Question 1

Other things equal, appreciation of the dollar:

Accepted Answer

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

Question 2

Changes in which of the two factors below would most likely cause a change in consumer spending? The following list of factors, are related to the aggregate demand curve.

Accepted Answer

A)  1 and 3 
B)  2 and 4 
C)  5 and 10 
D)  8 and 9 
A)  1 and 3 
B)  2 and 4 
C)  5 and 10 
D)  8 and 9

Question 3

A n expected rise in the rate of inflation for consumer goods will:

Accepted Answer

A)  decrease aggregate demand. 
B)  increase aggregate supply. 
C)  increase aggregate demand. 
D)  decrease aggregate supply. 
A)  decrease aggregate demand. 
B)  increase aggregate supply. 
C)  increase aggregate demand. 
D)  decrease aggregate supply.

Question 4

-Which of the above diagrams best portrays the effects of a dramatic increase in energy prices?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 5

If real output rises and the price level falls, this would likely be due to a:

Accepted Answer

A)  rightward shift of the aggregate demand curve. 
B)  leftward shift of the aggregate demand curve. 
C)  rightward shift of the aggregate supply curve. 
D)  leftward shift of the aggregate supply curve. 
A)  rightward shift of the aggregate demand curve. 
B)  leftward shift of the aggregate demand curve. 
C)  rightward shift of the aggregate supply curve. 
D)  leftward shift of the aggregate supply curve.

Question 6

Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:

Accepted Answer

A)  demand curve will shift leftward. 
B)  supply curve will shift rightward. 
C)  supply curve will shift leftward. 
D)  expenditures curve will shift downward. 
A)  demand curve will shift leftward. 
B)  supply curve will shift rightward. 
C)  supply curve will shift leftward. 
D)  expenditures curve will shift downward.

Question 7

Refer to the list below. Which two factors would most likely cause a change in investment spending? The following list of items is related to aggregate demand.

Accepted Answer

A)  2 and 5 
B)  3 and 10 
C)  2 and 7 
D)  6 and 9 
A)  2 and 5 
B)  3 and 10 
C)  2 and 7 
D)  6 and 9

Question 8

In which of the following sets of circumstances can we confidently expect inflation?

Accepted Answer

A)  aggregate supply and aggregate demand both increase 
B)  aggregate supply and aggregate demand both decrease 
C)  aggregate supply decreases and aggregate demand increases 
D)  aggregate supply increases and aggregate demand decreases 
A)  aggregate supply and aggregate demand both increase 
B)  aggregate supply and aggregate demand both decrease 
C)  aggregate supply decreases and aggregate demand increases 
D)  aggregate supply increases and aggregate demand decreases

Question 9

Which would most likely shift the aggregate supply curve? A change in:

Accepted Answer

A)  consumer expectations. 
B)  government spending. 
C)  excess capacity in business. 
D)  prices of imported resources. 
A)  consumer expectations. 
B)  government spending. 
C)  excess capacity in business. 
D)  prices of imported resources.

Question 10

-Which of the above diagrams best portrays the effects of an increase in productivity?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 11

Other things equal, an improvement in productivity will:

Accepted Answer

A)  tend to increase the equilibrium price level. 
B)  shift the aggregate supply curve to the left. 
C)  shift the aggregate supply curve to the right. 
D)  shift the aggregate demand curve to the left. 
A)  tend to increase the equilibrium price level. 
B)  shift the aggregate supply curve to the left. 
C)  shift the aggregate supply curve to the right. 
D)  shift the aggregate demand curve to the left.

Question 12

The aggregate expenditures model and the aggregate demand curve can be reconciled because, other things being equal, in the aggregate expenditures model:

Accepted Answer

A)  changes in the price level have no effect on the equilibrium level of GDP. 
B)  an increase in the price level increases the real value of wealth. 
C)  the level of aggregate expenditures and therefore the level of real GDP vary inversely with the price level. 
D)  the level of aggregate expenditures and therefore the level of real GDP vary directly with the price level. 
A)  changes in the price level have no effect on the equilibrium level of GDP. 
B)  an increase in the price level increases the real value of wealth. 
C)  the level of aggregate expenditures and therefore the level of real GDP vary inversely with the price level. 
D)  the level of aggregate expenditures and therefore the level of real GDP vary directly with the price level.

Question 13

The per unit cost of production in the economy described above is:

Accepted Answer

A)  $.50. 
B)  $1. 
C)  $2. 
D)  $5. 
A)  $.50. 
B)  $1. 
C)  $2. 
D)  $5.

Question 14

Other things equal, an increase in the price level will:

Accepted Answer

A)  shift the short run aggregate supply curve to the right. 
B)  shift the aggregate demand curve to the right. 
C)  cause a movement up along a short-run aggregate supply curve. 
D)  cause a movement down a short run aggregate supply curve. 
A)  shift the short run aggregate supply curve to the right. 
B)  shift the aggregate demand curve to the right. 
C)  cause a movement up along a short-run aggregate supply curve. 
D)  cause a movement down a short run aggregate supply curve.

Question 15

Suppose the full-employment level of real output (Q) for a hypothetical economy is $500 and that the price level (P) initially is 100. Use the following short-run aggregate supply schedules to answer the next question.
  
-Refer to the information above. In the long run, an increase in the price level from 100 to 125 will:

Accepted Answer

A)  increase real output from $500 to $560. 
B)  decrease real output from $500 to $440. 
C)  change the aggregate supply schedule from (a) to (c) and result in an equilibrium level of real output of $560. 
D)  change the aggregate supply schedule from (a) to (b) and result in an equilibrium level of real output of $500. 
A)  increase real output from $500 to $560. 
B)  decrease real output from $500 to $440. 
C)  change the aggregate supply schedule from (a) to (c) and result in an equilibrium level of real output of $560. 
D)  change the aggregate supply schedule from (a) to (b) and result in an equilibrium level of real output of $500.

