Question 1

Which of the following will NOT shift the aggregate demand curve?

Accepted Answer

A)  a change in the domestic marginal tax rates 
B)  a change in government expenditures 
C)  a change in the domestic price level 
D)  depreciation in the value of the national currency 
A)  a change in the domestic marginal tax rates 
B)  a change in government expenditures 
C)  a change in the domestic price level 
D)  depreciation in the value of the national currency C

Question 2

Which of the following can cause supply-side inflation?

Accepted Answer

A)  an increase in human capital 
B)  increases in the money supply 
C)  tax cuts 
D)  none of the above 
A)  an increase in human capital 
B)  increases in the money supply 
C)  tax cuts 
D)  none of the above D

Question 3

-In the above figure, if the price level is 110

Accepted Answer

A)  total planned production exceeds total expenditures. 
B)  total expenditures exceed total planned expenditures. 
C)  total planned production equals total expenditures. 
D)  total planned production is less than total expenditures. 
A)  total planned production exceeds total expenditures. 
B)  total expenditures exceed total planned expenditures. 
C)  total planned production equals total expenditures. 
D)  total planned production is less than total expenditures. D

Question 4

Which of the following does NOT affect the long-run aggregate supply curve?

Accepted Answer

A)  technology 
B)  production possibilities curve 
C)  endowments of resources 
D)  price level 
A)  technology 
B)  production possibilities curve 
C)  endowments of resources 
D)  price level

Question 5

All of the following would shift the LRAS curve to the right EXCEPT

Accepted Answer

A)  an increase in the size of the labor force. 
B)  a net inflow of human capital. 
C)  an increase in the overall price level. 
D)  an improvement in technology. 
A)  an increase in the size of the labor force. 
B)  a net inflow of human capital. 
C)  an increase in the overall price level. 
D)  an improvement in technology.

Question 6

The aggregate demand curve shows that, if other factors are held constant

Accepted Answer

A)  higher price levels will result in lower total planned spending. 
B)  higher price levels will result in higher total planned spending. 
C)  higher price levels will result in lower interest rates. 
D)  lower price levels will result in inflationary conditions. 
A)  higher price levels will result in lower total planned spending. 
B)  higher price levels will result in higher total planned spending. 
C)  higher price levels will result in lower interest rates. 
D)  lower price levels will result in inflationary conditions.

Question 7

The aggregate demand curve is usually

Accepted Answer

A)  vertical. 
B)  upward sloping. 
C)  downward sloping. 
D)  horizontal. 
A)  vertical. 
B)  upward sloping. 
C)  downward sloping. 
D)  horizontal.

Question 8

All of the following would cause the aggregate demand curve to shift EXCEPT

Accepted Answer

A)  a rise in real interest rates. 
B)  an increase in taxes. 
C)  improvements in economic conditions in other countries. 
D)  a decrease in the price level. 
A)  a rise in real interest rates. 
B)  an increase in taxes. 
C)  improvements in economic conditions in other countries. 
D)  a decrease in the price level.

Question 9

A price level increase tends to reduce net exports, thereby reducing the amount of real goods and services purchased in the United States. Economists refer to this phenomenon as

Accepted Answer

A)  the wealth effect. 
B)  the barrier effect. 
C)  the open-economy effect. 
D)  the Gross Domestic Product (GDP) effect. 
A)  the wealth effect. 
B)  the barrier effect. 
C)  the open-economy effect. 
D)  the Gross Domestic Product (GDP) effect.

Question 10

The long-run aggregate supply curve is

Accepted Answer

A)  U-shaped. 
B)  horizontal. 
C)  upward sloping. 
D)  vertical. 
A)  U-shaped. 
B)  horizontal. 
C)  upward sloping. 
D)  vertical.

Question 11

A rightward shift of the long-run aggregate supply curve is caused by

Accepted Answer

A)  an increase in the minimum wage. 
B)  an increase in the average duration of unemployment. 
C)  improvements in technology. 
D)  an increase in the GDP deflator. 
A)  an increase in the minimum wage. 
B)  an increase in the average duration of unemployment. 
C)  improvements in technology. 
D)  an increase in the GDP deflator.

Question 12

What causes demand-side inflation? What causes supply-side inflation?

Accepted Answer

Demand-side inflation is cause

Question 13

Suppose total planned expenditures equal $50 trillion when the value of the price level is 100. If the price level drops to 90, total planned real expenditures will equal

Accepted Answer

A)  $50 billion. 
B)  less than $50 trillion. 
C)  more than $50 trillion. 
D)  None of the above: Cannot be determined without additional information. 
A)  $50 billion. 
B)  less than $50 trillion. 
C)  more than $50 trillion. 
D)  None of the above: Cannot be determined without additional information.

Question 14

How is economic growth graphically depicted?

Accepted Answer

A)  The aggregate demand curve shifts to the left. 
B)  Aggregate demand shifts to the right. 
C)  Short-run aggregate supply shifts left. 
D)  The long-run aggregate supply curve shifts right. 
A)  The aggregate demand curve shifts to the left. 
B)  Aggregate demand shifts to the right. 
C)  Short-run aggregate supply shifts left. 
D)  The long-run aggregate supply curve shifts right.

Question 15

When a change in the price level causes a change in the purchasing power of currency, which then changes planned real expenditures at all income levels, it is called

Accepted Answer

A)  the real-balance effect. 
B)  the substitution effect. 
C)  the open-economy effect. 
D)  the interest rate effect. 
A)  the real-balance effect. 
B)  the substitution effect. 
C)  the open-economy effect. 
D)  the interest rate effect.

Question 16

When total planned real expenditures change due to changes in the cost of borrowing that result from variations in the price level, this is known as the

Accepted Answer

A)  interest rate effect. 
B)  real-balance effect. 
C)  open economy effect. 
D)  aggregate balances effect. 
A)  interest rate effect. 
B)  real-balance effect. 
C)  open economy effect. 
D)  aggregate balances effect.

Question 17

What is one implication of the real-balance effect?

Accepted Answer

A)  The part of your wealth that you hold in the form of cash loses some of its value as the price level rises. 
B)  When the price level rises, people have an incentive to work harder in order to earn a higher income. 
C)  When the price level falls, most consumers reallocate their spending so as to have an equal balance between necessities and luxuries. 
D)  Aggregate demand and aggregate supply can never reach long-run equilibrium. 
A)  The part of your wealth that you hold in the form of cash loses some of its value as the price level rises. 
B)  When the price level rises, people have an incentive to work harder in order to earn a higher income. 
C)  When the price level falls, most consumers reallocate their spending so as to have an equal balance between necessities and luxuries. 
D)  Aggregate demand and aggregate supply can never reach long-run equilibrium.

Question 18

The long-run aggregate supply curve can be thought of as the

Accepted Answer

A)  level of output that the nation is currently producing. 
B)  full-employment level of real GDP. 
C)  level of real GDP associated with a constant price level. 
D)  level of output for which real GDP equals nominal GDP. 
A)  level of output that the nation is currently producing. 
B)  full-employment level of real GDP. 
C)  level of real GDP associated with a constant price level. 
D)  level of output for which real GDP equals nominal GDP.

Question 19

A decrease in U.S. prices relative to European prices

Accepted Answer

A)  will decrease European exports to the United States. 
B)  will increase U.S. imports from Europe. 
C)  will decrease U.S. exports to Europe. 
D)  will not affect U.S. trade with Europe. 
A)  will decrease European exports to the United States. 
B)  will increase U.S. imports from Europe. 
C)  will decrease U.S. exports to Europe. 
D)  will not affect U.S. trade with Europe.

Question 20

The aggregate demand curve shows

Accepted Answer

A)  a direct relationship between changes in the price level and changes in real GDP. 
B)  real GDP does not change as the price level changes. 
C)  an inverse relationship between the price level and real GDP. 
D)  an inverse relationship between changes in the price level and changes in nominal GDP. 
A)  a direct relationship between changes in the price level and changes in real GDP. 
B)  real GDP does not change as the price level changes. 
C)  an inverse relationship between the price level and real GDP. 
D)  an inverse relationship between changes in the price level and changes in nominal GDP.

Exam 10: Real GDP and the Price Level in the Long Run

Which of the following will NOT shift the aggregate demand curve?

Which of the following can cause supply-side inflation?

-In the above figure, if the price level is 110

Which of the following does NOT affect the long-run aggregate supply curve?

All of the following would shift the LRAS curve to the right EXCEPT

The aggregate demand curve shows that, if other factors are held constant

The aggregate demand curve is usually

All of the following would cause the aggregate demand curve to shift EXCEPT

A price level increase tends to reduce net exports, thereby reducing the amount of real goods and services purchased in the United States. Economists refer to this phenomenon as

The long-run aggregate supply curve is

A rightward shift of the long-run aggregate supply curve is caused by

What causes demand-side inflation? What causes supply-side inflation?

Suppose total planned expenditures equal $50 trillion when the value of the price level is 100. If the price level drops to 90, total planned real expenditures will equal

How is economic growth graphically depicted?

When a change in the price level causes a change in the purchasing power of currency, which then changes planned real expenditures at all income levels, it is called

When total planned real expenditures change due to changes in the cost of borrowing that result from variations in the price level, this is known as the

What is one implication of the real-balance effect?

The long-run aggregate supply curve can be thought of as the

A decrease in U.S. prices relative to European prices

The aggregate demand curve shows

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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