Question 1

The short-run aggregate supply curve slopes upward because:

Accepted Answer

A) firms normally can purchase some inputs at prices that are temporarily fixed in the short run. 
B) firms seek maximum profits and always try to increase output in the short run. 
C) firms purchase inputs that rise in price as the price level rises in the short run. 
D) All of the above are correct. 
A) firms normally can purchase some inputs at prices that are temporarily fixed in the short run. 
B) firms seek maximum profits and always try to increase output in the short run. 
C) firms purchase inputs that rise in price as the price level rises in the short run. 
D) All of the above are correct.

Question 2

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

Accepted Answer

A) True 
 B)False

Question 3

An increase in net exports would lead to an increase aggregate demand but would not lead to an increase in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 4

The misperception effect explanation for an upward-sloping short-run aggregate supply curve is based on:

Accepted Answer

A) falling profit margins as the price level rises. 
B) rising costs of production as the price level rises. 
C) fixed wage labor contracts. 
D) people mistaking changes in aggregate demand for changes in the demand for their goods relative to other goods and services. 
A) falling profit margins as the price level rises. 
B) rising costs of production as the price level rises. 
C) fixed wage labor contracts. 
D) people mistaking changes in aggregate demand for changes in the demand for their goods relative to other goods and services.

Question 5

Describe the difference between a microeconomic demand curve and an aggregate demand curve.

Accepted Answer

A microeconomic demand curve shows the r

Question 6

Increases in government regulations can make it more costly for producers, and the increase in production costs results in a leftward shift of the short-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 7

The long-run aggregate supply curve is the relationship between the price level and the quantity of real GDP that is supplied once input prices have had time to fully adjust to that price level.

Accepted Answer

A) True 
 B)False

Question 8

If the educational attainment of a nation's population increases, the economy's production possibilities curve shifts inward.

Accepted Answer

A) True 
 B)False

Question 9

In an open economy as the price level decreases, a(n) ____ in demand for domestic goods relative to foreign goods results in a(n) ____ in the quantity of RGDP demanded.

Accepted Answer

A) increase, decrease 
B) increase, increase 
C) decrease, decrease 
D) decrease, increase 
A) increase, decrease 
B) increase, increase 
C) decrease, decrease 
D) decrease, increase

Question 10

Investment will decrease if business taxes ____, real interest rates ____, or if business confidence ____.

Accepted Answer

A) increase, increase, increases 
B) decrease, decrease, decreases 
C) increase, increase, decreases 
D) decrease, decrease, increases 
A) increase, increase, increases 
B) decrease, decrease, decreases 
C) increase, increase, decreases 
D) decrease, decrease, increases

Question 11

If there is currently a recessionary gap, a fall in aggregate demand would make the recessionary gap larger.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following will cause consumption, and as a result, aggregate demand, to shift to the right?

Accepted Answer

A) an optimistic business forecast of future income growth 
B) increased consumer wealth 
C) an increase in consumer confidence 
D) a tax cut 
E) All of the above. 
A) an optimistic business forecast of future income growth 
B) increased consumer wealth 
C) an increase in consumer confidence 
D) a tax cut 
E) All of the above.

Question 13

Which of the following will not cause consumption, and as a result, aggregate demand, to increase?

Accepted Answer

A) an optimistic business forecast of future income growth 
B) a tax cut 
C) an increase in consumer confidence 
D) a tax increase 
E) increased consumer wealth 
A) an optimistic business forecast of future income growth 
B) a tax cut 
C) an increase in consumer confidence 
D) a tax increase 
E) increased consumer wealth

Question 14

In the short run, an increase in the price level:

Accepted Answer

A) increases output prices relative to input prices. 
B) increases the profit margins of many producers. 
C) increases RGDP supplied. 
D) decreases unemployment rates. 
E) does all of the above. 
A) increases output prices relative to input prices. 
B) increases the profit margins of many producers. 
C) increases RGDP supplied. 
D) decreases unemployment rates. 
E) does all of the above.

Question 15

If there was no profit effect or misperception effect in the short run, then SRAS is ____ and LRAS is ____.

Accepted Answer

A) upward sloping; upward sloping 
B) upward sloping: vertical 
C) vertical; upward sloping 
D) vertical; vertical 
A) upward sloping; upward sloping 
B) upward sloping: vertical 
C) vertical; upward sloping 
D) vertical; vertical

Question 16

If exports fell and imports rose,

Accepted Answer

A) AD would fall. 
B) AD would rise. 
C) AD would be unaffected. 
D) AD could either increase or decrease. 
A) AD would fall. 
B) AD would rise. 
C) AD would be unaffected. 
D) AD could either increase or decrease.

Question 17

In an open economy, as the price level increases, a(n) ____ in demand for domestic goods results in a(n) ____ in the quantity of RGDP demanded.

Accepted Answer

A) increase, decrease 
B) increase, increase 
C) decrease, decrease 
D) decrease, increase 
A) increase, decrease 
B) increase, increase 
C) decrease, decrease 
D) decrease, increase

Question 18

How does opportunity cost to education contribute to low school enrollments in developing countries?

Accepted Answer

In developing countries, children are of

Question 19

Higher interest rates will tend to reduce aggregate demand, other things being equal.

Accepted Answer

A) True 
 B)False

Question 20

If input prices adjusted just as quickly as output prices, the profit effect leading to an increase in RGDP supplied would disappear.

Accepted Answer

A) True 
 B)False

The short-run aggregate supply curve slopes upward because:

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

An increase in net exports would lead to an increase aggregate demand but would not lead to an increase in aggregate supply.

The misperception effect explanation for an upward-sloping short-run aggregate supply curve is based on:

Describe the difference between a microeconomic demand curve and an aggregate demand curve.

Increases in government regulations can make it more costly for producers, and the increase in production costs results in a leftward shift of the short-run aggregate supply curve.

The long-run aggregate supply curve is the relationship between the price level and the quantity of real GDP that is supplied once input prices have had time to fully adjust to that price level.

If the educational attainment of a nation's population increases, the economy's production possibilities curve shifts inward.

In an open economy as the price level decreases, a(n) in demand for domestic goods relative to foreign goods results in a(n) in the quantity of RGDP demanded.

Investment will decrease if business taxes , real interest rates , or if business confidence .

If there is currently a recessionary gap, a fall in aggregate demand would make the recessionary gap larger.

Which of the following will cause consumption, and as a result, aggregate demand, to shift to the right?

Which of the following will not cause consumption, and as a result, aggregate demand, to increase?

In the short run, an increase in the price level:

If there was no profit effect or misperception effect in the short run, then SRAS is and LRAS is .

If exports fell and imports rose,

In an open economy, as the price level increases, a(n) in demand for domestic goods results in a(n) in the quantity of RGDP demanded.

How does opportunity cost to education contribute to low school enrollments in developing countries?

Higher interest rates will tend to reduce aggregate demand, other things being equal.

If input prices adjusted just as quickly as output prices, the profit effect leading to an increase in RGDP supplied would disappear.

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 13: Aggregate Demand and Aggregate Supply

The short-run aggregate supply curve slopes upward because:

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

An increase in net exports would lead to an increase aggregate demand but would not lead to an increase in aggregate supply.

The misperception effect explanation for an upward-sloping short-run aggregate supply curve is based on:

Describe the difference between a microeconomic demand curve and an aggregate demand curve.

Increases in government regulations can make it more costly for producers, and the increase in production costs results in a leftward shift of the short-run aggregate supply curve.

The long-run aggregate supply curve is the relationship between the price level and the quantity of real GDP that is supplied once input prices have had time to fully adjust to that price level.

If the educational attainment of a nation's population increases, the economy's production possibilities curve shifts inward.

In an open economy as the price level decreases, a(n) ____ in demand for domestic goods relative to foreign goods results in a(n) ____ in the quantity of RGDP demanded.

Investment will decrease if business taxes ____, real interest rates ____, or if business confidence ____.

If there is currently a recessionary gap, a fall in aggregate demand would make the recessionary gap larger.

Which of the following will cause consumption, and as a result, aggregate demand, to shift to the right?

Which of the following will not cause consumption, and as a result, aggregate demand, to increase?

In the short run, an increase in the price level:

If there was no profit effect or misperception effect in the short run, then SRAS is ____ and LRAS is ____.

If exports fell and imports rose,

In an open economy, as the price level increases, a(n) ____ in demand for domestic goods results in a(n) ____ in the quantity of RGDP demanded.

How does opportunity cost to education contribute to low school enrollments in developing countries?

Higher interest rates will tend to reduce aggregate demand, other things being equal.

If input prices adjusted just as quickly as output prices, the profit effect leading to an increase in RGDP supplied would disappear.

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

In an open economy as the price level decreases, a(n) in demand for domestic goods relative to foreign goods results in a(n) in the quantity of RGDP demanded.

Investment will decrease if business taxes , real interest rates , or if business confidence .

If there was no profit effect or misperception effect in the short run, then SRAS is and LRAS is .

In an open economy, as the price level increases, a(n) in demand for domestic goods results in a(n) in the quantity of RGDP demanded.