Question 16

An increase in aggregate demand is most likely to be caused by a decrease in:

Accepted Answer

A)  the wealth of consumers. 
B)  consumer confidence. 
C)  business confidence. 
D)  the tax rates on household income. 
A)  the wealth of consumers. 
B)  consumer confidence. 
C)  business confidence. 
D)  the tax rates on household income.

Question 17

Refer to the diagram below. Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf. In the short run, cost-push inflation could best be shown as:

Accepted Answer

A)  a leftward shift of aggregate supply from AS2 to AS3. 
B)  a move from b to c on AS2. 
C)  a move from b to c to d. 
D)  a move from b to f to d. 
A)  a leftward shift of aggregate supply from AS2 to AS3. 
B)  a move from b to c on AS2. 
C)  a move from b to c to d. 
D)  a move from b to f to d.

Question 18

An increase in aggregate expenditures resulting from a decrease in the price level is equivalent to a:

Accepted Answer

A)  rightward shift of the aggregate demand curve. 
B)  leftward shift of the aggregate demand curve. 
C)  movement downward along a fixed aggregate demand curve. 
D)  decrease in aggregate supply. 
A)  rightward shift of the aggregate demand curve. 
B)  leftward shift of the aggregate demand curve. 
C)  movement downward along a fixed aggregate demand curve. 
D)  decrease in aggregate supply.

Question 19

Refer to the above information. Given an increase in input price from $4 to $6, we would expect the aggregate:

Accepted Answer

A)  supply curve to shift to the left. 
B)  supply curve to shift to the right. 
C)  demand curve to shift to the left. 
D)  demand curve to shift to the right. 
A)  supply curve to shift to the left. 
B)  supply curve to shift to the right. 
C)  demand curve to shift to the left. 
D)  demand curve to shift to the right.

Question 20

Refer to the above diagram. If the price level rises above P1 because of an increase in aggregate demand, the:

Accepted Answer

A)  economy will move up along curve B and output will temporarily increase. 
B)  long-run aggregate supply curve C will shift upward. 
C)  short-run aggregate supply curve B will automatically shift to the right. 
D)  economy's output first will decline, then increase, and finally return to Q1. 
A)  economy will move up along curve B and output will temporarily increase. 
B)  long-run aggregate supply curve C will shift upward. 
C)  short-run aggregate supply curve B will automatically shift to the right. 
D)  economy's output first will decline, then increase, and finally return to Q1.

Other things equal, appreciation of the dollar:

Changes in which of the two factors below would most likely cause a change in consumer spending? The following list of factors, are related to the aggregate demand curve.

A n expected rise in the rate of inflation for consumer goods will:

-Which of the above diagrams best portrays the effects of a dramatic increase in energy prices?

If real output rises and the price level falls, this would likely be due to a:

Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:

Refer to the list below. Which two factors would most likely cause a change in investment spending? The following list of items is related to aggregate demand.

In which of the following sets of circumstances can we confidently expect inflation?

Which would most likely shift the aggregate supply curve? A change in:

-Which of the above diagrams best portrays the effects of an increase in productivity?

Other things equal, an improvement in productivity will:

The aggregate expenditures model and the aggregate demand curve can be reconciled because, other things being equal, in the aggregate expenditures model:

The per unit cost of production in the economy described above is:

Other things equal, an increase in the price level will:

An increase in aggregate demand is most likely to be caused by a decrease in:

Refer to the diagram below. Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f. In the short run, cost-push inflation could best be shown as:

An increase in aggregate expenditures resulting from a decrease in the price level is equivalent to a:

Refer to the above information. Given an increase in input price from $4 to $6, we would expect the aggregate:

Refer to the above diagram. If the price level rises above P₁ because of an increase in aggregate demand, the:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 10: Aggregate Demand and Aggregate Supply

Other things equal, appreciation of the dollar:

Changes in which of the two factors below would most likely cause a change in consumer spending? The following list of factors, are related to the aggregate demand curve.

A n expected rise in the rate of inflation for consumer goods will:

-Which of the above diagrams best portrays the effects of a dramatic increase in energy prices?

If real output rises and the price level falls, this would likely be due to a:

Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:

Refer to the list below. Which two factors would most likely cause a change in investment spending? The following list of items is related to aggregate demand.

In which of the following sets of circumstances can we confidently expect inflation?

Which would most likely shift the aggregate supply curve? A change in:

-Which of the above diagrams best portrays the effects of an increase in productivity?

Other things equal, an improvement in productivity will:

The aggregate expenditures model and the aggregate demand curve can be reconciled because, other things being equal, in the aggregate expenditures model:

The per unit cost of production in the economy described above is:

Other things equal, an increase in the price level will:

An increase in aggregate demand is most likely to be caused by a decrease in:

Refer to the diagram below. Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf. In the short run, cost-push inflation could best be shown as:

An increase in aggregate expenditures resulting from a decrease in the price level is equivalent to a:

Refer to the above information. Given an increase in input price from $4 to $6, we would expect the aggregate:

Refer to the above diagram. If the price level rises above P1 because of an increase in aggregate demand, the:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Refer to the diagram below. Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f. In the short run, cost-push inflation could best be shown as:

Refer to the above diagram. If the price level rises above P₁ because of an increase in aggregate demand, the: