Question 1

Oil price hikes

Accepted Answer

A) increase aggregate supply. 
B) decrease aggregate supply. 
C) increase aggregate demand. 
D) decrease aggregate demand. 
E) increase potential GDP. 
A) increase aggregate supply. 
B) decrease aggregate supply. 
C) increase aggregate demand. 
D) decrease aggregate demand. 
E) increase potential GDP.

Question 2

A fall in the price level brings a ________ in the real wage rate that ________ profits and can lead to ________.

Accepted Answer

A) rise;reduces;firms going out of business 
B) rise;reduces;new firms entering business 
C) fall;increases;firms going out of business 
D) rise;increases;new firms entering business 
E) fall;decreases;new firms entering business 
A) rise;reduces;firms going out of business 
B) rise;reduces;new firms entering business 
C) fall;increases;firms going out of business 
D) rise;increases;new firms entering business 
E) fall;decreases;new firms entering business

Question 3

How does a recession in Asia affect U.S.aggregate demand and the U.S.aggregate demand curve?

Accepted Answer

A recession in Asia means that Asians pu

Question 4

An increase in potential GDP ________ aggregate supply and ________.

Accepted Answer

A) decreases;shifts the AS curve rightward 
B) increases;shifts the AS curve leftward 
C) increases;shifts the AS curve rightward 
D) decreases;shifts the AS curve leftward 
E) has no effect on;does not shift the AS curve 
A) decreases;shifts the AS curve rightward 
B) increases;shifts the AS curve leftward 
C) increases;shifts the AS curve rightward 
D) decreases;shifts the AS curve leftward 
E) has no effect on;does not shift the AS curve

Question 5

What is the aggregate demand multiplier and why does it occur?

Accepted Answer

The aggregate demand multiplier is an ef

Question 6

Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil?

Accepted Answer

A) The AS curve shifts rightward. 
B) There is no change to the AS curve. 
C) The AS curve does not shift but there is an upward movement along it. 
D) The AS curve does not shift but there is a downward movement along it. 
E) The AS curve shifts leftward. 
A) The AS curve shifts rightward. 
B) There is no change to the AS curve. 
C) The AS curve does not shift but there is an upward movement along it. 
D) The AS curve does not shift but there is a downward movement along it. 
E) The AS curve shifts leftward.

Question 7

Aggregate demand ________ and shifts the AD curve ________ when ________.

Accepted Answer

A) increases;rightward;government expenditure increases 
B) increases;rightward;taxes increase 
C) increases;rightward;future expected profit decreases 
D) decreases;leftward;foreign income increases 
E) increases;leftward;government expenditure increases 
A) increases;rightward;government expenditure increases 
B) increases;rightward;taxes increase 
C) increases;rightward;future expected profit decreases 
D) decreases;leftward;foreign income increases 
E) increases;leftward;government expenditure increases

Question 8

Cost-push inflation can start with

Accepted Answer

A) a decrease in investment. 
B) an increase in oil prices. 
C) an increase in government expenditure. 
D) a decrease in government expenditure. 
E) a decrease in the quantity of money. 
A) a decrease in investment. 
B) an increase in oil prices. 
C) an increase in government expenditure. 
D) a decrease in government expenditure. 
E) a decrease in the quantity of money.

Question 9

The table gives the aggregate demand and aggregate supply schedules for a nation.
-If the price level is 90,then the price level will ________ because ________.

Accepted Answer

A) either fall or rise;markets are unstable and macroeconomic equilibrium is difficult to predict 
B) fall;the aggregate quantity demanded is less than the aggregate quantity supplied 
C) rise;the aggregate quantity demanded is less than the aggregate quantity supplied 
D) rise;the aggregate quantity demanded is greater than the aggregate quantity supplied 
E) fall;the aggregate quantity demanded is greater than the aggregate quantity supplied 
A) either fall or rise;markets are unstable and macroeconomic equilibrium is difficult to predict 
B) fall;the aggregate quantity demanded is less than the aggregate quantity supplied 
C) rise;the aggregate quantity demanded is less than the aggregate quantity supplied 
D) rise;the aggregate quantity demanded is greater than the aggregate quantity supplied 
E) fall;the aggregate quantity demanded is greater than the aggregate quantity supplied

