Question 1

-In the figure above,the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110.At this point there is

Accepted Answer

A) an inflationary gap. 
B) a recessionary gap. 
C) price stability. 
D) a full-employment equilibrium. 
E) an above full-employment equilibrium. 
A) an inflationary gap. 
B) a recessionary gap. 
C) price stability. 
D) a full-employment equilibrium. 
E) an above full-employment equilibrium.

Question 2

A reason why an increase in the price level decreases the quantity of real GDP demanded is that

Accepted Answer

A) the buying power of money increases. 
B) the real interest rate falls. 
C) the price of domestic goods and services increases relative to foreign goods and services. 
D) the inflation rate decreases. 
E) potential GDP decreases. 
A) the buying power of money increases. 
B) the real interest rate falls. 
C) the price of domestic goods and services increases relative to foreign goods and services. 
D) the inflation rate decreases. 
E) potential GDP decreases.

Question 3

When the price level increases there is ________ movement along the aggregate demand curve because the buying power of money ________.

Accepted Answer

A) an upward;decreases 
B) a downward;decreases 
C) an upward;increases 
D) a downward;increases 
E) no;does not change 
A) an upward;decreases 
B) a downward;decreases 
C) an upward;increases 
D) a downward;increases 
E) no;does not change

Question 4

Reasons that the recession of 2008-2009 did not become a depression include:
I.The Fed bailed out troubled financial institutions.
Ii.The government aggressively balanced its budget.
Iii.The government increased its expenditures,which increased aggregate demand.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i and ii 
A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i and ii

Question 5

What is demand-pull inflation?

Accepted Answer

An inflation that st

Question 6

________ could result in a recession because it would ________.

Accepted Answer

A) A rise in the price of oil;shift the AS curve to the left. 
B) An increase in investment;shift the AD curve to the right. 
C) A tax cut;shift the AS curve to the left. 
D) An increase in the quantity of money;shift the AS curve to the right. 
E) An increase in government expenditures on goods and services;shift the AD curve to the right. 
A) A rise in the price of oil;shift the AS curve to the left. 
B) An increase in investment;shift the AD curve to the right. 
C) A tax cut;shift the AS curve to the left. 
D) An increase in the quantity of money;shift the AS curve to the right. 
E) An increase in government expenditures on goods and services;shift the AD curve to the right.

Question 7

The figure above shows the aggregate demand curve.
-The aggregate demand curve in the figure above shifts rightward if

Accepted Answer

A) potential GDP increases. 
B) the money wage rate falls. 
C) taxes are hiked. 
D) government expenditure decreases. 
E) the expected future profit increases so that investment increases. 
A) potential GDP increases. 
B) the money wage rate falls. 
C) taxes are hiked. 
D) government expenditure decreases. 
E) the expected future profit increases so that investment increases.

Question 8

Suppose that during 2005,the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos.What sort of equilibrium existed in Chile?

Accepted Answer

Chile's actual real GDP exceed

Question 9

At the start of a cost-push inflation,

Accepted Answer

A) the price level remains constant and real GDP decreases. 
B) the price level and real GDP both increase. 
C) the price level remains constant and real GDP increases. 
D) the price level rises and real GDP decreases. 
E) the price level rises and real GDP does not change. 
A) the price level remains constant and real GDP decreases. 
B) the price level and real GDP both increase. 
C) the price level remains constant and real GDP increases. 
D) the price level rises and real GDP decreases. 
E) the price level rises and real GDP does not change.

Question 10

A decrease in foreign income ________ exports of U.S.-made goods,so aggregate demand ________ and the aggregate demand curve shifts ________.

Accepted Answer

A) increases;increases;rightward 
B) decreases;decreases;leftward 
C) decreases;increases;rightward 
D) increases;increases;leftward 
E) decreases;decreases;rightward 
A) increases;increases;rightward 
B) decreases;decreases;leftward 
C) decreases;increases;rightward 
D) increases;increases;leftward 
E) decreases;decreases;rightward

Question 11

Does a rise in the price level bring a movement along the aggregate supply curve or does it shift the aggregate supply curve?

Accepted Answer

A rise in the price level resu

Question 12

Give examples of factors that decrease aggregate demand.Which way does the aggregate demand curve shift?

Accepted Answer

Anything that decreases spending decreas

Question 13

When the price level rises and the money wage rate does not change,

Accepted Answer

A) the quantity of real GDP supplied increases as more businesses start up and potential GDP does not change. 
B) the quantity of real GDP supplied decreases as more businesses fail and potential GDP does not change. 
C) profits fall and more businesses fail. 
D) existing businesses do not change their level of output. 
E) the quantity of potential GDP increases because the quantity of real GDP supplied increases. 
A) the quantity of real GDP supplied increases as more businesses start up and potential GDP does not change. 
B) the quantity of real GDP supplied decreases as more businesses fail and potential GDP does not change. 
C) profits fall and more businesses fail. 
D) existing businesses do not change their level of output. 
E) the quantity of potential GDP increases because the quantity of real GDP supplied increases.

Question 14

An increase in government expenditure on goods and services leads to the

Accepted Answer

A) aggregate supply curve shifting rightward. 
B) aggregate supply curve shifting leftward. 
C) aggregate demand curve shifting rightward. 
D) aggregate demand curve shifting leftward. 
E) potential GDP increasing. 
A) aggregate supply curve shifting rightward. 
B) aggregate supply curve shifting leftward. 
C) aggregate demand curve shifting rightward. 
D) aggregate demand curve shifting leftward. 
E) potential GDP increasing.

Question 15

Aggregate demand ________ if the expected inflation rate increases because ________.

Accepted Answer

A) increases;people expect to receive cost of living raises as the inflation begins 
B) decreases;people wait for the exchange rates to change before making purchases 
C) does not change;inflation does not affect the aggregate demand curve 
D) increases;people want to make purchases now before the price of goods and services begin to increase 
E) decreases;people want to wait for the price of goods and services begin to decrease 
A) increases;people expect to receive cost of living raises as the inflation begins 
B) decreases;people wait for the exchange rates to change before making purchases 
C) does not change;inflation does not affect the aggregate demand curve 
D) increases;people want to make purchases now before the price of goods and services begin to increase 
E) decreases;people want to wait for the price of goods and services begin to decrease

Question 16

Compared to the initial equilibrium,an initial increase in aggregate demand that is NOT followed by an increase in the quantity of money results in new long-run equilibrium with

Accepted Answer

A) a higher price level but the same real GDP. 
B) a higher price level and an increased level of real GDP. 
C) the same price level and a lower level of real GDP. 
D) the same price level and the same real GDP. 
E) None of the above answers is correct. 
A) a higher price level but the same real GDP. 
B) a higher price level and an increased level of real GDP. 
C) the same price level and a lower level of real GDP. 
D) the same price level and the same real GDP. 
E) None of the above answers is correct.

Question 17

Changes in which of the following do NOT shift the AS curve?
I.the price level
Ii.potential GDP
Iii.the money wage rate

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) i,ii,and iii 
A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) i,ii,and iii

Question 18

State how shifts in the aggregate demand curve can explain the movement of real GDP around potential GDP.

Accepted Answer

When the aggregate demand curve and the

Question 19

When the price level rises and increases the demand for money,the nominal interest rate ________ and the real interest rate ________.

Accepted Answer

A) rises;rises 
B) rises;falls 
C) falls;rises 
D) falls;falls 
E) does not change;does not change 
A) rises;rises 
B) rises;falls 
C) falls;rises 
D) falls;falls 
E) does not change;does not change

Question 20

If the AD curve shifts rightward,then

Accepted Answer

A) both the price level and real GDP will increase. 
B) the price level will increase,but no change will occur in real GDP. 
C) the price level will not change,but real GDP will increase. 
D) both the price level and real GDP will decrease. 
E) potential GDP increases. 
A) both the price level and real GDP will increase. 
B) the price level will increase,but no change will occur in real GDP. 
C) the price level will not change,but real GDP will increase. 
D) both the price level and real GDP will decrease. 
E) potential GDP increases.

