Question 1

For supply-side inflation to occur in the long run,

Accepted Answer

A) the aggregate demand curve has to shift to the left. 
B) the aggregate demand curve has to shift to the right. 
C) the long-run aggregate supply curve has to shift to the right. 
D) the long-run aggregate supply curve has to shift to the left. 
A) the aggregate demand curve has to shift to the left. 
B) the aggregate demand curve has to shift to the right. 
C) the long-run aggregate supply curve has to shift to the right. 
D) the long-run aggregate supply curve has to shift to the left.

Question 2

As the capital stock grows and technology improves,we would expect the long-run aggregate supply curve to

Accepted Answer

A) shift right. 
B) shift left. 
C) remain the same. 
D) first shift right,then shift left. 
A) shift right. 
B) shift left. 
C) remain the same. 
D) first shift right,then shift left.

Question 3

-Refer to the above figure.A movement from B to D would be a result of

Accepted Answer

A) an increase in the quantity of money in circulation. 
B) an increase in labor productivity. 
C) an increase in government expenditures. 
D) an increase in the marginal income tax rate. 
A) an increase in the quantity of money in circulation. 
B) an increase in labor productivity. 
C) an increase in government expenditures. 
D) an increase in the marginal income tax rate.

Question 4

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 5

What information is provided by the aggregate demand curve?

Accepted Answer

The aggregate demand curve relates total

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 long-run aggregate supply curve shifts right at the same time as

Accepted Answer

A) the Laffer curve shifts upward. 
B) the production possibilities curve shifts outward. 
C) the production possibilities curve shifts inward. 
D) the inflation rate increases. 
A) the Laffer curve shifts upward. 
B) the production possibilities curve shifts outward. 
C) the production possibilities curve shifts inward. 
D) the inflation rate increases.

Question 8

Which of the following would cause aggregate demand to decrease?

Accepted Answer

A) The government increases taxes on both business and personal income. 
B) A drop in the foreign exchange value of the dollar 
C) The Fed increases the amount of money in circulation. 
D) Businesses and households believe that the economy is headed for good times,so they begin to feel increased security about their jobs. 
A) The government increases taxes on both business and personal income. 
B) A drop in the foreign exchange value of the dollar 
C) The Fed increases the amount of money in circulation. 
D) Businesses and households believe that the economy is headed for good times,so they begin to feel increased security about their jobs.

Question 9

Suppose that along the aggregate demand curve,real GDP equals $14.2 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 $14.2 trillion. 
B) $14.2 trillion. 
C) more than $14.2 trillion but less than $14.8 trillion. 
D) more than $14.8 trillion. 
A) less than $14.2 trillion. 
B) $14.2 trillion. 
C) more than $14.2 trillion but less than $14.8 trillion. 
D) more than $14.8 trillion.

Question 10

The various quantities of all final commodities demanded at various price levels,ceteris paribus,is the

Accepted Answer

A) LRAS. 
B) production possibilities curve. 
C) aggregate demand curve. 
D) aggregate supply curve. 
A) LRAS. 
B) production possibilities curve. 
C) aggregate demand curve. 
D) aggregate supply curve.

Question 11

What is measured on the vertical axis of the aggregate demand/aggregate supply model?

Accepted Answer

A) Real Gross Domestic Product (GDP) 
B) Nominal income 
C) The price level 
D) The interest rate 
A) Real Gross Domestic Product (GDP) 
B) Nominal income 
C) The price level 
D) The interest rate

Question 12

An assumption on the LRAS curve is

Accepted Answer

A) technology remains unchanged. 
B) an increase in the average price level occurs. 
C) the economy is operating to the right of the production possibilities curve. 
D) labor productivity is increasing. 
A) technology remains unchanged. 
B) an increase in the average price level occurs. 
C) the economy is operating to the right of the production possibilities curve. 
D) labor productivity is increasing.

Question 13

If long-run economic growth is not accompanied by a change in aggregate demand,the result will be

Accepted Answer

A) persistent inflation. 
B) secular deflation. 
C) devaluation of the dollar. 
D) appreciation of the dollar. 
A) persistent inflation. 
B) secular deflation. 
C) devaluation of the dollar. 
D) appreciation of the dollar.

Question 14

-Refer to the above figure.Suppose the economy's initial equilibrium is represented by the intersection of LRAS1 and AD1.Now there is an increase in labor productivity which increases total planned production at any given price level and aggregate demand remains stable.The resulting change in the economy's long-run equilibrium position would be represented by a

Accepted Answer

A) movement from B to D. 
B) movement from C to D. 
C) movement from C to B. 
D) movement from A to B. 
A) movement from B to D. 
B) movement from C to D. 
C) movement from C to B. 
D) movement from A to B.

