Question 1

Which of the following statements best categorizes the LRAS curve.

Accepted Answer

A) Vertical at the current level of real output. 
B) Depends on the position of the AD curve. 
C) The full-employment and full adjustment level of real output of goods and services in the economy. 
D) Depends on the aggregate price level in the economy. 
A) Vertical at the current level of real output. 
B) Depends on the position of the AD curve. 
C) The full-employment and full adjustment level of real output of goods and services in the economy. 
D) Depends on the aggregate price level in the economy.

Question 2

If you have $2 000 and the GDP deflator decreases from 120 to 110,then

Accepted Answer

A) the value of the $1 000 decreases. 
B) the $1 000 will buy 8.3 percent less of the goods and services produced by society. 
C) the $1 000 will buy 8.3 percent more of the goods and services produced by society. 
D) you will be able to less goods,but the real value of those goods will decrease at the same time. 
A) the value of the $1 000 decreases. 
B) the $1 000 will buy 8.3 percent less of the goods and services produced by society. 
C) the $1 000 will buy 8.3 percent more of the goods and services produced by society. 
D) you will be able to less goods,but the real value of those goods will decrease at the same time.

Question 3

The aggregate demand curve

Accepted Answer

A) is like individual demand curves in that prices of other goods are held constant. 
B) is like individual demand curves in that income is constant. 
C) differs from individual demand curves in that the aggregate demand curve is not downward sloping. 
D) differs from individual demand curves in that the aggregate demand curve looks at the entire circular flow of income and product while the individual demand curve looks at only one good. 
A) is like individual demand curves in that prices of other goods are held constant. 
B) is like individual demand curves in that income is constant. 
C) differs from individual demand curves in that the aggregate demand curve is not downward sloping. 
D) differs from individual demand curves in that the aggregate demand curve looks at the entire circular flow of income and product while the individual demand curve looks at only one good.

Question 4

The aggregate demand curve would shift to the left if

Accepted Answer

A) the economic conditions in Europe improved. 
B) there was a tax decrease. 
C) the Bank of Canada caused the real interest rate to increase. 
D) the foreign exchange rate of the dollar decreased. 
A) the economic conditions in Europe improved. 
B) there was a tax decrease. 
C) the Bank of Canada caused the real interest rate to increase. 
D) the foreign exchange rate of the dollar decreased.

Question 5

When the Federal government increases the level of taxes in the economy,this has the effect of

Accepted Answer

A) increasing AD. 
B) decreasing AD. 
C) increasing AS in the long run. 
D) decreasing AS in the long run. 
A) increasing AD. 
B) decreasing AD. 
C) increasing AS in the long run. 
D) decreasing AS in the long run.

Question 6

What is the long-run aggregate supply curve?

Accepted Answer

The LRAS is a vertical line representing

Question 7

A decrease in the price level will have a direct effect on spending because

Accepted Answer

A) people like to spend less when prices are lower. 
B) the real value of the money people have varies directly with the price level,and so does their spending. 
C) the real value of the money people have increases and they can buy more with it. 
D) the more money they have the more it is worth and the more goods and services they can buy. 
A) people like to spend less when prices are lower. 
B) the real value of the money people have varies directly with the price level,and so does their spending. 
C) the real value of the money people have increases and they can buy more with it. 
D) the more money they have the more it is worth and the more goods and services they can buy.

Question 8

The real balance effect shows that

Accepted Answer

A) aggregate demand is upward sloping. 
B) a higher price level leads to higher interest rates. 
C) a lower price level will increase the purchasing power of currency and increase personal consumption. 
D) consumption and the price level are positively correlated. 
A) aggregate demand is upward sloping. 
B) a higher price level leads to higher interest rates. 
C) a lower price level will increase the purchasing power of currency and increase personal consumption. 
D) consumption and the price level are positively correlated.

Question 9

The long-run aggregate supply curve is

Accepted Answer

A) horizontal at the full employment level of real GDP. 
B) vertical at the full employment level of real GDP. 
C) sloping upward due to the effects of price level changes on output. 
D) the same as the short-run aggregate supply curve. 
A) horizontal at the full employment level of real GDP. 
B) vertical at the full employment level of real GDP. 
C) sloping upward due to the effects of price level changes on output. 
D) the same as the short-run aggregate supply curve.

