts left. 
D)  If people save more,aggregate demand shifts left; if the government raises taxes,aggregate demand shifts right. 
A)  Aggregate demand shifts right. 
B)  Aggregate demand shifts left. 
C)  If people save more,aggregate demand shifts right; if the government raises taxes,aggregate demand shifts left. 
D)  If people save more,aggregate demand shifts left; if the government raises taxes,aggregate demand shifts right.

Question 10

What is the effect of increases in the capital stock and in the money supply on prices in the long run?

Accepted Answer

A)  Both make the price level rise. 
B)  Both make the price level fall. 
C)  Increases in the capital stock make the price level rise,while increases in the money supply make prices fall. 
D)  Increases in the capital stock make the price level fall,while increases in the money supply make prices rise. 
A)  Both make the price level rise. 
B)  Both make the price level fall. 
C)  Increases in the capital stock make the price level rise,while increases in the money supply make prices fall. 
D)  Increases in the capital stock make the price level fall,while increases in the money supply make prices rise.

Question 11

Make a list of things that would shift the long-run aggregate-supply curve to the right.

Accepted Answer

Examples in the text (or variations)incl

Question 12

What happens when the price level falls?

Accepted Answer

A)  Interest rates rise,so firms increase investment. 
B)  Interest rates rise,so firms decrease investment. 
C)  Interest rates fall,so firms increase investment. 
D)  Interest rates fall,so firms decrease investment. 
A)  Interest rates rise,so firms increase investment. 
B)  Interest rates rise,so firms decrease investment. 
C)  Interest rates fall,so firms increase investment. 
D)  Interest rates fall,so firms decrease investment.

Question 13

On average,over the past 130 years,at about what rate has the Canadian economy grown?

Accepted Answer

A)  1 percent per year 
B)  2 percent per year 
C)  4 percent per year 
D)  8 percent per year 
A)  1 percent per year 
B)  2 percent per year 
C)  4 percent per year 
D)  8 percent per year

Question 14

What are the effects of a decrease in the price level?

Accepted Answer

A)  Wealth falls,people lend less,interest rates fall,and the dollar appreciates. 
B)  Wealth falls,people lend less,interest rates rise,and the dollar depreciates. 
C)  Wealth rises,people lend more,interest rates rise,and the dollar appreciates. 
D)  Wealth rises,people lend more,interest rates fall,and the dollar depreciates. 
A)  Wealth falls,people lend less,interest rates fall,and the dollar appreciates. 
B)  Wealth falls,people lend less,interest rates rise,and the dollar depreciates. 
C)  Wealth rises,people lend more,interest rates rise,and the dollar appreciates. 
D)  Wealth rises,people lend more,interest rates fall,and the dollar depreciates.

Question 15

What did NOT happen during the onset of the Great Depression?

Accepted Answer

A)  The money supply fell as households took money out of banks. 
B)  The Bank of Canada decreased the bank rate. 
C)  The real GDP per person fell about 30 percent. 
D)  Bankers began holding greater reserves. 
A)  The money supply fell as households took money out of banks. 
B)  The Bank of Canada decreased the bank rate. 
C)  The real GDP per person fell about 30 percent. 
D)  Bankers began holding greater reserves.

Question 16

Economists mostly agree that the Great Depression was the result of a very large adverse supply shock.

Accepted Answer

A) True 
 B)False

Question 17

Figure 14-1    
-Refer to the Figure 14-1.In the short run,what would result from a favourable shift in aggregate supply?

Accepted Answer

A)  It would move the economy from A to B. 
B)  It would move the economy from B to C. 
C)  It would move the economy from C to D. 
D)  It would move the economy from D to A. 
A)  It would move the economy from A to B. 
B)  It would move the economy from B to C. 
C)  It would move the economy from C to D. 
D)  It would move the economy from D to A.

Question 18

During Canada's three last recessions,investment spending accounted for what percentage of the decline in GDP?

