Question 1

The total of all planned expenditures in the entire economy is the definition of

Accepted Answer

A) aggregate supply. 
B) production possibilities curve. 
C) aggregate demand. 
D) net domestic product. 
A) aggregate supply. 
B) production possibilities curve. 
C) aggregate demand. 
D) net domestic product.

Question 2

Which of the following statements is correct? I.A drop in the foreign exchange value of the dollar would decrease aggregate demand
II.A decrease in the amount of money in circulation would increase aggregate demand

Accepted Answer

A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II 
A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II

Question 3

What are the three forces that cause the aggregate demand curve to slope down? Explain.

Accepted Answer

The three forces are the real-balance ef

Question 4

Total planned real expenditures measured along the aggregate demand curve are made up of

Accepted Answer

A) consumption spending,investment spending,government spending,and net export spending. 
B) consumption spending,income,government spending,and net export spending. 
C) consumption spending,saving,investment spending,and government spending. 
D) consumption spending,factor payments,investment spending,and net export spending. 
A) consumption spending,investment spending,government spending,and net export spending. 
B) consumption spending,income,government spending,and net export spending. 
C) consumption spending,saving,investment spending,and government spending. 
D) consumption spending,factor payments,investment spending,and net export spending.

Question 5

Demand-side inflation occurs when

Accepted Answer

A) increases in aggregate demand are not matched by increases in aggregate supply. 
B) increases in aggregate supply outstrip increases in aggregate demand. 
C) aggregate demand falls more rapidly than aggregate supply. 
D) long-run aggregate demand rises faster than short-run aggregate supply. 
A) increases in aggregate demand are not matched by increases in aggregate supply. 
B) increases in aggregate supply outstrip increases in aggregate demand. 
C) aggregate demand falls more rapidly than aggregate supply. 
D) long-run aggregate demand rises faster than short-run aggregate supply.

Question 6

Holding nominal money balances constant,a decrease in the price level

Accepted Answer

A) causes the real value of the money balances to increase,in turn increasing total planned real expenditures. 
B) causes the real value of the money balances to decrease,in turn decreasing total planned real expenditures. 
C) causes the real value of the money balances to increase,thereby increasing the interest rate. 
D) generates a reduction in the value of the money balances,leading to higher interest rates and a decrease in total planned real expenditures. 
A) causes the real value of the money balances to increase,in turn increasing total planned real expenditures. 
B) causes the real value of the money balances to decrease,in turn decreasing total planned real expenditures. 
C) causes the real value of the money balances to increase,thereby increasing the interest rate. 
D) generates a reduction in the value of the money balances,leading to higher interest rates and a decrease in total planned real expenditures.

Question 7

The position of the long-run aggregate supply curve is determined by

Accepted Answer

A) the long-run aggregate demand curve. 
B) the production possibilities curve. 
C) the open economy effect. 
D) the interest rate effect. 
A) the long-run aggregate demand curve. 
B) the production possibilities curve. 
C) the open economy effect. 
D) the interest rate effect.

Question 8

The slope of the long-run aggregate supply curve is

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) undefined. 
A) positive. 
B) negative. 
C) zero. 
D) undefined.

Question 9

The long-run aggregate supply curve occurs at the level of real GDP consistent with

Accepted Answer

A) individuals' tastes and preferences. 
B) the natural rate of unemployment. 
C) no inflation. 
D) low levels of inflation. 
A) individuals' tastes and preferences. 
B) the natural rate of unemployment. 
C) no inflation. 
D) low levels of inflation.

Question 10

"The aggregate demand curve slopes down for the same reason that the individual demand curve for a good slopes down." Do you agree or disagree with this statement? Why?

Accepted Answer

Disagree.The aggregate demand curve does

Question 11

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 12

If the price level increases,then

Accepted Answer

A) the exchange rate will increase,causing U.S.goods to become cheaper and increasing total planned real expenditures. 
B) imports increase but exports do not change.Therefore,there is no effect on total planned real expenditures. 
C) foreign residents buy fewer U.S.goods,leaving more goods for U.S.residents and an increase in total planned real production by firms. 
D) domestic goods are more expensive relative to foreign goods,which reduces total planed real expenditures. 
A) the exchange rate will increase,causing U.S.goods to become cheaper and increasing total planned real expenditures. 
B) imports increase but exports do not change.Therefore,there is no effect on total planned real expenditures. 
C) foreign residents buy fewer U.S.goods,leaving more goods for U.S.residents and an increase in total planned real production by firms. 
D) domestic goods are more expensive relative to foreign goods,which reduces total planed real expenditures.

Question 13

Which of the following would likely result in a decrease in aggregate demand?

Accepted Answer

A) tax increases 
B) a reduction in the real interest rate 
C) increased job and future income security 
D) a rise in the quantity of money in circulation 
A) tax increases 
B) a reduction in the real interest rate 
C) increased job and future income security 
D) a rise in the quantity of money in circulation

Question 14

A higher domestic price level should

Accepted Answer

A) decrease net exports. 
B) increase desired investment. 
C) increase real wealth and consumption. 
D) none of these. 
A) decrease net exports. 
B) increase desired investment. 
C) increase real wealth and consumption. 
D) none of these.

