Question 1

Figure 8-5  
-If the aggregate demand curve in Figure 8-5 is D₅,the economy will be experiencing

Accepted Answer

A) demand-pull inflation. 
B) cost-push inflation. 
C) structural inflation. 
D) stagflation. 
A) demand-pull inflation. 
B) cost-push inflation. 
C) structural inflation. 
D) stagflation.

Question 2

What is measured on the vertical axis of the short-run aggregate supply curve?

Accepted Answer

A) real national income 
B) nominal income 
C) the price level 
D) the interest rate 
A) real national income 
B) nominal income 
C) the price level 
D) the interest rate

Question 3

As the price level increases,the short-run aggregate supply curve

Accepted Answer

A) becomes increasingly steep. 
B) begins to level out. 
C) shifts inward. 
D) does not change. 
A) becomes increasingly steep. 
B) begins to level out. 
C) shifts inward. 
D) does not change.

Question 4

One possible result of a fall in aggregate demand coupled with a stable aggregate supply is

Accepted Answer

A) a recession. 
B) an increase in employment levels. 
C) an economic expansion. 
D) a rise in the stock market. 
A) a recession. 
B) an increase in employment levels. 
C) an economic expansion. 
D) a rise in the stock market.

Question 5

Figure 8-4  
-The reason that it is possible for the economy in Figure 8-4 to be at E₂ rather than at E₁ is that

Accepted Answer

A) in the long run there is always less than full employment. 
B) in the short run the economy can produce more than it can in a long-run full-adjustment situation. 
C) AD always shifts outward and never shifts inward. 
D) the economy must be in a recession. 
A) in the long run there is always less than full employment. 
B) in the short run the economy can produce more than it can in a long-run full-adjustment situation. 
C) AD always shifts outward and never shifts inward. 
D) the economy must be in a recession.

Question 6

The effect of a positive demand shock is to

Accepted Answer

A) decrease the level of aggregate demand. 
B) cause prices to rise. 
C) decrease the firm's cost of producing at every level of output. 
D) decrease the level of employment. 
A) decrease the level of aggregate demand. 
B) cause prices to rise. 
C) decrease the firm's cost of producing at every level of output. 
D) decrease the level of employment.

Question 7

As the price level increases,the ________ becomes increasingly steep.

Accepted Answer

A) short-run aggregate supply curve 
B) aggregate demand curve 
C) long-run aggregate supply curve 
D) planned aggregate expenditure curve 
A) short-run aggregate supply curve 
B) aggregate demand curve 
C) long-run aggregate supply curve 
D) planned aggregate expenditure curve

Question 8

What is the affect of a rise in the price level on potential output?

Accepted Answer

A rise in the price level has

Question 9

If our economy is growing at a constant rate of 5 percent per year,then over a period of 10 years we would expect to see which of the following?

Accepted Answer

A) Nice,steady flat line growth 
B) An upward-sloping growth line 
C) A downward-sloping growth line 
D) It is impossible to say what kind of growth line we would see 
A) Nice,steady flat line growth 
B) An upward-sloping growth line 
C) A downward-sloping growth line 
D) It is impossible to say what kind of growth line we would see

Question 10

The ________ represents the relationship between the price level and the real output of goods and services in the economy without full adjustment or full information.

Accepted Answer

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

Question 11

An increase in the labour force while holding population constant will

Accepted Answer

A) increase aggregate demand and real GDP,but have no effect on the price level. 
B) increase aggregate demand and aggregate supply by the same amounts,causing real GDP to increase and the price level to remain constant. 
C) increase aggregate supply and real GDP,but have no effect on the price level. 
D) increase aggregate supply and real GDP and lower the price level. 
A) increase aggregate demand and real GDP,but have no effect on the price level. 
B) increase aggregate demand and aggregate supply by the same amounts,causing real GDP to increase and the price level to remain constant. 
C) increase aggregate supply and real GDP,but have no effect on the price level. 
D) increase aggregate supply and real GDP and lower the price level.

Question 12

An increase in ________ would cause the long-run aggregate supply curve to shift to the right.

