Question 1

-Refer to the above graph to answer this question.What could cause the movement from point B to point A?

Accepted Answer

A) A decrease in government spending. 
B) A decrease in labour productivity. 
C) The discovery of new oil fields. 
D) An increase in wage rates. 
A) A decrease in government spending. 
B) A decrease in labour productivity. 
C) The discovery of new oil fields. 
D) An increase in wage rates.

Question 2

Explain why a decrease in nominal wages does not necessarily imply a decrease in real wages.

Accepted Answer

Real wage is equal to nominal wage divid

Question 3

The following are an aggregate demand and supply schedules for a hypothetical economy.All figures in $ billions.
  
-Refer to the information above to answer this question.If the aggregate quantity demanded falls by 150,what will be the equilibrium price level and real output respectively?

Accepted Answer

A) $120 and 900. 
B) $130 and 950. 
C) $140 and 950. 
D) $150 and 1,050. 
E) $160 and 1,050. 
A) $120 and 900. 
B) $130 and 950. 
C) $140 and 950. 
D) $150 and 1,050. 
E) $160 and 1,050.

Question 4

Under what circumstances will the multiplier effect have a big impact on Real GDP?

Accepted Answer

A) When the AS curve is vertical. 
B) When the AD curve is vertical. 
C) When the AS is horizontal. 
D) When the economy is booming. 
A) When the AS curve is vertical. 
B) When the AD curve is vertical. 
C) When the AS is horizontal. 
D) When the economy is booming.

Question 5

According to Keynesian economists,why are prices and wages often inflexible?

Accepted Answer

A) Because of the existence of large corporations and unions. 
B) Because of high unemployment. 
C) Because of government regulation of the market. 
D) Because the AS curve is vertical. 
E) Because the AD curve is horizontal. 
A) Because of the existence of large corporations and unions. 
B) Because of high unemployment. 
C) Because of government regulation of the market. 
D) Because the AS curve is vertical. 
E) Because the AD curve is horizontal.

Question 6

A change in resource prices will shift both the aggregate supply and the LAS curves.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following will lead to an increase in aggregate demand?

Accepted Answer

A) A decrease in stock prices. 
B) An increase in the price level. 
C) An increase in interest rates. 
D) A decrease in the price of capital goods. 
E) A decrease in the price level. 
A) A decrease in stock prices. 
B) An increase in the price level. 
C) An increase in interest rates. 
D) A decrease in the price of capital goods. 
E) A decrease in the price level.

Question 8

-Refer to the graph above to answer this question.What does Figure C illustrate?

Accepted Answer

A) The situation that existed in the 1930s. 
B) Full-employment equilibrium. 
C) An inflationary gap situation. 
D) A recessionary gap situation. 
E) A situation where individual firms cannot be making profits. 
A) The situation that existed in the 1930s. 
B) Full-employment equilibrium. 
C) An inflationary gap situation. 
D) A recessionary gap situation. 
E) A situation where individual firms cannot be making profits.

Question 9

What does the interest-rate 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 shifts. 
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 shifts. 
E) The change in economic growth.

Question 10

According to neoclassicists,an increase in aggregate demand will have no effect upon Real GDP but will cause the price level to increase.

Accepted Answer

A) True 
 B)False

Question 11

What is the business cycle?

Accepted Answer

A) The expansionary and contractionary phases in the growth rate of Real GDP. 
B) The expansionary and contractionary phases in the rate of unemployment. 
C) The continuous rise in GDP that Canada has experienced throughout the Twentieth Century. 
D) The rise and fall in the rate of inflation. 
A) The expansionary and contractionary phases in the growth rate of Real GDP. 
B) The expansionary and contractionary phases in the rate of unemployment. 
C) The continuous rise in GDP that Canada has experienced throughout the Twentieth Century. 
D) The rise and fall in the rate of inflation.

Question 12

What is true of a movement up the aggregate supply curve?

Accepted Answer

A) The nominal wage remains constant but the real wage declines. 
B) The real wage remains constant but the nominal wage declines. 
C) The real wage remains constant but the nominal wage increases. 
D) Both the nominal and real wages decline. 
A) The nominal wage remains constant but the real wage declines. 
B) The real wage remains constant but the nominal wage declines. 
C) The real wage remains constant but the nominal wage increases. 
D) Both the nominal and real wages decline.

Question 13

What could cause the aggregate demand curve to shift to the right?

Accepted Answer

A) A fall in the price level. 
B) A fall in people's real balances. 
C) An increase in income levels abroad. 
D) An increase in interest rates. 
A) A fall in the price level. 
B) A fall in people's real balances. 
C) An increase in income levels abroad. 
D) An increase in interest rates.

Question 14

What is Potential GDP?

Accepted Answer

A) The total amount of production an economy produces at equilibrium. 
B) The total amount of production when all of an economy's resources are being fully utilized. 
C) A prediction of what an economy will likely produce in the future. 
D) The total amount of production by an economy,adjusted for inflation. 
A) The total amount of production an economy produces at equilibrium. 
B) The total amount of production when all of an economy's resources are being fully utilized. 
C) A prediction of what an economy will likely produce in the future. 
D) The total amount of production by an economy,adjusted for inflation.

Question 15

What is aggregate supply?

Accepted Answer

A) The aggregate quantity produced by all sellers at equilibrium. 
B) The aggregate quantity produced by all sellers at full employment. 
C) The aggregate quantity produced by all sellers at various different prices. 
D) The aggregate quantity produced by all sellers at the current price level. 
A) The aggregate quantity produced by all sellers at equilibrium. 
B) The aggregate quantity produced by all sellers at full employment. 
C) The aggregate quantity produced by all sellers at various different prices. 
D) The aggregate quantity produced by all sellers at the current price level.

Question 16

Why is the AD curve downward-sloping?

Accepted Answer

A) Because production costs decline as Real GDP increases. 
B) Because higher prices cause an increase in real balances which increases spending. 
C) Because lower prices cause an increase in real balances which increase spending. 
D) Because lower prices cause interest rates to increase which increases spending. 
A) Because production costs decline as Real GDP increases. 
B) Because higher prices cause an increase in real balances which increases spending. 
C) Because lower prices cause an increase in real balances which increase spending. 
D) Because lower prices cause interest rates to increase which increases spending.

Question 17

Which of the following will shift the aggregate demand curve left?

Accepted Answer

A) An increase in wealth holdings. 
B) A decrease in labour productivity. 
C) An increase in government spending. 
D) A rise in the exchange rate. 
E) An increase in the incomes of our major trading partners. 
A) An increase in wealth holdings. 
B) A decrease in labour productivity. 
C) An increase in government spending. 
D) A rise in the exchange rate. 
E) An increase in the incomes of our major trading partners.

Question 18

On average,Canada's Real GDP has grown by ________% per year between the years of 1997-2012.

Accepted Answer

A) 2.6 
B) 3.25 
C) 4.5 
D) 5.75 
A) 2.6 
B) 3.25 
C) 4.5 
D) 5.75

Question 19

Which of the following will cause the aggregate demand curve to shift to the right?

Accepted Answer

A) A decrease in the money supply. 
B) A decrease in the interest rate. 
C) An increase in the exchange rate. 
D) A decrease in government spending. 
A) A decrease in the money supply. 
B) A decrease in the interest rate. 
C) An increase in the exchange rate. 
D) A decrease in government spending.

Question 20

Which of the following is the result of the price level increasing while resource costs remain constant?

Accepted Answer

A) A movement up the aggregate supply curve. 
B) A movement down the aggregate supply curve. 
C) A shift to the right of the aggregate supply curve. 
D) A shift to the left of the aggregate supply curve. 
E) A shift to the right of the long-run aggregate supply curve. 
A) A movement up the aggregate supply curve. 
B) A movement down the aggregate supply curve. 
C) A shift to the right of the aggregate supply curve. 
D) A shift to the left of the aggregate supply curve. 
E) A shift to the right of the long-run aggregate supply curve.

-Refer to the above graph to answer this question.What could cause the movement from point B to point A?

Explain why a decrease in nominal wages does not necessarily imply a decrease in real wages.

The following are an aggregate demand and supply schedules for a hypothetical economy.All figures in $ billions. -Refer to the information above to answer this question.If the aggregate quantity demanded falls by 150,what will be the equilibrium price level and real output respectively?

Under what circumstances will the multiplier effect have a big impact on Real GDP?

According to Keynesian economists,why are prices and wages often inflexible?

A change in resource prices will shift both the aggregate supply and the LAS curves.

Which of the following will lead to an increase in aggregate demand?

-Refer to the graph above to answer this question.What does Figure C illustrate?

What does the interest-rate effect explain?

According to neoclassicists,an increase in aggregate demand will have no effect upon Real GDP but will cause the price level to increase.

What is the business cycle?

What is true of a movement up the aggregate supply curve?

What could cause the aggregate demand curve to shift to the right?

What is Potential GDP?

What is aggregate supply?

Why is the AD curve downward-sloping?

Which of the following will shift the aggregate demand curve left?

On average,Canada's Real GDP has grown by ________% per year between the years of 1997-2012.

Which of the following will cause the aggregate demand curve to shift to the right?

Which of the following is the result of the price level increasing while resource costs remain constant?

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

-Refer to the above graph to answer this question.What could cause the movement from point B to point A?

Explain why a decrease in nominal wages does not necessarily imply a decrease in real wages.

The following are an aggregate demand and supply schedules for a hypothetical economy.All figures in $ billions. -Refer to the information above to answer this question.If the aggregate quantity demanded falls by 150,what will be the equilibrium price level and real output respectively?

Under what circumstances will the multiplier effect have a big impact on Real GDP?

According to Keynesian economists,why are prices and wages often inflexible?

A change in resource prices will shift both the aggregate supply and the LAS curves.

Which of the following will lead to an increase in aggregate demand?

-Refer to the graph above to answer this question.What does Figure C illustrate?

What does the interest-rate effect explain?

According to neoclassicists,an increase in aggregate demand will have no effect upon Real GDP but will cause the price level to increase.

What is the business cycle?

What is true of a movement up the aggregate supply curve?

What could cause the aggregate demand curve to shift to the right?

What is Potential GDP?

What is aggregate supply?

Why is the AD curve downward-sloping?

Which of the following will shift the aggregate demand curve left?

On average,Canada's Real GDP has grown by ________% per year between the years of 1997-2012.

Which of the following will cause the aggregate demand curve to shift to the right?

Which of the following is the result of the price level increasing while resource costs remain constant?

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