Question 1

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. C

Question 2

The long-run aggregate supply curve is

Accepted Answer

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

Question 3

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 and resource endowments. 
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 and resource endowments. 
D) an increase in the GDP deflator. C

Question 4

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 5

The values on the axes of the long-run aggregate supply diagram are

Accepted Answer

A) real GDP per year and the price level. 
B) nominal GDP and the price level. 
C) real GDP and interest rates. 
D) real GDP and nominal GDP. 
A) real GDP per year and the price level. 
B) nominal GDP and the price level. 
C) real GDP and interest rates. 
D) real GDP and nominal GDP.

Question 6

Which one of the following is NOT a component of aggregate demand?

Accepted Answer

A) merchandise inventories 
B) consumption spending 
C) investment expenditures 
D) government purchases 
A) merchandise inventories 
B) consumption spending 
C) investment expenditures 
D) government purchases

Question 7

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

Accepted Answer

Demand-side inflation is cause

Question 8

The total of all planned production for the economy is

Accepted Answer

A) determined only by individuals and firms. 
B) determined only by the government. 
C) aggregate demand. 
D) aggregate supply. 
A) determined only by individuals and firms. 
B) determined only by the government. 
C) aggregate demand. 
D) aggregate supply.

Question 9

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 10

Which of the following is the main cause of the persistent inflation that we have experienced in the United States?

Accepted Answer

A) Supply-side inflationary factors. 
B) Demand-side inflationary factors. 
C) A combination of supply- and demand-side inflationary factors. 
D) Supply-side secularity factors. 
A) Supply-side inflationary factors. 
B) Demand-side inflationary factors. 
C) A combination of supply- and demand-side inflationary factors. 
D) Supply-side secularity factors.

Question 11

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) the real-balance effect increases. 
D) the amount of labor decreases. 
A) there is economic growth. 
B) the price level decreases. 
C) the real-balance effect increases. 
D) the amount of labor decreases.

Question 12

Which of the following is consistent with secular deflation?

Accepted Answer

A) a persistently decreasing price level caused by several periods of economic growth with stable AD 
B) a persistently increasing price level caused by several periods of economic growth with decreasing AD 
C) a persistently decreasing price level caused by increases in government expenditures 
D) a persistently decreasing price level caused by money being withdrawn from the economy 
A) a persistently decreasing price level caused by several periods of economic growth with stable AD 
B) a persistently increasing price level caused by several periods of economic growth with decreasing AD 
C) a persistently decreasing price level caused by increases in government expenditures 
D) a persistently decreasing price level caused by money being withdrawn from the economy

Question 13

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 14

What is measured on the vertical axis when we draw a graph of long-run aggregate supply?

Accepted Answer

A) production of capital goods 
B) output of consumer goods 
C) the price level 
D) real GDP 
A) production of capital goods 
B) output of consumer goods 
C) the price level 
D) real GDP

Question 15

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.

Question 16

If the economy grows steadily over several years and at the same time maintains the aggregate demand curve in its present position,then the economy will experience which of the following?

Accepted Answer

A) inflation 
B) a stable price level 
C) secular deflation 
D) The price level cannot be determined without more information. 
A) inflation 
B) a stable price level 
C) secular deflation 
D) The price level cannot be determined without more information.

Question 17

An individual holds $10,000 in a non-interest-earning checking account,and the overall price level rises significantly.Other things being constant,we would expect

Accepted Answer

A) the individual's real wealth to decrease and consumption to decline. 
B) the individual's stock of real wealth to decrease but real national income to increase. 
C) no change in the individual's real wealth but a decline in real national product. 
D) the individual's wealth to increase. 
A) the individual's real wealth to decrease and consumption to decline. 
B) the individual's stock of real wealth to decrease but real national income to increase. 
C) no change in the individual's real wealth but a decline in real national product. 
D) the individual's wealth to increase.

Question 18

The long-run aggregate supply curve of an economy corresponds to

Accepted Answer

A) a point inside the production possibilities curve. 
B) a point outside the production possibilities curve. 
C) a point on the production possibilities curve. 
D) none of the above: there is no relationship between the long-run aggregate supply curve and the production possibilities curve. 
A) a point inside the production possibilities curve. 
B) a point outside the production possibilities curve. 
C) a point on the production possibilities curve. 
D) none of the above: there is no relationship between the long-run aggregate supply curve and the production possibilities curve.

Question 19

Suppose a country has no trade with other countries and people can borrow as many funds as they want at the current interest rate.An increase in the price level will generate

Accepted Answer

A) a decrease in total planned real expenditures because of the real-balance effect. 
B) a decrease in total planned real expenditures because of the open-economy effect and the indirect effect. 
C) a decrease in total planned real expenditures because the real-balance effect will be stronger than the indirect effect and the open-economy effect. 
D) a decrease in total planned real expenditures because the indirect effect will be stronger than the real-balance effect. 
A) a decrease in total planned real expenditures because of the real-balance effect. 
B) a decrease in total planned real expenditures because of the open-economy effect and the indirect effect. 
C) a decrease in total planned real expenditures because the real-balance effect will be stronger than the indirect effect and the open-economy effect. 
D) a decrease in total planned real expenditures because the indirect effect will be stronger than the real-balance effect.

Question 20

-In the above figure,the long-run equilibrium real GDP is

Accepted Answer

A) $10 trillion. 
B) $11 trillion. 
C) $12.trillion 
D) not displayed. 
A) $10 trillion. 
B) $11 trillion. 
C) $12.trillion 
D) not displayed.

The aggregate demand curve is usually

The long-run aggregate supply curve is

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

The aggregate supply curve cannot tell us

The values on the axes of the long-run aggregate supply diagram are

Which one of the following is NOT a component of aggregate demand?

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

The total of all planned production for the economy is

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

Which of the following is the main cause of the persistent inflation that we have experienced in the United States?

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

Which of the following is consistent with secular deflation?

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

What is measured on the vertical axis when we draw a graph of long-run aggregate supply?

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

If the economy grows steadily over several years and at the same time maintains the aggregate demand curve in its present position,then the economy will experience which of the following?

An individual holds $10,000 in a non-interest-earning checking account,and the overall price level rises significantly.Other things being constant,we would expect

The long-run aggregate supply curve of an economy corresponds to

Suppose a country has no trade with other countries and people can borrow as many funds as they want at the current interest rate.An increase in the price level will generate

-In the above figure,the long-run equilibrium real GDP 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

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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

The aggregate demand curve is usually

The long-run aggregate supply curve is

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

The aggregate supply curve cannot tell us

The values on the axes of the long-run aggregate supply diagram are

Which one of the following is NOT a component of aggregate demand?

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

The total of all planned production for the economy is

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

Which of the following is the main cause of the persistent inflation that we have experienced in the United States?

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

Which of the following is consistent with secular deflation?

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

What is measured on the vertical axis when we draw a graph of long-run aggregate supply?

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

If the economy grows steadily over several years and at the same time maintains the aggregate demand curve in its present position,then the economy will experience which of the following?

An individual holds $10,000 in a non-interest-earning checking account,and the overall price level rises significantly.Other things being constant,we would expect

The long-run aggregate supply curve of an economy corresponds to

Suppose a country has no trade with other countries and people can borrow as many funds as they want at the current interest rate.An increase in the price level will generate

-In the above figure,the long-run equilibrium real GDP 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

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters