Question 1

The aggregate demand curve shows the relationship between the aggregate price level and (the)aggregate:

Accepted Answer

A)  productivity. 
B)  unemployment rate. 
C)  quantity of output demanded by households,businesses,the government,and the rest of the world. 
D)  quantity of output demanded by businesses only. 
A)  productivity. 
B)  unemployment rate. 
C)  quantity of output demanded by households,businesses,the government,and the rest of the world. 
D)  quantity of output demanded by businesses only.

Question 2

Use the following to answer questions:  
-(Figure: Inflationary and Recessionary Gaps)Refer to Figure: Inflationary and Recessionary Gaps.If the economy is in short-run equilibrium at Y1 in panel (b),the economy is in:

Accepted Answer

A)  a recessionary gap. 
B)  an inflationary gap. 
C)  simultaneous short-run and long-run equilibrium. 
D)  a high level of unemployment. 
A)  a recessionary gap. 
B)  an inflationary gap. 
C)  simultaneous short-run and long-run equilibrium. 
D)  a high level of unemployment.

Question 3

Use the following to answer questions:  
-(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.If commodity prices rise,the _____ curve will shift to the _____.

Accepted Answer

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

Question 4

The aggregate demand curve would NOT shift to the left as a result of:

Accepted Answer

A)  a fall in consumers' wealth. 
B)  a decrease in the amount of money in circulation. 
C)  more pessimistic consumer expectations. 
D)  lower labour productivity. 
A)  a fall in consumers' wealth. 
B)  a decrease in the amount of money in circulation. 
C)  more pessimistic consumer expectations. 
D)  lower labour productivity.

Question 5

During the Great Depression,Canada moved to the _____ along its _____ curve.

Accepted Answer

A)  right;aggregate demand 
B)  right;short-run aggregate supply 
C)  left;aggregate demand 
D)  left;short-run aggregate supply 
A)  right;aggregate demand 
B)  right;short-run aggregate supply 
C)  left;aggregate demand 
D)  left;short-run aggregate supply

Question 6

A positive short-run aggregate supply shock increases aggregate output and the aggregate price level.

Accepted Answer

A) True 
 B)False

Question 7

Suppose that productivity increases as workers' health improves.This increase in productivity will:

Accepted Answer

A)  cause a movement up the short-run aggregate supply curve from left to right. 
B)  cause a movement down the short-run aggregate supply curve from right to left. 
C)  shift the short-run aggregate supply curve to the right. 
D)  shift the short-run aggregate supply curve to the left. 
A)  cause a movement up the short-run aggregate supply curve from left to right. 
B)  cause a movement down the short-run aggregate supply curve from right to left. 
C)  shift the short-run aggregate supply curve to the right. 
D)  shift the short-run aggregate supply curve to the left.

Question 8

Use the following to answer questions:  
-(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.When consumers and firms become more optimistic,in the short run the _____ curve will shift to the _____.

Accepted Answer

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

Question 9

An increase in government pension benefits will likely increase consumption and shift the aggregate demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 10

Use the following to answer questions:  
-(Figure: Aggregate Supply)Refer to Figure: Aggregate Supply.If the economy is at point E:

Accepted Answer

A)  actual output is less than potential output. 
B)  actual output is more than potential output. 
C)  actual output is equal to potential output. 
D)  potential output will decrease. 
A)  actual output is less than potential output. 
B)  actual output is more than potential output. 
C)  actual output is equal to potential output. 
D)  potential output will decrease.

Question 11

Between 1929 and 1933,real GDP increased by a large amount.

Accepted Answer

A) True 
 B)False

Question 12

Producing an aggregate output level that is higher than potential output is possible only if nominal wages:

Accepted Answer

A)  fully adjust downward. 
B)  fully adjust upward. 
C)  haven't yet fully adjusted upward. 
D)  haven't yet fully adjusted downward. 
A)  fully adjust downward. 
B)  fully adjust upward. 
C)  haven't yet fully adjusted upward. 
D)  haven't yet fully adjusted downward.