Accepted Answer

A)  20 percent 
B)  40 percent 
C)  60 percent 
D)  80 percent 
A)  20 percent 
B)  40 percent 
C)  60 percent 
D)  80 percent

Question 19

How is the effect of an increase in the price level represented?

Accepted Answer

A)  by a shift to the right of the aggregate-demand curve 
B)  by a shift to the left of the aggregate-demand curve 
C)  by a movement to the left along a given aggregate-demand curve 
D)  by a movement to the right along a given aggregate-demand curve 
A)  by a shift to the right of the aggregate-demand curve 
B)  by a shift to the left of the aggregate-demand curve 
C)  by a movement to the left along a given aggregate-demand curve 
D)  by a movement to the right along a given aggregate-demand curve

Question 20

What could create an increase in the price level and a decrease in real GDP in the short run?

Accepted Answer

A)  an increase in the money supply 
B)  an increase in government expenditures 
C)  a fall in stock prices 
D)  bad weather in agriculture producing provinces 
A)  an increase in the money supply 
B)  an increase in government expenditures 
C)  a fall in stock prices 
D)  bad weather in agriculture producing provinces

What would happen to Canadian net exports and aggregate demand if countries that imported from Canada went into recession?

According to the sticky-wage theory,which statement is consistent with an unexpected increase in the price level?

We know the theories that explain why the short-run aggregate-supply is upward sloping.But what determines how steep is the short-run aggregate-supply curve,and why is this important?

What would cause prices and real GDP to rise in the short run?

Which situation would induce a shift of the aggregate demand to the right?

Figure 14-1 -Refer to the Figure 14-1.How would an increase in the money supply move the economy in the short and long run?

In which situation are people most likely to spend more?

What happens to aggregate demand if people want to save more for retirement and the government raises taxes?

What is the effect of increases in the capital stock and in the money supply on prices in the long run?

Make a list of things that would shift the long-run aggregate-supply curve to the right.

What happens when the price level falls?

On average,over the past 130 years,at about what rate has the Canadian economy grown?

What are the effects of a decrease in the price level?

What did NOT happen during the onset of the Great Depression?

Economists mostly agree that the Great Depression was the result of a very large adverse supply shock.

Figure 14-1 -Refer to the Figure 14-1.In the short run,what would result from a favourable shift in aggregate supply?

During Canada's three last recessions,investment spending accounted for what percentage of the decline in GDP?

How is the effect of an increase in the price level represented?

What could create an increase in the price level and a decrease in real GDP in the short run?

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

What would happen to Canadian net exports and aggregate demand if countries that imported from Canada went into recession?

According to the sticky-wage theory,which statement is consistent with an unexpected increase in the price level?

We know the theories that explain why the short-run aggregate-supply is upward sloping.But what determines how steep is the short-run aggregate-supply curve,and why is this important?

What would cause prices and real GDP to rise in the short run?

Which situation would induce a shift of the aggregate demand to the right?

Figure 14-1 -Refer to the Figure 14-1.How would an increase in the money supply move the economy in the short and long run?

In which situation are people most likely to spend more?

What happens to aggregate demand if people want to save more for retirement and the government raises taxes?

What is the effect of increases in the capital stock and in the money supply on prices in the long run?

Make a list of things that would shift the long-run aggregate-supply curve to the right.

What happens when the price level falls?

On average,over the past 130 years,at about what rate has the Canadian economy grown?

What are the effects of a decrease in the price level?

What did NOT happen during the onset of the Great Depression?

Economists mostly agree that the Great Depression was the result of a very large adverse supply shock.

Figure 14-1 -Refer to the Figure 14-1.In the short run,what would result from a favourable shift in aggregate supply?

During Canada's three last recessions,investment spending accounted for what percentage of the decline in GDP?

How is the effect of an increase in the price level represented?

What could create an increase in the price level and a decrease in real GDP in the short run?

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