Question 15

The aggregate demand curve plots

Accepted Answer

A) desired expenditures against production. 
B) total expenditures against the level of employment. 
C) planned expenditures against the price level. 
D) employment against the price level. 
A) desired expenditures against production. 
B) total expenditures against the level of employment. 
C) planned expenditures against the price level. 
D) employment against the price level.

Question 16

The long-run aggregate supply curve

Accepted Answer

A) shifts to the right when there is a tax increase. 
B) indicates the level of output (GDP)that occurs when resources are fully employed. 
C) indicates that an increase in the overall price level will cause an increase in production. 
D) shifts to the right when the Federal Reserve increases the money supply. 
A) shifts to the right when there is a tax increase. 
B) indicates the level of output (GDP)that occurs when resources are fully employed. 
C) indicates that an increase in the overall price level will cause an increase in production. 
D) shifts to the right when the Federal Reserve increases the money supply.

Question 17

If our economy is growing at a constant rate of 5 percent per year,then over a period of 10 years we would expect to see which of the following?

Accepted Answer

A) Nice,steady flat-line growth 
B) An upward sloping growth path 
C) A downward sloping growth path 
D) It is impossible to say what kind of growth path we would see. 
A) Nice,steady flat-line growth 
B) An upward sloping growth path 
C) A downward sloping growth path 
D) It is impossible to say what kind of growth path we would see.

Question 18

An increase in the level of prices of goods and services will do what to the long-run aggregate supply curve?

Accepted Answer

A) Shift it to the right 
B) Shift it to the left 
C) Not shift the curve at all 
D) Depends upon the long-run aggregate demand curve 
A) Shift it to the right 
B) Shift it to the left 
C) Not shift the curve at all 
D) Depends upon the long-run aggregate demand curve

Question 19

Aggregate demand reflects

Accepted Answer

A) planned total spending in the economy. 
B) planned total production in the economy. 
C) both spending and production in the economy. 
D) planned demand for consumer goods only. 
A) planned total spending in the economy. 
B) planned total production in the economy. 
C) both spending and production in the economy. 
D) planned demand for consumer goods only.

Question 20

Higher interest rates tend to

Accepted Answer

A) reduce the total planned spending on goods and services. 
B) lower the costs of building new plants and equipment. 
C) increase the quantity demanded of goods and services. 
D) make it less costly for people to buy houses and cars. 
A) reduce the total planned spending on goods and services. 
B) lower the costs of building new plants and equipment. 
C) increase the quantity demanded of goods and services. 
D) make it less costly for people to buy houses and cars.

The total of all planned expenditures in the entire economy is the definition of

Which of the following statements is correct? I.A drop in the foreign exchange value of the dollar would decrease aggregate demand II.A decrease in the amount of money in circulation would increase aggregate demand

What are the three forces that cause the aggregate demand curve to slope down? Explain.

Total planned real expenditures measured along the aggregate demand curve are made up of

Demand-side inflation occurs when

Holding nominal money balances constant,a decrease in the price level

The position of the long-run aggregate supply curve is determined by

The slope of the long-run aggregate supply curve is

The long-run aggregate supply curve occurs at the level of real GDP consistent with

"The aggregate demand curve slopes down for the same reason that the individual demand curve for a good slopes down." Do you agree or disagree with this statement? Why?

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

If the price level increases,then

Which of the following would likely result in a decrease in aggregate demand?

A higher domestic price level should

The aggregate demand curve plots

The long-run aggregate supply curve

If our economy is growing at a constant rate of 5 percent per year,then over a period of 10 years we would expect to see which of the following?

An increase in the level of prices of goods and services will do what to the long-run aggregate supply curve?

Aggregate demand reflects

Higher interest rates tend to

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

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

The total of all planned expenditures in the entire economy is the definition of

Which of the following statements is correct? I.A drop in the foreign exchange value of the dollar would decrease aggregate demand II.A decrease in the amount of money in circulation would increase aggregate demand

What are the three forces that cause the aggregate demand curve to slope down? Explain.

Total planned real expenditures measured along the aggregate demand curve are made up of

Demand-side inflation occurs when

Holding nominal money balances constant,a decrease in the price level

The position of the long-run aggregate supply curve is determined by

The slope of the long-run aggregate supply curve is

The long-run aggregate supply curve occurs at the level of real GDP consistent with

"The aggregate demand curve slopes down for the same reason that the individual demand curve for a good slopes down." Do you agree or disagree with this statement? Why?

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

If the price level increases,then

Which of the following would likely result in a decrease in aggregate demand?

A higher domestic price level should

The aggregate demand curve plots

The long-run aggregate supply curve

If our economy is growing at a constant rate of 5 percent per year,then over a period of 10 years we would expect to see which of the following?

An increase in the level of prices of goods and services will do what to the long-run aggregate supply curve?

Aggregate demand reflects

Higher interest rates tend to

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