Question 1

Stagflation occurs when the aggregate price level _____ and the aggregate output level _____.

Accepted Answer

A)  falls;falls 
B)  falls;rises 
C)  rises;falls 
D)  rises;rises 
A)  falls;falls 
B)  falls;rises 
C)  rises;falls 
D)  rises;rises

Question 2

Use the following to answer questions:  
-(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.When firms decrease their investment spending,in the short run the _____ curve will shift to the _____.

Accepted Answer

A)  LRAS;left 
B)  LRAS;right 
C)  AD;right 
D)  AD;left 
A)  LRAS;left 
B)  LRAS;right 
C)  AD;right 
D)  AD;left

Question 3

In the long run,the aggregate price level has no effect on the quantity of aggregate output supplied.

Accepted Answer

A) True 
 B)False

Question 4

Use the following to answer questions:  
-(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.If the central bank reduces the quantity of money that is circulating in the economy,the _____ curve will shift to the _____.

Accepted Answer

A)  LRAS;right 
B)  LRAS;left 
C)  AD1;left 
D)  AD1;right 
A)  LRAS;right 
B)  LRAS;left 
C)  AD1;left 
D)  AD1;right

Question 5

If the Bank of Canada decreases the quantity of money in circulation,interest rates _____,investment spending _____,and the aggregate demand curve shifts to the _____.

Accepted Answer

A)  decrease;increases;right 
B)  decrease;decreases;left 
C)  increase;decreases;left 
D)  increase;decreases;right 
A)  decrease;increases;right 
B)  decrease;decreases;left 
C)  increase;decreases;left 
D)  increase;decreases;right

Question 6

Stagflation is the combination of inflation and rising aggregate output.

Accepted Answer

A) True 
 B)False

Question 7

When the price level decreases,firms in imperfectly competitive markets will:

Accepted Answer

A)  decrease output and increase the price. 
B)  decrease output. 
C)  decrease output and decrease the price. 
D)  increase output. 
A)  decrease output and increase the price. 
B)  decrease output. 
C)  decrease output and decrease the price. 
D)  increase output.

Question 8

The interest rate effect leads to a downward-sloping aggregate demand curve because a higher price level causes consumption to _____ and investment to _____.

Accepted Answer

A)  decrease;decrease 
B)  decrease;increase 
C)  increase;decrease 
D)  increase;increase 
A)  decrease;decrease 
B)  decrease;increase 
C)  increase;decrease 
D)  increase;increase

Question 9

When the aggregate price level falls,the purchasing power of assets rises,which leads to:

Accepted Answer

A)  an increase in the quantity of aggregate output demanded. 
B)  a decrease in the quantity of aggregate output demanded. 
C)  a shift in the AD curve to the right. 
D)  a shift in the AD curve to the left. 
A)  an increase in the quantity of aggregate output demanded. 
B)  a decrease in the quantity of aggregate output demanded. 
C)  a shift in the AD curve to the right. 
D)  a shift in the AD curve to the left.

Question 10

A shift to the right of the short-run aggregate supply curve may be caused by a(n):

Accepted Answer

A)  decrease in productivity. 
B)  increase in productivity. 
C)  increase in the price of inputs. 
D)  increase in wages. 
A)  decrease in productivity. 
B)  increase in productivity. 
C)  increase in the price of inputs. 
D)  increase in wages.

Question 11

An increase in the aggregate price level will increase:

Accepted Answer

A)  short-run aggregate supply. 
B)  the quantity of aggregate output supplied in the short run. 
C)  aggregate demand. 
D)  the quantity of aggregate output demanded. 
A)  short-run aggregate supply. 
B)  the quantity of aggregate output supplied in the short run. 
C)  aggregate demand. 
D)  the quantity of aggregate output demanded.

Question 12

If the price level increases by 20%,the purchasing power of $1 000 will increase to $1 200.

Accepted Answer

A) True 
 B)False

Question 13

Suppose the equilibrium aggregate price level is rising and the equilibrium level of real GDP is falling.Which factor MOST likely caused these changes?

Accepted Answer

A)  an increase in short-run aggregate supply 
B)  an increase in aggregate demand 
C)  a decrease in short-run aggregate supply 
D)  a decrease in aggregate demand 
A)  an increase in short-run aggregate supply 
B)  an increase in aggregate demand 
C)  a decrease in short-run aggregate supply 
D)  a decrease in aggregate demand

Question 14

The short-run aggregate supply curve illustrates:

Accepted Answer

A)  the price level at which real output will be consumed. 
B)  the price level at which real output will be in equilibrium. 
C)  the positive relationship between the aggregate price level and aggregate output supplied. 
D)  the negative relationship between the aggregate price level and aggregate output supplied. 
A)  the price level at which real output will be consumed. 
B)  the price level at which real output will be in equilibrium. 
C)  the positive relationship between the aggregate price level and aggregate output supplied. 
D)  the negative relationship between the aggregate price level and aggregate output supplied.

Question 15

Suppose that the stock market crashes,which causes a large decrease in the value of many households' financial assets.The most likely outcome is a _____ the aggregate demand curve.

Accepted Answer

A)  rightward shift of 
B)  leftward shift of 
C)  movement up 
D)  movement down 
A)  rightward shift of 
B)  leftward shift of 
C)  movement up 
D)  movement down

Question 16

Use the following to answer questions:  
-(Figure: Aggregate Supply)Refer to Figure: Aggregate Supply.At point F,potential output is _____ than actual output and unemployment is _____.