Question 10

If profits are high because the price level rose,

Accepted Answer

A) it is likely the result of an increase in the real wage rate. 
B) new businesses open and the quantity of real GDP supplied increases. 
C) business failures rise and the quantity of real GDP supplied increases. 
D) potential GDP must be decreasing. 
E) the AS curve shifts leftward. 
A) it is likely the result of an increase in the real wage rate. 
B) new businesses open and the quantity of real GDP supplied increases. 
C) business failures rise and the quantity of real GDP supplied increases. 
D) potential GDP must be decreasing. 
E) the AS curve shifts leftward.

Question 11

Because there is a ________ relationship between the price level and the quantity of real GDP supplied,the aggregate supply curve is ________ curve.

Accepted Answer

A) negative;an upward-sloping 
B) positive;a downward-sloping 
C) positive;an upward-sloping 
D) negative;a downward-sloping 
E) positive;a vertical 
A) negative;an upward-sloping 
B) positive;a downward-sloping 
C) positive;an upward-sloping 
D) negative;a downward-sloping 
E) positive;a vertical

Question 12

How does a rise in the foreign exchange rate affect aggregate demand in the United States? Explain your answer.

Accepted Answer

An increase in the foreign exchange rate

Question 13

When investment increases,the ________ in aggregate demand is ________ the change in investment.

Accepted Answer

A) increase;greater than 
B) increase;smaller than 
C) increase;the same as 
D) decrease;the same as 
E) decrease;greater than 
A) increase;greater than 
B) increase;smaller than 
C) increase;the same as 
D) decrease;the same as 
E) decrease;greater than

Question 14

An increase in investment ________ aggregate demand,the aggregate demand curve shifts ________ and the economy is in the ________ phase of the business cycle.

Accepted Answer

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

Question 15

-The table above gives data for the nation of Pearl,a small island in the South Pacific.If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level,the new equilibrium real GDP is ________,and the nation is now experiencing a(n)________.

Accepted Answer

A) $22 billion;inflationary gap 
B) $22 billion;recessionary gap 
C) $28 billion;inflationary gap 
D) $28 billion;recessionary gap 
E) $25 billion;equilibrium 
A) $22 billion;inflationary gap 
B) $22 billion;recessionary gap 
C) $28 billion;inflationary gap 
D) $28 billion;recessionary gap 
E) $25 billion;equilibrium

Question 16

The aggregate supply curve illustrates that the

Accepted Answer

A) higher the price level,the greater the quantity of real GDP supplied. 
B) higher the price level,the smaller the quantity of real GDP supplied. 
C) aggregate demand curve is not needed to determine the aggregate price level. 
D) price level does not affect the quantity of real GDP supplied. 
E) amount of potential GDP increases when the price level rises. 
A) higher the price level,the greater the quantity of real GDP supplied. 
B) higher the price level,the smaller the quantity of real GDP supplied. 
C) aggregate demand curve is not needed to determine the aggregate price level. 
D) price level does not affect the quantity of real GDP supplied. 
E) amount of potential GDP increases when the price level rises.

Question 17

If the price level falls and the money wage rate does not change,some firms ________ and there is ________.

Accepted Answer

A) shut down;a leftward shift of the aggregate supply curve 
B) start up;a rightward shift of the aggregate supply curve 
C) shut down;a decrease in the quantity of real GDP supplied 
D) shut down;a decrease in potential GDP 
E) start up;an increase in potential GDP 
A) shut down;a leftward shift of the aggregate supply curve 
B) start up;a rightward shift of the aggregate supply curve 
C) shut down;a decrease in the quantity of real GDP supplied 
D) shut down;a decrease in potential GDP 
E) start up;an increase in potential GDP

Question 18

Which of the following shifts the aggregate supply curve rightward?

Accepted Answer

A) increase in potential GDP 
B) increase in the money wage rate 
C) increase in real GDP 
D) increase in the money price of oil 
E) increase in consumers' incomes 
A) increase in potential GDP 
B) increase in the money wage rate 
C) increase in real GDP 
D) increase in the money price of oil 
E) increase in consumers' incomes

Question 19

Which of the following shifts the aggregate supply curve leftward?

Accepted Answer

A) increase in potential GDP 
B) increase in the money wage rate 
C) increase in real GDP 
D) decrease in the money price of oil 
E) a fall in the price level 
A) increase in potential GDP 
B) increase in the money wage rate 
C) increase in real GDP 
D) decrease in the money price of oil 
E) a fall in the price level

Question 20

When the price level rises,the real interest rate ________ and the quantity of real GDP demanded ________.

Accepted Answer

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

Oil price hikes

A fall in the price level brings a in the real wage rate that profits and can lead to .

How does a recession in Asia affect U.S.aggregate demand and the U.S.aggregate demand curve?

An increase in potential GDP aggregate supply and .

What is the aggregate demand multiplier and why does it occur?

Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil?

Aggregate demand and shifts the AD curve when .

Cost-push inflation can start with

The table gives the aggregate demand and aggregate supply schedules for a nation. -If the price level is 90,then the price level will because .

If profits are high because the price level rose,

Because there is a relationship between the price level and the quantity of real GDP supplied,the aggregate supply curve is curve.

How does a rise in the foreign exchange rate affect aggregate demand in the United States? Explain your answer.

When investment increases,the in aggregate demand is the change in investment.

An increase in investment aggregate demand,the aggregate demand curve shifts and the economy is in the phase of the business cycle.

-The table above gives data for the nation of Pearl,a small island in the South Pacific.If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level,the new equilibrium real GDP is ,and the nation is now experiencing a(n).

The aggregate supply curve illustrates that the

If the price level falls and the money wage rate does not change,some firms and there is .

Which of the following shifts the aggregate supply curve rightward?

Which of the following shifts the aggregate supply curve leftward?

When the price level rises,the real interest rate and the quantity of real GDP demanded .

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

Oil price hikes

A fall in the price level brings a ________ in the real wage rate that ________ profits and can lead to ________.

How does a recession in Asia affect U.S.aggregate demand and the U.S.aggregate demand curve?

An increase in potential GDP ________ aggregate supply and ________.

What is the aggregate demand multiplier and why does it occur?

Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil?

Aggregate demand ________ and shifts the AD curve ________ when ________.

Cost-push inflation can start with

The table gives the aggregate demand and aggregate supply schedules for a nation. -If the price level is 90,then the price level will ________ because ________.

If profits are high because the price level rose,

Because there is a ________ relationship between the price level and the quantity of real GDP supplied,the aggregate supply curve is ________ curve.

How does a rise in the foreign exchange rate affect aggregate demand in the United States? Explain your answer.

When investment increases,the ________ in aggregate demand is ________ the change in investment.

An increase in investment ________ aggregate demand,the aggregate demand curve shifts ________ and the economy is in the ________ phase of the business cycle.

-The table above gives data for the nation of Pearl,a small island in the South Pacific.If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level,the new equilibrium real GDP is ________,and the nation is now experiencing a(n)________.

The aggregate supply curve illustrates that the

If the price level falls and the money wage rate does not change,some firms ________ and there is ________.

Which of the following shifts the aggregate supply curve rightward?

Which of the following shifts the aggregate supply curve leftward?

When the price level rises,the real interest rate ________ and the quantity of real GDP demanded ________.

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

A fall in the price level brings a in the real wage rate that profits and can lead to .

An increase in potential GDP aggregate supply and .

Aggregate demand and shifts the AD curve when .

The table gives the aggregate demand and aggregate supply schedules for a nation. -If the price level is 90,then the price level will because .

Because there is a relationship between the price level and the quantity of real GDP supplied,the aggregate supply curve is curve.

When investment increases,the in aggregate demand is the change in investment.

An increase in investment aggregate demand,the aggregate demand curve shifts and the economy is in the phase of the business cycle.

-The table above gives data for the nation of Pearl,a small island in the South Pacific.If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level,the new equilibrium real GDP is ,and the nation is now experiencing a(n).

If the price level falls and the money wage rate does not change,some firms and there is .

When the price level rises,the real interest rate and the quantity of real GDP demanded .