Question 13

Suppose that an economy is in an inflationary gap in the short run.In the long run:

Accepted Answer

A)  the economy's self-correcting mechanism will restore GDP to its potential level. 
B)  inflation will spiral unless the government takes dramatic fiscal measures. 
C)  sustained inflation will reduce the value of money. 
D)  fiscal and monetary policies may lower prices,but output will remain higher than potential level. 
A)  the economy's self-correcting mechanism will restore GDP to its potential level. 
B)  inflation will spiral unless the government takes dramatic fiscal measures. 
C)  sustained inflation will reduce the value of money. 
D)  fiscal and monetary policies may lower prices,but output will remain higher than potential level.

Question 14

Changes in short-run aggregate supply can be caused by changes in:

Accepted Answer

A)  wealth. 
B)  commodity prices. 
C)  government spending. 
D)  the price level. 
A)  wealth. 
B)  commodity prices. 
C)  government spending. 
D)  the price level.

Question 15

A decrease in the supply of money shifts the aggregate _____ curve to the _____.

Accepted Answer

A)  supply;left 
B)  supply;right 
C)  demand;left 
D)  demand;right 
A)  supply;left 
B)  supply;right 
C)  demand;left 
D)  demand;right

Question 16

In the long run,the economy is:

Accepted Answer

A)  unstable. 
B)  self-correcting. 
C)  inflexible. 
D)  uncontrollable. 
A)  unstable. 
B)  self-correcting. 
C)  inflexible. 
D)  uncontrollable.

Question 17

Use the following to answer questions:  
-A major reason for the end of the Great Depression was an increase in government spending:

Accepted Answer

A)  for social security. 
B)  for space exploration. 
C)  for environmental protection. 
D)  during World War II. 
A)  for social security. 
B)  for space exploration. 
C)  for environmental protection. 
D)  during World War II.

Question 18

As a result of a sharp decrease in aggregate demand between 1929 and 1933,the unemployment rate changed from _____% in 1929 to _____% in 1933.

Accepted Answer

A)  0;3 
B)  3;19 
C)  40;5 
D)  25;0 
A)  0;3 
B)  3;19 
C)  40;5 
D)  25;0

Question 19

Use the following to answer questions:  
-(Figure: Policy Alternatives)Refer to Figure: Policy Alternatives.If the economy is in equilibrium at Y1 in panel (a)and the government decreases taxes,the result will likely be a(n):

Accepted Answer

A)  increase in unemployment. 
B)  decrease in interest rates. 
C)  decrease in aggregate demand. 
D)  increase in aggregate demand. 
A)  increase in unemployment. 
B)  decrease in interest rates. 
C)  decrease in aggregate demand. 
D)  increase in aggregate demand.

Question 20

A graphical representation of the relationship between the total quantity of goods and services demanded and the price level is the:

Accepted Answer

A)  aggregate demand curve. 
B)  average price level. 
C)  circular-flow model. 
D)  GDP curve. 
A)  aggregate demand curve. 
B)  average price level. 
C)  circular-flow model. 
D)  GDP curve.

The aggregate demand curve shows the relationship between the aggregate price level and (the)aggregate:

Use the following to answer questions: -(Figure: Inflationary and Recessionary Gaps)Refer to Figure: Inflationary and Recessionary Gaps.If the economy is in short-run equilibrium at Y₁ in panel (b),the economy is in:

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.If commodity prices rise,the _ curve will shift to the _.

The aggregate demand curve would NOT shift to the left as a result of:

During the Great Depression,Canada moved to the _ along its _ curve.

A positive short-run aggregate supply shock increases aggregate output and the aggregate price level.

Suppose that productivity increases as workers' health improves.This increase in productivity will:

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.When consumers and firms become more optimistic,in the short run the _ curve will shift to the _.

An increase in government pension benefits will likely increase consumption and shift the aggregate demand curve to the right.

Use the following to answer questions: -(Figure: Aggregate Supply)Refer to Figure: Aggregate Supply.If the economy is at point E:

Between 1929 and 1933,real GDP increased by a large amount.

Producing an aggregate output level that is higher than potential output is possible only if nominal wages:

Suppose that an economy is in an inflationary gap in the short run.In the long run:

Changes in short-run aggregate supply can be caused by changes in:

A decrease in the supply of money shifts the aggregate _ curve to the _.

In the long run,the economy is:

Use the following to answer questions: -A major reason for the end of the Great Depression was an increase in government spending:

As a result of a sharp decrease in aggregate demand between 1929 and 1933,the unemployment rate changed from _% in 1929 to _% in 1933.

Use the following to answer questions: -(Figure: Policy Alternatives)Refer to Figure: Policy Alternatives.If the economy is in equilibrium at Y₁ in panel (a)and the government decreases taxes,the result will likely be a(n):

A graphical representation of the relationship between the total quantity of goods and services demanded and the price level is the:

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

The aggregate demand curve shows the relationship between the aggregate price level and (the)aggregate:

Use the following to answer questions: -(Figure: Inflationary and Recessionary Gaps)Refer to Figure: Inflationary and Recessionary Gaps.If the economy is in short-run equilibrium at Y1 in panel (b),the economy is in:

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.If commodity prices rise,the _____ curve will shift to the _____.

The aggregate demand curve would NOT shift to the left as a result of:

During the Great Depression,Canada moved to the _____ along its _____ curve.

A positive short-run aggregate supply shock increases aggregate output and the aggregate price level.

Suppose that productivity increases as workers' health improves.This increase in productivity will:

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.When consumers and firms become more optimistic,in the short run the _____ curve will shift to the _____.

An increase in government pension benefits will likely increase consumption and shift the aggregate demand curve to the right.

Use the following to answer questions: -(Figure: Aggregate Supply)Refer to Figure: Aggregate Supply.If the economy is at point E:

Between 1929 and 1933,real GDP increased by a large amount.

Producing an aggregate output level that is higher than potential output is possible only if nominal wages:

Suppose that an economy is in an inflationary gap in the short run.In the long run:

Changes in short-run aggregate supply can be caused by changes in:

A decrease in the supply of money shifts the aggregate _____ curve to the _____.

In the long run,the economy is:

Use the following to answer questions: -A major reason for the end of the Great Depression was an increase in government spending:

As a result of a sharp decrease in aggregate demand between 1929 and 1933,the unemployment rate changed from _____% in 1929 to _____% in 1933.

Use the following to answer questions: -(Figure: Policy Alternatives)Refer to Figure: Policy Alternatives.If the economy is in equilibrium at Y1 in panel (a)and the government decreases taxes,the result will likely be a(n):

A graphical representation of the relationship between the total quantity of goods and services demanded and the price level is the:

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

Use the following to answer questions: -(Figure: Inflationary and Recessionary Gaps)Refer to Figure: Inflationary and Recessionary Gaps.If the economy is in short-run equilibrium at Y₁ in panel (b),the economy is in:

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.If commodity prices rise,the _ curve will shift to the _.

During the Great Depression,Canada moved to the _ along its _ curve.

Use the following to answer questions: -(Figure: AD-AS Model II)Refer to Figure: AD-AS Model II.When consumers and firms become more optimistic,in the short run the _ curve will shift to the _.

A decrease in the supply of money shifts the aggregate _ curve to the _.

As a result of a sharp decrease in aggregate demand between 1929 and 1933,the unemployment rate changed from _% in 1929 to _% in 1933.

Use the following to answer questions: -(Figure: Policy Alternatives)Refer to Figure: Policy Alternatives.If the economy is in equilibrium at Y₁ in panel (a)and the government decreases taxes,the result will likely be a(n):