Question 10

If you have $1 000 and the GDP deflator increases from 100 to 120,then

Accepted Answer

A) the $1 000 will buy 20 percent less of the goods and services produced by society. 
B) the $1 000 will buy 20 percent more of the goods and services produced by society. 
C) the value of the $1 000 increases. 
D) you will be able to buy fewer goods,but the real value of those goods will increase. 
A) the $1 000 will buy 20 percent less of the goods and services produced by society. 
B) the $1 000 will buy 20 percent more of the goods and services produced by society. 
C) the value of the $1 000 increases. 
D) you will be able to buy fewer goods,but the real value of those goods will increase.

Question 11

If the Bank of Canada were to buy back Canada Savings bonds from the public,we would expect

Accepted Answer

A) the AD curve to remain unchanged since this has no effect on the money supply. 
B) the AD curve to shift to the right since this has the effect of increasing the money supply. 
C) the AD curve to shift to the left since this has the effect of decreasing the money supply. 
D) will see a marked effect from the interest rate effect. 
A) the AD curve to remain unchanged since this has no effect on the money supply. 
B) the AD curve to shift to the right since this has the effect of increasing the money supply. 
C) the AD curve to shift to the left since this has the effect of decreasing the money supply. 
D) will see a marked effect from the interest rate effect.

Question 12

Higher interest rates

Accepted Answer

A) reduce the quantity of goods and services demanded because they increase the cost of borrowing money. 
B) reduce the quantity of goods and services demanded because they reduce the income of bankers and other creditors. 
C) increase the quantity of goods and services demanded because they increase the incomes of all people in the economy. 
D) increase the quantity of goods and services demanded because they lower the costs of building new plants and equipment. 
A) reduce the quantity of goods and services demanded because they increase the cost of borrowing money. 
B) reduce the quantity of goods and services demanded because they reduce the income of bankers and other creditors. 
C) increase the quantity of goods and services demanded because they increase the incomes of all people in the economy. 
D) increase the quantity of goods and services demanded because they lower the costs of building new plants and equipment.

Question 13

Describe the three possibilities that occur when the price level rises.

Accepted Answer

This requires an account of th

Question 14

The aggregate demand curve gives the

Accepted Answer

A) planned purchases for all goods and services in the economy,holding other things constant such as the price level constant. 
B) planned purchase rates for all goods and services in the economy at various price levels. 
C) government's demand for goods and services at various price levels. 
D) amount of all goods everyone wants to buy at various income levels. 
A) planned purchases for all goods and services in the economy,holding other things constant such as the price level constant. 
B) planned purchase rates for all goods and services in the economy at various price levels. 
C) government's demand for goods and services at various price levels. 
D) amount of all goods everyone wants to buy at various income levels.

Question 15

Figure 6-1  
-In Figure 6-1,a movement from point B to point A can be explained by

Accepted Answer

A) an increase in spending due to a war. 
B) an increase in spending due to increases in education expenditures. 
C) an increase in the demand for manufacturing goods due to new technology. 
D) a drop in the price level. 
A) an increase in spending due to a war. 
B) an increase in spending due to increases in education expenditures. 
C) an increase in the demand for manufacturing goods due to new technology. 
D) a drop in the price level.

Which of the following statements best categorizes the LRAS curve.

If you have $2 000 and the GDP deflator decreases from 120 to 110,then

The aggregate demand curve

The aggregate demand curve would shift to the left if

When the Federal government increases the level of taxes in the economy,this has the effect of

What is the long-run aggregate supply curve?

A decrease in the price level will have a direct effect on spending because

The real balance effect shows that

The long-run aggregate supply curve is

If you have $1 000 and the GDP deflator increases from 100 to 120,then

If the Bank of Canada were to buy back Canada Savings bonds from the public,we would expect

Higher interest rates

Describe the three possibilities that occur when the price level rises.

The aggregate demand curve gives the

Figure 6-1 -In Figure 6-1,a movement from point B to point A can be explained by

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 6: Modelling Real Gdp and the Price Level in the Long Run

Which of the following statements best categorizes the LRAS curve.

If you have $2 000 and the GDP deflator decreases from 120 to 110,then

The aggregate demand curve

The aggregate demand curve would shift to the left if

When the Federal government increases the level of taxes in the economy,this has the effect of

What is the long-run aggregate supply curve?

A decrease in the price level will have a direct effect on spending because

The real balance effect shows that

The long-run aggregate supply curve is

If you have $1 000 and the GDP deflator increases from 100 to 120,then

If the Bank of Canada were to buy back Canada Savings bonds from the public,we would expect

Higher interest rates

Describe the three possibilities that occur when the price level rises.

The aggregate demand curve gives the

Figure 6-1 -In Figure 6-1,a movement from point B to point A can be explained by

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters