Question 1

If nominal GDP in 2000 is greater than nominal GDP in 1998, the economy's real output of goods and services must have risen.

Accepted Answer

A) True 
 B)False

Question 2

What is the relationship between savings, capital formation, and consumption?

Accepted Answer

One of the most important determinants o

Question 3

If there was no profit effect, but there was a 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 4

Explain why the short-run supply curve is not vertical, but the long-run aggregate supply curve is vertical.

Accepted Answer

Over the short run, suppliers are willin

Question 5

____ are unexpected temporary events that can either increase or decrease the short-run aggregate supply.

Accepted Answer

A) Profit effects 
B) Volatilities 
C) Supply shocks 
D) Misperception effects 
A) Profit effects 
B) Volatilities 
C) Supply shocks 
D) Misperception effects

Question 6

Real GDP per capita increases if the population grows at a rate faster than real GDP.

Accepted Answer

A) True 
 B)False

Question 7

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 8

The aggregate supply curve slopes:

Accepted Answer

A) downward because firms can sell more, and hence, will produce more when prices are lower. 
B) downward because firms find it costs less to purchase labor and other inputs when prices are lower and hence, they produce more. 
C) upward because firms normally can purchase some labor and other inputs at fixed costs for some period of time. 
D) upward because firms find that it costs more to purchase labor and other inputs when prices are higher and hence they must produce and sell more in order to make a profit. 
A) downward because firms can sell more, and hence, will produce more when prices are lower. 
B) downward because firms find it costs less to purchase labor and other inputs when prices are lower and hence, they produce more. 
C) upward because firms normally can purchase some labor and other inputs at fixed costs for some period of time. 
D) upward because firms find that it costs more to purchase labor and other inputs when prices are higher and hence they must produce and sell more in order to make a profit.

Question 9

When there is a recessionary gap, one is likely to see an increase in overtime work and more hours worked by part-time workers.

Accepted Answer

A) True 
 B)False

Question 10

Capital formation is a key component of economic growth.

Accepted Answer

A) True 
 B)False

Question 11

The long-run aggregate supply relationship refers to:

Accepted Answer

A) a time period long enough for the prices of both outputs and inputs to adjust to changes in the economy. 
B) any time period of more than a year. 
C) a time period in which input prices can change, but output prices have not had time to adjust. 
D) a time period in which output prices can change but input prices have not had time to adjust. 
A) a time period long enough for the prices of both outputs and inputs to adjust to changes in the economy. 
B) any time period of more than a year. 
C) a time period in which input prices can change, but output prices have not had time to adjust. 
D) a time period in which output prices can change but input prices have not had time to adjust.

Question 12

What problems would result from the measurement of the sales of all goods and services produced?

Accepted Answer

Measuring the sales of all goods and ser

Question 13

Which of the following would lead to an increase in aggregate demand?

Accepted Answer

A) an increase in consumer confidence 
B) a decrease in the overall price level 
C) an improvement in labor productivity 
D) all of the above 
A) an increase in consumer confidence 
B) a decrease in the overall price level 
C) an improvement in labor productivity 
D) all of the above

Question 14

Pierre is French Canadian, and like many Canadians he is experiencing booming good economic times.His good fortune is likely to impact U.S.aggregate demand in what way?

Accepted Answer

A) Positively, because he prefers to make all his purchases in Canada from Canadian firms. 
B) Negatively, because he prefers to make all his purchases in Canada from Canadian firms. 
C) Negatively, since we are all members of North American Free Trade Zone. 
D) Positively, since he will be in a better position to purchase U.S.-made goods. 
A) Positively, because he prefers to make all his purchases in Canada from Canadian firms. 
B) Negatively, because he prefers to make all his purchases in Canada from Canadian firms. 
C) Negatively, since we are all members of North American Free Trade Zone. 
D) Positively, since he will be in a better position to purchase U.S.-made goods.

Question 15

If the profit effect and misperception effect existed in both the short run and the long 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

Why is China still poor in per capita terms despite having the second-largest economy in the world in terms of real GDP?

Accepted Answer

China has over 1 billion peopl

Question 17

An increase in the quantity of labor inputs always leads to economic growth.

Accepted Answer

A) True 
 B)False

Question 18

What would happen to the short-run and long-run aggregate supply curves if the capital stock grew and available supplies of natural resources expanded over the same period of time?

Accepted Answer

Both short-run and long-run ag

Question 19

What would happen to aggregate demand if the federal government increased military purchases and state and local governments decreased their road building budgets at the same time?

Accepted Answer

A) AD would increase, because only federal government purchases affect AD. 
B) AD would decrease, because only state and local government purchases affect AD. 
C) AD would increase if the change in federal purchases were smaller than the change in state and local purchases. 
D) AD would decrease if the change in federal purchases was smaller than the change in state and local purchases. 
A) AD would increase, because only federal government purchases affect AD. 
B) AD would decrease, because only state and local government purchases affect AD. 
C) AD would increase if the change in federal purchases were smaller than the change in state and local purchases. 
D) AD would decrease if the change in federal purchases was smaller than the change in state and local purchases.

Question 20

If you are living in a period of continued high inflation on a fixed income (that is not indexed), the cost of the goods and services you buy ____ and your income ____.

Accepted Answer

A) decreases, decreases 
B) increases, increases 
C) decreases, remains the same 
D) increases, remains the same 
A) decreases, decreases 
B) increases, increases 
C) decreases, remains the same 
D) increases, remains the same

If nominal GDP in 2000 is greater than nominal GDP in 1998, the economy's real output of goods and services must have risen.

What is the relationship between savings, capital formation, and consumption?

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

Explain why the short-run supply curve is not vertical, but the long-run aggregate supply curve is vertical.

____ are unexpected temporary events that can either increase or decrease the short-run aggregate supply.

Real GDP per capita increases if the population grows at a rate faster than real GDP.

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

The aggregate supply curve slopes:

When there is a recessionary gap, one is likely to see an increase in overtime work and more hours worked by part-time workers.

Capital formation is a key component of economic growth.

The long-run aggregate supply relationship refers to:

What problems would result from the measurement of the sales of all goods and services produced?

Which of the following would lead to an increase in aggregate demand?

Pierre is French Canadian, and like many Canadians he is experiencing booming good economic times.His good fortune is likely to impact U.S.aggregate demand in what way?

If the profit effect and misperception effect existed in both the short run and the long run, then SRAS is and LRAS is .

Why is China still poor in per capita terms despite having the second-largest economy in the world in terms of real GDP?

An increase in the quantity of labor inputs always leads to economic growth.

What would happen to the short-run and long-run aggregate supply curves if the capital stock grew and available supplies of natural resources expanded over the same period of time?

What would happen to aggregate demand if the federal government increased military purchases and state and local governments decreased their road building budgets at the same time?

If you are living in a period of continued high inflation on a fixed income (that is not indexed), the cost of the goods and services you buy and your income .

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

If nominal GDP in 2000 is greater than nominal GDP in 1998, the economy's real output of goods and services must have risen.

What is the relationship between savings, capital formation, and consumption?

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

Explain why the short-run supply curve is not vertical, but the long-run aggregate supply curve is vertical.

____ are unexpected temporary events that can either increase or decrease the short-run aggregate supply.

Real GDP per capita increases if the population grows at a rate faster than real GDP.

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

The aggregate supply curve slopes:

When there is a recessionary gap, one is likely to see an increase in overtime work and more hours worked by part-time workers.

Capital formation is a key component of economic growth.

The long-run aggregate supply relationship refers to:

What problems would result from the measurement of the sales of all goods and services produced?

Which of the following would lead to an increase in aggregate demand?

Pierre is French Canadian, and like many Canadians he is experiencing booming good economic times.His good fortune is likely to impact U.S.aggregate demand in what way?

If the profit effect and misperception effect existed in both the short run and the long run, then SRAS is ____ and LRAS is ____.

Why is China still poor in per capita terms despite having the second-largest economy in the world in terms of real GDP?

An increase in the quantity of labor inputs always leads to economic growth.

What would happen to the short-run and long-run aggregate supply curves if the capital stock grew and available supplies of natural resources expanded over the same period of time?

What would happen to aggregate demand if the federal government increased military purchases and state and local governments decreased their road building budgets at the same time?

If you are living in a period of continued high inflation on a fixed income (that is not indexed), the cost of the goods and services you buy ____ and your income ____.

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

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

If the profit effect and misperception effect existed in both the short run and the long run, then SRAS is and LRAS is .

If you are living in a period of continued high inflation on a fixed income (that is not indexed), the cost of the goods and services you buy and your income .