Question 1

If consumers' confidence in the economy rises

Accepted Answer

A)  aggregate demand will shift leftward and the price level will rise. 
B)  aggregate demand will shift leftward and the price level will fall. 
C)  aggregate demand will shift rightward and the price level will rise. 
D)  aggregate demand will shift rightward and the price level will fall. 
A)  aggregate demand will shift leftward and the price level will rise. 
B)  aggregate demand will shift leftward and the price level will fall. 
C)  aggregate demand will shift rightward and the price level will rise. 
D)  aggregate demand will shift rightward and the price level will fall.

Question 2

What has been TRUE about inflation in the United States since 1960?

Accepted Answer

A)  Inflation rates have been consistently above 100 percent per year. 
B)  The nation has experienced persistent deflation. 
C)  The annual rate of inflation has varies around zero percent. 
D)  Inflation rates have been consistently positive. 
A)  Inflation rates have been consistently above 100 percent per year. 
B)  The nation has experienced persistent deflation. 
C)  The annual rate of inflation has varies around zero percent. 
D)  Inflation rates have been consistently positive.

Question 3

One reason that the aggregate demand curve slopes downward is because

Accepted Answer

A)  higher price levels increase real wealth and consumption. 
B)  higher price levels reduce net exports. 
C)  higher price levels reduce interest rates. 
D)  higher price levels increase investment. 
A)  higher price levels increase real wealth and consumption. 
B)  higher price levels reduce net exports. 
C)  higher price levels reduce interest rates. 
D)  higher price levels increase investment.

Question 4

Suppose that along the aggregate demand curve, real GDP equals $15 trillion when the GDP deflator is 90. If the GDP deflator were 95, real GDP along the aggregate demand curve would equal

Accepted Answer

A)  less than $15 trillion. 
B)  $15 trillion. 
C)  more than $15 trillion but less than $15.8 trillion. 
D)  more than $15 trillion. 
A)  less than $15 trillion. 
B)  $15 trillion. 
C)  more than $15 trillion but less than $15.8 trillion. 
D)  more than $15 trillion.

Question 5

What causes the long-run aggregate supply curve to shift right?

Accepted Answer

A)  economic growth 
B)  inflation 
C)  unemployment 
D)  scarcity 
A)  economic growth 
B)  inflation 
C)  unemployment 
D)  scarcity

Question 6

The long run aggregate supply curve (LRAS) also represents

Accepted Answer

A)  the full-information level of output. 
B)  the full-employment level of output. 
C)  the full-adjustment level of output. 
D)  all of the above. 
A)  the full-information level of output. 
B)  the full-employment level of output. 
C)  the full-adjustment level of output. 
D)  all of the above.

Question 7

The aggregate supply curve shows

Accepted Answer

A)  the total amount of planned production for an economy. 
B)  the various quantities of goods consumers will purchase. 
C)  that real GDP can only increase when the price level increases. 
D)  what an economy can produce if resource prices are constant. 
A)  the total amount of planned production for an economy. 
B)  the various quantities of goods consumers will purchase. 
C)  that real GDP can only increase when the price level increases. 
D)  what an economy can produce if resource prices are constant.

Question 8

The aggregate supply curve cannot tell us

Accepted Answer

A)  anything about the quantity demanded of all commodities and the price level. 
B)  what the effect of changes in interest rates will be on real GDP. 
C)  how the total dollar values of spending will ultimately be divided between output and prices. 
D)  how changes in the price level affect quantity demanded of all commodities. 
A)  anything about the quantity demanded of all commodities and the price level. 
B)  what the effect of changes in interest rates will be on real GDP. 
C)  how the total dollar values of spending will ultimately be divided between output and prices. 
D)  how changes in the price level affect quantity demanded of all commodities.

Question 9

When the aggregate demand curve shifts ________ than the long-run aggregate supply shifts leftward, the result will be inflation.

Accepted Answer

A)  rightward at a slower rate 
B)  leftward at a slower rate 
C)  rightward at a faster rate 
D)  leftward at the same rate 
A)  rightward at a slower rate 
B)  leftward at a slower rate 
C)  rightward at a faster rate 
D)  leftward at the same rate

Question 10

Other things being equal, a depreciation of the dollar

Accepted Answer

A)  increases aggregate demand in the United States, and may increase aggregate supply by reducing the prices of imported resources. 
B)  increases aggregate demand in the United States, and may decrease aggregate supply by increasing the prices of imported resources. 
C)  decreases aggregate demand in the United States, and may increase aggregate supply by reducing the prices of imported resources. 
D)  decreases aggregate demand in the United States, and may decrease aggregate supply by increasing the prices of imported resources. 
A)  increases aggregate demand in the United States, and may increase aggregate supply by reducing the prices of imported resources. 
B)  increases aggregate demand in the United States, and may decrease aggregate supply by increasing the prices of imported resources. 
C)  decreases aggregate demand in the United States, and may increase aggregate supply by reducing the prices of imported resources. 
D)  decreases aggregate demand in the United States, and may decrease aggregate supply by increasing the prices of imported resources.

Question 11

What is the aggregate demand curve and what does it represent?

Accepted Answer

The aggregate demand curve shows total p

Question 12

When expenditures change due to changes in the real value of money caused by 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 13

Refer to the above figures. Which panel(s) represent the effect of a decrease in labor productivity?

Accepted Answer

A)  Panel A only 
B)  Panels A and C only 
C)  Panel D only 
D)  Panels B and D only 
A)  Panel A only 
B)  Panels A and C only 
C)  Panel D only 
D)  Panels B and D only

Question 14

A rise in the price level has a direct effect on spending because

Accepted Answer

A)  people like to spend more when prices are higher. 
B)  the real value of the money people have varies directly with the price level. 
C)  the real value of the money people have decreases and they can buy less with it. 
D)  a higher price gives people more money, and so the more goods and services they can buy. 
A)  people like to spend more when prices are higher. 
B)  the real value of the money people have varies directly with the price level. 
C)  the real value of the money people have decreases and they can buy less with it. 
D)  a higher price gives people more money, and so the more goods and services they can buy.

Question 15

Which of the following will NOT lead to a rightward shift of the long-run aggregate supply curve?

Accepted Answer

A)  increase in labor productivity 
B)  increase in aggregate spending 
C)  increase in capital 
D)  increase in labor 
A)  increase in labor productivity 
B)  increase in aggregate spending 
C)  increase in capital 
D)  increase in labor

Question 16

The long-run aggregate supply curve will shift outward to the right when

Accepted Answer

A)  there is economic growth. 
B)  the price level decreases. 
C)  government spending increases. 
D)  the amount of labor decreases. 
A)  there is economic growth. 
B)  the price level decreases. 
C)  government spending increases. 
D)  the amount of labor decreases.

Question 17

-In the above figure, a movement from point A to point B could be explained by

Accepted Answer

A)  an increase in the price level. 
B)  an increase in the quantity of money in circulation. 
C)  a decrease in the price level. 
D)  a decrease in government spending. 
A)  an increase in the price level. 
B)  an increase in the quantity of money in circulation. 
C)  a decrease in the price level. 
D)  a decrease in government spending.

Question 18

When the relative prices of U.S.-manufactured goods go up, the result is

Accepted Answer

A)  an increase in exports. 
B)  a decrease in exports. 
C)  a decrease in imports. 
D)  no net change in imports or exports. 
A)  an increase in exports. 
B)  a decrease in exports. 
C)  a decrease in imports. 
D)  no net change in imports or exports.

Question 19

The aggregate demand curve will shift to the left if

Accepted Answer

A)  people are more optimistic about their future. 
B)  a reduction in the price level pushes down borrowing costs. 
C)  government expenditures increase. 
D)  the nation's exports decrease. 
A)  people are more optimistic about their future. 
B)  a reduction in the price level pushes down borrowing costs. 
C)  government expenditures increase. 
D)  the nation's exports decrease.

Question 20

The change in total planned real expenditures resulting from a change in the real value of money balances when the price level changes, all other things held constant, is

Accepted Answer

A)  the real-balance effect. 
B)  the interest rate effect. 
C)  the open economy effect. 
D)  demand side inflation. 
A)  the real-balance effect. 
B)  the interest rate effect. 
C)  the open economy effect. 
D)  demand side inflation.

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

If consumers' confidence in the economy rises

What has been TRUE about inflation in the United States since 1960?

One reason that the aggregate demand curve slopes downward is because

Suppose that along the aggregate demand curve, real GDP equals $15 trillion when the GDP deflator is 90. If the GDP deflator were 95, real GDP along the aggregate demand curve would equal

What causes the long-run aggregate supply curve to shift right?

The long run aggregate supply curve (LRAS) also represents

The aggregate supply curve shows

The aggregate supply curve cannot tell us

When the aggregate demand curve shifts ________ than the long-run aggregate supply shifts leftward, the result will be inflation.

Other things being equal, a depreciation of the dollar

What is the aggregate demand curve and what does it represent?

When expenditures change due to changes in the real value of money caused by variations in the price level, this is known as the

Refer to the above figures. Which panel(s) represent the effect of a decrease in labor productivity?

A rise in the price level has a direct effect on spending because

Which of the following will NOT lead to a rightward shift of the long-run aggregate supply curve?

The long-run aggregate supply curve will shift outward to the right when

-In the above figure, a movement from point A to point B could be explained by

When the relative prices of U.S.-manufactured goods go up, the result is

The aggregate demand curve will shift to the left if

The change in total planned real expenditures resulting from a change in the real value of money balances when the price level changes, all other things held constant, is

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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