Accepted Answer

A)  less;high 
B)  less;low 
C)  higher;high 
D)  higher;low 
A)  less;high 
B)  less;low 
C)  higher;high 
D)  higher;low

Question 17

A positive demand shock leads to:

Accepted Answer

A)  higher prices and higher employment. 
B)  higher prices and higher unemployment. 
C)  higher prices and lower output. 
D)  lower prices and lower output. 
A)  higher prices and higher employment. 
B)  higher prices and higher unemployment. 
C)  higher prices and lower output. 
D)  lower prices and lower output.

Question 18

If the price level rises by 10%,the purchasing power of $10 000 will:

Accepted Answer

A)  increase to $11 000. 
B)  decrease to $9 000. 
C)  decrease to $1 000. 
D)  remain constant. 
A)  increase to $11 000. 
B)  decrease to $9 000. 
C)  decrease to $1 000. 
D)  remain constant.

Question 19

The long run in macroeconomic analysis is a period:

Accepted Answer

A)  in which nominal wages and other prices are flexible. 
B)  in which wages are sticky. 
C)  of less than 1 year. 
D)  of 1-2 years. 
A)  in which nominal wages and other prices are flexible. 
B)  in which wages are sticky. 
C)  of less than 1 year. 
D)  of 1-2 years.

Question 20

Increased government spending in the short run will _____ aggregate output and _____ aggregate price levels.

Accepted Answer

A)  increase;increase 
B)  increase;decrease 
C)  decrease;decrease 
D)  decrease;increase 
A)  increase;increase 
B)  increase;decrease 
C)  decrease;decrease 
D)  decrease;increase

Stagflation occurs when the aggregate price level _ and the aggregate output level _.

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.When firms decrease their investment spending,in the short run the _ curve will shift to the _.

In the long run,the aggregate price level has no effect on the quantity of aggregate output supplied.

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.If the central bank reduces the quantity of money that is circulating in the economy,the _ curve will shift to the _.

If the Bank of Canada decreases the quantity of money in circulation,interest rates ___,investment spending _,and the aggregate demand curve shifts to the ___.

Stagflation is the combination of inflation and rising aggregate output.

When the price level decreases,firms in imperfectly competitive markets will:

The interest rate effect leads to a downward-sloping aggregate demand curve because a higher price level causes consumption to _ and investment to _.

When the aggregate price level falls,the purchasing power of assets rises,which leads to:

A shift to the right of the short-run aggregate supply curve may be caused by a(n):

An increase in the aggregate price level will increase:

If the price level increases by 20%,the purchasing power of $1 000 will increase to $1 200.

Suppose the equilibrium aggregate price level is rising and the equilibrium level of real GDP is falling.Which factor MOST likely caused these changes?

The short-run aggregate supply curve illustrates:

Suppose that the stock market crashes,which causes a large decrease in the value of many households' financial assets.The most likely outcome is a _____ the aggregate demand curve.

Use the following to answer questions: -(Figure: Aggregate Supply)Refer to Figure: Aggregate Supply.At point F,potential output is _ than actual output and unemployment is _.

A positive demand shock leads to:

If the price level rises by 10%,the purchasing power of $10 000 will:

The long run in macroeconomic analysis is a period:

Increased government spending in the short run will _ aggregate output and _ aggregate price levels.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

Gdp and the Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Income and Expenditure

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Graphs in Economics

Filters

Exam 12: Aggregate Demand and Aggregate Supply

Stagflation occurs when the aggregate price level _____ and the aggregate output level _____.

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.When firms decrease their investment spending,in the short run the _____ curve will shift to the _____.

In the long run,the aggregate price level has no effect on the quantity of aggregate output supplied.

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.If the central bank reduces the quantity of money that is circulating in the economy,the _____ curve will shift to the _____.

If the Bank of Canada decreases the quantity of money in circulation,interest rates _____,investment spending _____,and the aggregate demand curve shifts to the _____.

Stagflation is the combination of inflation and rising aggregate output.

When the price level decreases,firms in imperfectly competitive markets will:

The interest rate effect leads to a downward-sloping aggregate demand curve because a higher price level causes consumption to _____ and investment to _____.

When the aggregate price level falls,the purchasing power of assets rises,which leads to:

A shift to the right of the short-run aggregate supply curve may be caused by a(n):

An increase in the aggregate price level will increase:

If the price level increases by 20%,the purchasing power of $1 000 will increase to $1 200.

Suppose the equilibrium aggregate price level is rising and the equilibrium level of real GDP is falling.Which factor MOST likely caused these changes?

The short-run aggregate supply curve illustrates:

Suppose that the stock market crashes,which causes a large decrease in the value of many households' financial assets.The most likely outcome is a _____ the aggregate demand curve.

Use the following to answer questions: -(Figure: Aggregate Supply)Refer to Figure: Aggregate Supply.At point F,potential output is _____ than actual output and unemployment is _____.

A positive demand shock leads to:

If the price level rises by 10%,the purchasing power of $10 000 will:

The long run in macroeconomic analysis is a period:

Increased government spending in the short run will _____ aggregate output and _____ aggregate price levels.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

Gdp and the Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Income and Expenditure

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Graphs in Economics

Filters

Stagflation occurs when the aggregate price level _ and the aggregate output level _.

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.When firms decrease their investment spending,in the short run the _ curve will shift to the _.

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.If the central bank reduces the quantity of money that is circulating in the economy,the _ curve will shift to the _.

If the Bank of Canada decreases the quantity of money in circulation,interest rates ___,investment spending _,and the aggregate demand curve shifts to the ___.

The interest rate effect leads to a downward-sloping aggregate demand curve because a higher price level causes consumption to _ and investment to _.

Use the following to answer questions: -(Figure: Aggregate Supply)Refer to Figure: Aggregate Supply.At point F,potential output is _ than actual output and unemployment is _.

Increased government spending in the short run will _ aggregate output and _ aggregate price levels.