Question 1

Figure 8-4  
-In Figure 8-4,the expansionary gap can correctly be identified as

Accepted Answer

A) the difference between 125 and 120. 
B) the difference between 7 billion and 7.2 billion. 
C) LRAS minus SRAS. 
D) A D₁ 
A) the difference between 125 and 120. 
B) the difference between 7 billion and 7.2 billion. 
C) LRAS minus SRAS. 
D) A D₁

Question 2

If the price level kept increasing,the ________ would get steeper because there are limits to how long workers can work long hours and capital can go without proper maintenance.

Accepted Answer

A) long-run aggregate supply curve 
B) short-run aggregate supply curve 
C) aggregate demand curve. 
D) labour supply curve. 
A) long-run aggregate supply curve 
B) short-run aggregate supply curve 
C) aggregate demand curve. 
D) labour supply curve.

Question 3

The long-run aggregate supply curve will shift to the left when

Accepted Answer

A) population decreases. 
B) the price level increases. 
C) technology improves. 
D) new sources of oil are discovered. 
A) population decreases. 
B) the price level increases. 
C) technology improves. 
D) new sources of oil are discovered.

Question 4

If the price level kept decreasing,the short-run aggregate supply curve would get flatter because

Accepted Answer

A) all the unemployed would eventually be hired. 
B) we could hire any and all resources at the going rate without increasing prices or the price of inputs.. 
C) the rate at which capacity can be expanded increases indefinitely. 
D) the long-run aggregate supply curve is horizontal. 
A) all the unemployed would eventually be hired. 
B) we could hire any and all resources at the going rate without increasing prices or the price of inputs.. 
C) the rate at which capacity can be expanded increases indefinitely. 
D) the long-run aggregate supply curve is horizontal.

Question 5

The price level is measured on the vertical axis of the ________

Accepted Answer

A) aggregate demand curve. 
B) nominal income curve. 
C) short-run aggregate supply curve. 
D) long-run aggregate supply curve. 
A) aggregate demand curve. 
B) nominal income curve. 
C) short-run aggregate supply curve. 
D) long-run aggregate supply curve.

Question 6

If the price level kept increasing,the short-run aggregate supply curve would get steeper because

Accepted Answer

A) all the unemployed would eventually be hired. 
B) there are limits to how long workers can work long hours and capital can go without proper maintenance. 
C) the rate at which capacity can be expanded increases indefinitely. 
D) the long-run aggregate supply curve is horizontal. 
A) all the unemployed would eventually be hired. 
B) there are limits to how long workers can work long hours and capital can go without proper maintenance. 
C) the rate at which capacity can be expanded increases indefinitely. 
D) the long-run aggregate supply curve is horizontal.

Question 7

________ will be associated with a constant price level when the increase in aggregate demand exactly equals the increase in long-run aggregate supply.

Accepted Answer

A) Economic growth 
B) Economic stagnation 
C) Economic inflation 
D) Economic recession 
A) Economic growth 
B) Economic stagnation 
C) Economic inflation 
D) Economic recession

Question 8

We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve.In the long run

Accepted Answer

A) technology is fixed but not in the short run. 
B) the price level is constant but in the short run it fluctuates. 
C) the aggregate supply curve is horizontal while in the short run it is upward sloping. 
D) all adjustments to changes in the price level have been made,but in the short run all changes in the price level cannot be made. 
A) technology is fixed but not in the short run. 
B) the price level is constant but in the short run it fluctuates. 
C) the aggregate supply curve is horizontal while in the short run it is upward sloping. 
D) all adjustments to changes in the price level have been made,but in the short run all changes in the price level cannot be made.