-In the figure above,the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110.At this point there is

A reason why an increase in the price level decreases the quantity of real GDP demanded is that

When the price level increases there is movement along the aggregate demand curve because the buying power of money .

Reasons that the recession of 2008-2009 did not become a depression include: I.The Fed bailed out troubled financial institutions. Ii.The government aggressively balanced its budget. Iii.The government increased its expenditures,which increased aggregate demand.

What is demand-pull inflation?

could result in a recession because it would .

The figure above shows the aggregate demand curve. -The aggregate demand curve in the figure above shifts rightward if

Suppose that during 2005,the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos.What sort of equilibrium existed in Chile?

At the start of a cost-push inflation,

A decrease in foreign income exports of U.S.-made goods,so aggregate demand and the aggregate demand curve shifts .

Does a rise in the price level bring a movement along the aggregate supply curve or does it shift the aggregate supply curve?

Give examples of factors that decrease aggregate demand.Which way does the aggregate demand curve shift?

When the price level rises and the money wage rate does not change,

An increase in government expenditure on goods and services leads to the

Aggregate demand if the expected inflation rate increases because .

Compared to the initial equilibrium,an initial increase in aggregate demand that is NOT followed by an increase in the quantity of money results in new long-run equilibrium with

Changes in which of the following do NOT shift the AS curve? I.the price level Ii.potential GDP Iii.the money wage rate

State how shifts in the aggregate demand curve can explain the movement of real GDP around potential GDP.

When the price level rises and increases the demand for money,the nominal interest rate and the real interest rate .

If the AD curve shifts rightward,then

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Fiscal Policy and Monetary Policy

Filters

Exam 19: Aggregate Supply and Aggregate Demand

-In the figure above,the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110.At this point there is

A reason why an increase in the price level decreases the quantity of real GDP demanded is that

When the price level increases there is ________ movement along the aggregate demand curve because the buying power of money ________.

Reasons that the recession of 2008-2009 did not become a depression include: I.The Fed bailed out troubled financial institutions. Ii.The government aggressively balanced its budget. Iii.The government increased its expenditures,which increased aggregate demand.

What is demand-pull inflation?

________ could result in a recession because it would ________.

The figure above shows the aggregate demand curve. -The aggregate demand curve in the figure above shifts rightward if

Suppose that during 2005,the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos.What sort of equilibrium existed in Chile?

At the start of a cost-push inflation,

A decrease in foreign income ________ exports of U.S.-made goods,so aggregate demand ________ and the aggregate demand curve shifts ________.

Does a rise in the price level bring a movement along the aggregate supply curve or does it shift the aggregate supply curve?

Give examples of factors that decrease aggregate demand.Which way does the aggregate demand curve shift?

When the price level rises and the money wage rate does not change,

An increase in government expenditure on goods and services leads to the

Aggregate demand ________ if the expected inflation rate increases because ________.

Compared to the initial equilibrium,an initial increase in aggregate demand that is NOT followed by an increase in the quantity of money results in new long-run equilibrium with

Changes in which of the following do NOT shift the AS curve? I.the price level Ii.potential GDP Iii.the money wage rate

State how shifts in the aggregate demand curve can explain the movement of real GDP around potential GDP.

When the price level rises and increases the demand for money,the nominal interest rate ________ and the real interest rate ________.

If the AD curve shifts rightward,then

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Fiscal Policy and Monetary Policy

Filters

When the price level increases there is movement along the aggregate demand curve because the buying power of money .

could result in a recession because it would .

A decrease in foreign income exports of U.S.-made goods,so aggregate demand and the aggregate demand curve shifts .

Aggregate demand if the expected inflation rate increases because .

When the price level rises and increases the demand for money,the nominal interest rate and the real interest rate .