Question 1

All of the following,except one,refer to the total amount of production when all of an economy's resources are being fully utilized.Which is the exception?

Accepted Answer

A) Equilibrium GDP. 
B) Full-employment GDP. 
C) Potential GDP. 
D) Economic capacity. 
A) Equilibrium GDP. 
B) Full-employment GDP. 
C) Potential GDP. 
D) Economic capacity.

Question 2

-Refer to the graph above to answer this question.What could cause the change in aggregate supply from AS1 to AS2?

Accepted Answer

A) An increase in resource prices. 
B) An increase in business taxes. 
C) An improvement in technology. 
D) The real balances,interest-rate,and foreign-trade effects. 
E) A decrease in the price level. 
A) An increase in resource prices. 
B) An increase in business taxes. 
C) An improvement in technology. 
D) The real balances,interest-rate,and foreign-trade effects. 
E) A decrease in the price level.

Question 3

Assume an economy is currently in equilibrium with Real GDP at $716 billion.If potential Real GDP (LAS)is $627 billion,which of the following is true?

Accepted Answer

A) There is an inflationary gap of $89 billion. 
B) There is an inflationary gap of 89 percent. 
C) There is a recessionary gap of 89 percent. 
D) There is a recessionary gap of $89 billion. 
A) There is an inflationary gap of $89 billion. 
B) There is an inflationary gap of 89 percent. 
C) There is a recessionary gap of 89 percent. 
D) There is a recessionary gap of $89 billion.

Question 4

Which of the following is true of an inflationary gap?

Accepted Answer

A) People are trying to buy more than the economy can produce on a sustainable basis. 
B) The level of aggregate demand is equal to Potential GDP. 
C) The level of aggregate demand is greater than the level of aggregate supply. 
D) It is often described as "too much money chasing too many goods." 
E) It is often described as "too little money chasing too many goods." 
A) People are trying to buy more than the economy can produce on a sustainable basis. 
B) The level of aggregate demand is equal to Potential GDP. 
C) The level of aggregate demand is greater than the level of aggregate supply. 
D) It is often described as "too much money chasing too many goods." 
E) It is often described as "too little money chasing too many goods."

Question 5

The following are aggregate demand and supply schedules for a hypothetical economy.All figures are in $ billions.
   Note: Potential GDP is 3,000.
-Refer to the information above to answer this question.Assume that technological change increases aggregate supply by 340.What would be the result?

Accepted Answer

A) A new full employment level of Real GDP of 3,340 and lower prices. 
B) An inflationary gap of 340. 
C) A recessionary gap of 240. 
D) A new equilibrium of Real GDP of some indeterminate level depending on how much prices fell. 
E) A new full-employment level of Real GDP of 3,340 with no change in prices. 
A) A new full employment level of Real GDP of 3,340 and lower prices. 
B) An inflationary gap of 340. 
C) A recessionary gap of 240. 
D) A new equilibrium of Real GDP of some indeterminate level depending on how much prices fell. 
E) A new full-employment level of Real GDP of 3,340 with no change in prices.

Question 6

What are the components of aggregate demand?

Accepted Answer

The components of aggregate de

Question 7

What does the foreign-trade effect explain?

Accepted Answer

A) The shape of the aggregate demand curve. 
B) The shape of the aggregate supply curve. 
C) The change in the aggregate demand curve. 
D) The change in the aggregate supply curve. 
E) The change in economic growth. 
A) The shape of the aggregate demand curve. 
B) The shape of the aggregate supply curve. 
C) The change in the aggregate demand curve. 
D) The change in the aggregate supply curve. 
E) The change in economic growth.

Question 8

Which of the following will cause a decrease in aggregate supply but no change in long-run aggregate supply?

Accepted Answer

A) A decrease in labour productivity. 
B) An increase in factor prices. 
C) An increase in the capital stock. 
D) A decrease in the labour participation rate. 
A) A decrease in labour productivity. 
B) An increase in factor prices. 
C) An increase in the capital stock. 
D) A decrease in the labour participation rate.

Question 9

The following is a list of economic events:
1.A big cut in the price of imported oil.
2.An increase in the money supply.
3.An increase in labour productivity.
4.A decline in the GDP of the USA
5.A big rise in nominal wages.
-Refer to the information above to answer this question.Which of the listed economic events will cause an increase in aggregate demand?

Accepted Answer

A) 1 only. 
B) 2 only. 
C) 1 and 2. 
D) 1,2 and 5. 
A) 1 only. 
B) 2 only. 
C) 1 and 2. 
D) 1,2 and 5.

Question 10

How did the neoclassical school view equilibrium?

Accepted Answer

A) As occurring at capacity output. 
B) Where AS = LAS. 
C) In a way that implied full employment. 
D) As being a natural result of flexible prices and wages. 
E) As occurring at capacity output,where AS = LAS,in a way that implied full employment and as being a natural result of flexible prices and wages. 
A) As occurring at capacity output. 
B) Where AS = LAS. 
C) In a way that implied full employment. 
D) As being a natural result of flexible prices and wages. 
E) As occurring at capacity output,where AS = LAS,in a way that implied full employment and as being a natural result of flexible prices and wages.

Question 11

Suppose that the economy of Wetland shown in the following figure is in full-employment equilibrium and the present nominal wage is $800 per week
a)What is the real wage (in base year prices)?
b)Suppose that aggregate demand increases by $100.At the new equilibrium,what will be the new value of the real wage rate?
c)As a result of the change in b),suppose the nominal wage increases,causing aggregate supply to decrease by $100.At the new equilibrium,what will be the new real wage rate?
d)At the new equilibrium in c),what is the value of the nominal wage rate?

Accepted Answer

a)$1,000 per week.($800/80@#LAT-DLM&100)

Question 12

Which of the following is true regarding changes in aggregate demand?

Accepted Answer

A) It would never change the price level according to Keynesians. 
B) It may or may not change the price level according to Keynesians. 
C) It would never change Real GDP according to Keynesians. 
D) It would never change the price level according to neoclassicists. 
E) It may or may not change the price level according to neoclassicists. 
A) It would never change the price level according to Keynesians. 
B) It may or may not change the price level according to Keynesians. 
C) It would never change Real GDP according to Keynesians. 
D) It would never change the price level according to neoclassicists. 
E) It may or may not change the price level according to neoclassicists.

Question 13

The following is a list of economic events:
1.A big cut in the price of imported oil.
2.An increase in the money supply.
3.An increase in labour productivity.
4.A decline in the GDP of the USA
5.A big rise in nominal wages.
-How does the economy eventually adjust to a recessionary gap?

Accepted Answer

A) The nominal wage and price levels will both increase. 
B) The nominal wage and price level will both decrease. 
C) The nominal wage level will decrease but the price level will increase. 
D) The nominal wage level will increase but the price level will decrease. 
A) The nominal wage and price levels will both increase. 
B) The nominal wage and price level will both decrease. 
C) The nominal wage level will decrease but the price level will increase. 
D) The nominal wage level will increase but the price level will decrease.

Question 14

What is the relationship between LAS and the price level?

Accepted Answer

A) Positive. 
B) Negative. 
C) Independent. 
D) Positive or negative. 
A) Positive. 
B) Negative. 
C) Independent. 
D) Positive or negative.

Question 15

What are the five determinants of investment spending?

Accepted Answer

The determinants of investment spending

Question 16

Assume there is an inflationary gap in the economy.If investment spending increases,what will happen to the inflationary gap?

Accepted Answer

An increase in investment will

Question 17

A high interest rate will lead to:

Accepted Answer

A) low investment spending. 
B) no investment spending. 
C) high investment spending. 
D) no changes in investment spending. 
A) low investment spending. 
B) no investment spending. 
C) high investment spending. 
D) no changes in investment spending.

Question 18

Which of the following statements is true about Canada's annual rate of economic growth from 1997 to 2012?

Accepted Answer

A) It was positive in every year. 
B) There were more negative than positive years. 
C) It was 5% or above in most years. 
D) It averaged 2.6 percent. 
A) It was positive in every year. 
B) There were more negative than positive years. 
C) It was 5% or above in most years. 
D) It averaged 2.6 percent.

Question 19

What is the domestic effect of an increase in the incomes of a country's major international trading partners?

Accepted Answer

A) The aggregate demand curve will shift to the right. 
B) The aggregate demand curve will shift to the left. 
C) The aggregate supply curve will shift to the right. 
D) The aggregate supply curve will shift to the left. 
A) The aggregate demand curve will shift to the right. 
B) The aggregate demand curve will shift to the left. 
C) The aggregate supply curve will shift to the right. 
D) The aggregate supply curve will shift to the left.

Question 20

Answer the question(s)on the basis of the following table:
  
-Refer to the above information to answer this question.What will happen if resource prices increase?

Accepted Answer

A) 1 and A 
B) 2 and B 
C) 2 and C 
D) 3 and B 
A) 1 and A 
B) 2 and B 
C) 2 and C 
D) 3 and B

All of the following,except one,refer to the total amount of production when all of an economy's resources are being fully utilized.Which is the exception?

-Refer to the graph above to answer this question.What could cause the change in aggregate supply from AS₁ to AS₂?

Assume an economy is currently in equilibrium with Real GDP at $716 billion.If potential Real GDP (LAS)is $627 billion,which of the following is true?

Which of the following is true of an inflationary gap?

The following are aggregate demand and supply schedules for a hypothetical economy.All figures are in $ billions. Note: Potential GDP is 3,000. -Refer to the information above to answer this question.Assume that technological change increases aggregate supply by 340.What would be the result?

What are the components of aggregate demand?

What does the foreign-trade effect explain?

Which of the following will cause a decrease in aggregate supply but no change in long-run aggregate supply?

How did the neoclassical school view equilibrium?

Which of the following is true regarding changes in aggregate demand?

The following is a list of economic events: 1.A big cut in the price of imported oil. 2.An increase in the money supply. 3.An increase in labour productivity. 4.A decline in the GDP of the USA 5.A big rise in nominal wages. -How does the economy eventually adjust to a recessionary gap?

What is the relationship between LAS and the price level?

What are the five determinants of investment spending?

Assume there is an inflationary gap in the economy.If investment spending increases,what will happen to the inflationary gap?

A high interest rate will lead to:

Which of the following statements is true about Canada's annual rate of economic growth from 1997 to 2012?

What is the domestic effect of an increase in the incomes of a country's major international trading partners?

Answer the question(s)on the basis of the following table: -Refer to the above information to answer this question.What will happen if resource prices increase?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Exam 5: Aggregate Demand and Supply

All of the following,except one,refer to the total amount of production when all of an economy's resources are being fully utilized.Which is the exception?

-Refer to the graph above to answer this question.What could cause the change in aggregate supply from AS1 to AS2?

Assume an economy is currently in equilibrium with Real GDP at $716 billion.If potential Real GDP (LAS)is $627 billion,which of the following is true?

Which of the following is true of an inflationary gap?

The following are aggregate demand and supply schedules for a hypothetical economy.All figures are in $ billions. Note: Potential GDP is 3,000. -Refer to the information above to answer this question.Assume that technological change increases aggregate supply by 340.What would be the result?

What are the components of aggregate demand?

What does the foreign-trade effect explain?

Which of the following will cause a decrease in aggregate supply but no change in long-run aggregate supply?

How did the neoclassical school view equilibrium?

Which of the following is true regarding changes in aggregate demand?

The following is a list of economic events: 1.A big cut in the price of imported oil. 2.An increase in the money supply. 3.An increase in labour productivity. 4.A decline in the GDP of the USA 5.A big rise in nominal wages. -How does the economy eventually adjust to a recessionary gap?

What is the relationship between LAS and the price level?

What are the five determinants of investment spending?

Assume there is an inflationary gap in the economy.If investment spending increases,what will happen to the inflationary gap?

A high interest rate will lead to:

Which of the following statements is true about Canada's annual rate of economic growth from 1997 to 2012?

What is the domestic effect of an increase in the incomes of a country's major international trading partners?

Answer the question(s)on the basis of the following table: -Refer to the above information to answer this question.What will happen if resource prices increase?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

-Refer to the graph above to answer this question.What could cause the change in aggregate supply from AS₁ to AS₂?