Question 9

Figure 8-3  
-According to Figure 8-3,the price level in the short run will be

Accepted Answer

A) 115 
B) 110 
C) 100 
D) Less than 100 
A) 115 
B) 110 
C) 100 
D) Less than 100

Question 10

Demand-pull inflation occurs when

Accepted Answer

A) increases in aggregate demand are not matched by increases in aggregate supply. 
B) increases in aggregate supply outstrip increases in aggregate demand. 
C) aggregate demand falls more rapidly than aggregate supply. 
D) long-run aggregate demand rises faster than short-run aggregate supply. 
A) increases in aggregate demand are not matched by increases in aggregate supply. 
B) increases in aggregate supply outstrip increases in aggregate demand. 
C) aggregate demand falls more rapidly than aggregate supply. 
D) long-run aggregate demand rises faster than short-run aggregate supply.

Question 11

A recessionary gap is commonly referred to as

Accepted Answer

A) the difference between the equilibrium level of real GDP and how much the economy could be producing if it were operating at the short run equilibrium on its long-run aggregate supply curve. 
B) the difference between the equilibrium level of real GDP and how much the economy could be producing if it were operating at full employment on its long-run aggregate supply curve. 
C) the difference between actual and expected inflation. 
A) the difference between the equilibrium level of real GDP and how much the economy could be producing if it were operating at the short run equilibrium on its long-run aggregate supply curve. 
B) the difference between the equilibrium level of real GDP and how much the economy could be producing if it were operating at full employment on its long-run aggregate supply curve. 
C) the difference between actual and expected inflation.

Question 12

At a point along the SRAS curve that is to the right of the point where it crosses the LRAS curve,what must be true of the actual unemployment rate relative to the natural rate of unemployment? Why?

Accepted Answer

At this point,the actual unemployment ra

Question 13

Economic growth will not result in inflation if aggregate demand shifts

Accepted Answer

A) outward to the right at the same speed as aggregate supply. 
B) inward to the left at the same speed as aggregate supply. 
C) outward to the right as aggregate supply shifts inward to the left. 
D) inward to the left as aggregate supply shifts outward to the right. 
A) outward to the right at the same speed as aggregate supply. 
B) inward to the left at the same speed as aggregate supply. 
C) outward to the right as aggregate supply shifts inward to the left. 
D) inward to the left as aggregate supply shifts outward to the right.

Question 14

If the Canadian dollar becomes weaker in international foreign exchange markets,imported goods become more expensive.One result of this is that

Accepted Answer

A) net exports decrease. 
B) net exports increase. 
C) domestic employment rises. 
D) real GDP increases. 
A) net exports decrease. 
B) net exports increase. 
C) domestic employment rises. 
D) real GDP increases.

Question 15

If the Canadian dollar becomes stronger in international foreign exchange markets,________ goods become cheaper.One result of this is that net exports decrease.

Accepted Answer

A) imported 
B) exported 
C) employment 
D) durable 
A) imported 
B) exported 
C) employment 
D) durable

Question 16

Suppose that the sras decreases while AD is held constant.What happens to the price level and output in the short and long run?

Accepted Answer

In the short-run since SRAS=AD

Question 17

The long-run aggregate supply curve will shift to the right when

Accepted Answer

A) population increases. 
B) the price level increases. 
C) technology improves. 
D) labour supply falls. 
A) population increases. 
B) the price level increases. 
C) technology improves. 
D) labour supply falls.

Question 18

The relationship between the price level and the real output of goods and services in the economy without full adjustment or full information is represented by

Accepted Answer

A) the long-run aggregate supply curve. 
B) the short-run aggregate supply curve. 
C) the aggregate demand curve. 
D) the distance between the long-run aggregate supply curve and the short-run aggregate supply curve. 
A) the long-run aggregate supply curve. 
B) the short-run aggregate supply curve. 
C) the aggregate demand curve. 
D) the distance between the long-run aggregate supply curve and the short-run aggregate supply curve.

Question 19

Figure 8-1  
-According to Figure 8-1,an increase in aggregate demand between real GDP levels Q₀ and Q₁

Accepted Answer

A) would most likely result in some inflation. 
B) would not increase output since the economy is already working at full capacity. 
C) would have no effect on the price level. 
D) would cause price levels to fall. 
A) would most likely result in some inflation. 
B) would not increase output since the economy is already working at full capacity. 
C) would have no effect on the price level. 
D) would cause price levels to fall.

Question 20

The short-run aggregate supply curve represents the relationship between the ________ and the real output of goods and services in the economy without full adjustment or full information.

Accepted Answer

A) price level 
B) inflation rate 
C) budget balance 
D) exchange rate 
A) price level 
B) inflation rate 
C) budget balance 
D) exchange rate

Figure 8-4 -In Figure 8-4,the expansionary gap can correctly be identified as

If the price level kept increasing,the ________ would get steeper because there are limits to how long workers can work long hours and capital can go without proper maintenance.

The long-run aggregate supply curve will shift to the left when

If the price level kept decreasing,the short-run aggregate supply curve would get flatter because

The price level is measured on the vertical axis of the ________

If the price level kept increasing,the short-run aggregate supply curve would get steeper because

________ will be associated with a constant price level when the increase in aggregate demand exactly equals the increase in long-run aggregate supply.

We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve.In the long run

Figure 8-3 -According to Figure 8-3,the price level in the short run will be

Demand-pull inflation occurs when

A recessionary gap is commonly referred to as

At a point along the SRAS curve that is to the right of the point where it crosses the LRAS curve,what must be true of the actual unemployment rate relative to the natural rate of unemployment? Why?

Economic growth will not result in inflation if aggregate demand shifts

If the Canadian dollar becomes weaker in international foreign exchange markets,imported goods become more expensive.One result of this is that

If the Canadian dollar becomes stronger in international foreign exchange markets,________ goods become cheaper.One result of this is that net exports decrease.

Suppose that the sras decreases while AD is held constant.What happens to the price level and output in the short and long run?

The long-run aggregate supply curve will shift to the right when

The relationship between the price level and the real output of goods and services in the economy without full adjustment or full information is represented by

Figure 8-1 -According to Figure 8-1,an increase in aggregate demand between real GDP levels Q₀ and Q₁

The short-run aggregate supply curve represents the relationship between the ________ and the real output of goods and services in the economy without full adjustment or full information.

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

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

Exam 8: Modelling Real Gdp and the Price Level in the Short Run

Figure 8-4 -In Figure 8-4,the expansionary gap can correctly be identified as

If the price level kept increasing,the ________ would get steeper because there are limits to how long workers can work long hours and capital can go without proper maintenance.

The long-run aggregate supply curve will shift to the left when

If the price level kept decreasing,the short-run aggregate supply curve would get flatter because

The price level is measured on the vertical axis of the ________

If the price level kept increasing,the short-run aggregate supply curve would get steeper because

________ will be associated with a constant price level when the increase in aggregate demand exactly equals the increase in long-run aggregate supply.

We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve.In the long run

Figure 8-3 -According to Figure 8-3,the price level in the short run will be

Demand-pull inflation occurs when

A recessionary gap is commonly referred to as

At a point along the SRAS curve that is to the right of the point where it crosses the LRAS curve,what must be true of the actual unemployment rate relative to the natural rate of unemployment? Why?

Economic growth will not result in inflation if aggregate demand shifts

If the Canadian dollar becomes weaker in international foreign exchange markets,imported goods become more expensive.One result of this is that

If the Canadian dollar becomes stronger in international foreign exchange markets,________ goods become cheaper.One result of this is that net exports decrease.

Suppose that the sras decreases while AD is held constant.What happens to the price level and output in the short and long run?

The long-run aggregate supply curve will shift to the right when

The relationship between the price level and the real output of goods and services in the economy without full adjustment or full information is represented by

Figure 8-1 -According to Figure 8-1,an increase in aggregate demand between real GDP levels Q₀ and Q₁

The short-run aggregate supply curve represents the relationship between the ________ and the real output of goods and services in the economy without full adjustment or full information.

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

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