Accepted Answer

A) the demand for labour 
B) the unemployment rate 
C) inflation 
D) productivity 
A) the demand for labour 
B) the unemployment rate 
C) inflation 
D) productivity

Question 13

An aggregate demand shock is generally referred to as

Accepted Answer

A) an unexpected event that causes the aggregate demand curve to shift inward or outward. 
B) an expected event that causes the aggregate demand curve to shift inward or outward. 
C) an unexpected event that causes the long-run aggregate supply curve to shift inward or outward. 
D) an unexpected event that causes the short-run aggregate supply curve to shift inward or outward. 
A) an unexpected event that causes the aggregate demand curve to shift inward or outward. 
B) an expected event that causes the aggregate demand curve to shift inward or outward. 
C) an unexpected event that causes the long-run aggregate supply curve to shift inward or outward. 
D) an unexpected event that causes the short-run aggregate supply curve to shift inward or outward.

Question 14

A short-run equilibrium occurs

Accepted Answer

A) at the intersection of the short-run aggregate supply curve and the long-run aggregate supply curve. 
B) at the intersection of the short-run aggregate supply curve and the aggregate demand curve. 
C) at the intersection of the short-run aggregate supply curve,the long-run aggregate supply curve,and the aggregate demand curve. 
D) when the rate at which prices increase equals the rate at which input prices increase. 
A) at the intersection of the short-run aggregate supply curve and the long-run aggregate supply curve. 
B) at the intersection of the short-run aggregate supply curve and the aggregate demand curve. 
C) at the intersection of the short-run aggregate supply curve,the long-run aggregate supply curve,and the aggregate demand curve. 
D) when the rate at which prices increase equals the rate at which input prices increase.

Question 15

Figure 8-2  
-In Figure 8-2,assume that B is the current long-run aggregate supply curve and that E is the current short-run aggregate supply curve.If there were a discovery of large oil fields in Manitoba,where no one thought oil fields existed,then we could expect the long-run aggregate supply curve and the short-run aggregate supply curve to

Accepted Answer

A) remain B and E. 
B) move to A and D. 
C) move to C and F. 
D) move to A and F. 
A) remain B and E. 
B) move to A and D. 
C) move to C and F. 
D) move to A and F.

Figure 8-5 -If the aggregate demand curve in Figure 8-5 is D₅,the economy will be experiencing

What is measured on the vertical axis of the short-run aggregate supply curve?

As the price level increases,the short-run aggregate supply curve

One possible result of a fall in aggregate demand coupled with a stable aggregate supply is

Figure 8-4 -The reason that it is possible for the economy in Figure 8-4 to be at E₂ rather than at E₁ is that

The effect of a positive demand shock is to

As the price level increases,the ________ becomes increasingly steep.

What is the affect of a rise in the price level on potential output?

If our economy is growing at a constant rate of 5 percent per year,then over a period of 10 years we would expect to see which of the following?

The ________ represents the relationship between the price level and the real output of goods and services in the economy without full adjustment or full information.

An increase in the labour force while holding population constant will

An increase in ________ would cause the long-run aggregate supply curve to shift to the right.

An aggregate demand shock is generally referred to as

A short-run equilibrium occurs

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

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

Figure 8-5 -If the aggregate demand curve in Figure 8-5 is D₅,the economy will be experiencing

What is measured on the vertical axis of the short-run aggregate supply curve?

As the price level increases,the short-run aggregate supply curve

One possible result of a fall in aggregate demand coupled with a stable aggregate supply is

Figure 8-4 -The reason that it is possible for the economy in Figure 8-4 to be at E₂ rather than at E₁ is that

The effect of a positive demand shock is to

As the price level increases,the ________ becomes increasingly steep.

What is the affect of a rise in the price level on potential output?

If our economy is growing at a constant rate of 5 percent per year,then over a period of 10 years we would expect to see which of the following?

The ________ represents the relationship between the price level and the real output of goods and services in the economy without full adjustment or full information.

An increase in the labour force while holding population constant will

An increase in ________ would cause the long-run aggregate supply curve to shift to the right.

An aggregate demand shock is generally referred to as

A short-run equilibrium occurs

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