Question 15

Economic growth takes place

Accepted Answer

A) only when both aggregate demand and aggregate supply increase. 
B) when aggregate supply increases. 
C) when aggregate demand decreases. 
D) only if the price level is constant or rising. 
A) only when both aggregate demand and aggregate supply increase. 
B) when aggregate supply increases. 
C) when aggregate demand decreases. 
D) only if the price level is constant or rising.

Question 16

Which of the following would cause an increase in aggregate demand (AD)?

Accepted Answer

A) A decrease in price levels 
B) An increase in interest rates 
C) A decrease in taxes 
D) A rise in the foreign exchange value of the dollar 
A) A decrease in price levels 
B) An increase in interest rates 
C) A decrease in taxes 
D) A rise in the foreign exchange value of the dollar

Question 17

-In the above figure,if the price level is 150,

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.

Question 18

If you have $1,000 and the Gross Domestic Product (GDP)deflator increases from 100 to 120,then

Accepted Answer

A) the $1,000 will buy 20 percent less of the goods and services produced by society. 
B) the $1,000 will buy 20 percent more of the goods and services produced by society. 
C) the value of the $1,000 increases. 
D) you will be able to buy fewer goods,but the real value of those goods will increase. 
A) the $1,000 will buy 20 percent less of the goods and services produced by society. 
B) the $1,000 will buy 20 percent more of the goods and services produced by society. 
C) the value of the $1,000 increases. 
D) you will be able to buy fewer goods,but the real value of those goods will increase.

Question 19

What would likely happen to the long-run aggregate supply curve if the U.S.federal government increases marginal tax rates on wages?

Accepted Answer

A) The LRAS curve would shift rightward. 
B) The LRAS curve would shift leftward. 
C) The LRAS curve would remain stable while the AD curve would shift leftward. 
D) The LRAS curve would remain stable while the AD curve would shift rightward. 
A) The LRAS curve would shift rightward. 
B) The LRAS curve would shift leftward. 
C) The LRAS curve would remain stable while the AD curve would shift leftward. 
D) The LRAS curve would remain stable while the AD curve would shift rightward.

Question 20

Why is the long-run aggregate supply curve a vertical line?

Accepted Answer

A) At that level of real GDP,the unemployment rate is 0 percent. 
B) At that level of real GDP,the inflation rate is 0 percent. 
C) At that level of real GDP,the production costs are at their lowest level. 
D) At that level of real GDP,production costs have fully adjusted to price changes. 
A) At that level of real GDP,the unemployment rate is 0 percent. 
B) At that level of real GDP,the inflation rate is 0 percent. 
C) At that level of real GDP,the production costs are at their lowest level. 
D) At that level of real GDP,production costs have fully adjusted to price changes.

For supply-side inflation to occur in the long run,

As the capital stock grows and technology improves,we would expect the long-run aggregate supply curve to

-Refer to the above figure.A movement from B to D would be a result of

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

What information is provided by the aggregate demand curve?

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

The long-run aggregate supply curve shifts right at the same time as

Which of the following would cause aggregate demand to decrease?

Suppose that along the aggregate demand curve,real GDP equals $14.2 trillion when the GDP deflator is 90.If the GDP deflator were 95,real GDP along the aggregate demand curve would equal

The various quantities of all final commodities demanded at various price levels,ceteris paribus,is the

What is measured on the vertical axis of the aggregate demand/aggregate supply model?

An assumption on the LRAS curve is

If long-run economic growth is not accompanied by a change in aggregate demand,the result will be

Economic growth takes place

Which of the following would cause an increase in aggregate demand (AD)?

-In the above figure,if the price level is 150,

If you have $1,000 and the Gross Domestic Product (GDP)deflator increases from 100 to 120,then

What would likely happen to the long-run aggregate supply curve if the U.S.federal government increases marginal tax rates on wages?

Why is the long-run aggregate supply curve a vertical line?

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

For supply-side inflation to occur in the long run,

As the capital stock grows and technology improves,we would expect the long-run aggregate supply curve to

-Refer to the above figure.A movement from B to D would be a result of

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

What information is provided by the aggregate demand curve?

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

The long-run aggregate supply curve shifts right at the same time as

Which of the following would cause aggregate demand to decrease?

Suppose that along the aggregate demand curve,real GDP equals $14.2 trillion when the GDP deflator is 90.If the GDP deflator were 95,real GDP along the aggregate demand curve would equal

The various quantities of all final commodities demanded at various price levels,ceteris paribus,is the

What is measured on the vertical axis of the aggregate demand/aggregate supply model?

An assumption on the LRAS curve is

If long-run economic growth is not accompanied by a change in aggregate demand,the result will be

Economic growth takes place

Which of the following would cause an increase in aggregate demand (AD)?

-In the above figure,if the price level is 150,

If you have $1,000 and the Gross Domestic Product (GDP)deflator increases from 100 to 120,then

What would likely happen to the long-run aggregate supply curve if the U.S.federal government increases marginal tax rates on wages?

Why is the long-run aggregate supply curve a vertical line?

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