Question 1

If the AD curve shifts rightward while the AS curve and potential GDP don't change,then

Accepted Answer

A) the economy will move from a peak into recession. 
B) the expansion phase of the business cycle occurs. 
C) there will be no change in real GDP,so the economy is at the peak of the cycle. 
D) there will be no change in real GDP,so the economy is at the trough of the cycle. 
E) real GDP does not change. 
A) the economy will move from a peak into recession. 
B) the expansion phase of the business cycle occurs. 
C) there will be no change in real GDP,so the economy is at the peak of the cycle. 
D) there will be no change in real GDP,so the economy is at the trough of the cycle. 
E) real GDP does not change.

Question 2

During 2012,a country reports that its price level fell and the money wage rate did not change.These changes led to a(n)________ because their country experienced a(n)________.

Accepted Answer

A) decrease in the quantity of real GDP supplied;higher real wage rate and lower profits for firms 
B) increase in the quantity of real GDP supplied;higher real wage rate and lower profits for firms 
C) decrease in the quantity of real GDP supplied;lower real wage rate and lower profits for firms 
D) increase in the quantity of real GDP supplied;lower real wage rate and higher profits for firms 
E) decrease in aggregate demand;economic expansion 
A) decrease in the quantity of real GDP supplied;higher real wage rate and lower profits for firms 
B) increase in the quantity of real GDP supplied;higher real wage rate and lower profits for firms 
C) decrease in the quantity of real GDP supplied;lower real wage rate and lower profits for firms 
D) increase in the quantity of real GDP supplied;lower real wage rate and higher profits for firms 
E) decrease in aggregate demand;economic expansion

Question 3

Demand-pull inflation starts with

Accepted Answer

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

Question 4

If the money wage rate increases,then the

Accepted Answer

A) aggregate supply curve shifts rightward. 
B) potential GDP increases. 
C) potential GDP decreases. 
D) aggregate supply curve shifts leftward. 
E) aggregate demand curve shifts leftward. 
A) aggregate supply curve shifts rightward. 
B) potential GDP increases. 
C) potential GDP decreases. 
D) aggregate supply curve shifts leftward. 
E) aggregate demand curve shifts leftward.

Question 5

Increases in the quantity of money can start a ________ inflation,and an increase in government expenditure can start a ________ inflation.

Accepted Answer

A) demand-pull;demand-pull 
B) demand-pull;cost-push 
C) cost-push;cost-push 
D) cost-push;demand-pull 
E) None of the above is correct because increases in the quantity of money are necessary to continue an inflation but cannot start an inflation. 
A) demand-pull;demand-pull 
B) demand-pull;cost-push 
C) cost-push;cost-push 
D) cost-push;demand-pull 
E) None of the above is correct because increases in the quantity of money are necessary to continue an inflation but cannot start an inflation.

Question 6

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP,the economy is suffering from ________,and the government policy to eliminate this gap will ________ real GDP and ________ the price level.

Accepted Answer

A) a recessionary gap;decrease;decrease 
B) an inflationary gap;increase;decrease 
C) a recessionary gap;increase;increase 
D) an inflationary gap;decrease;increase 
E) a recessionary gap;decrease;increase 
A) a recessionary gap;decrease;decrease 
B) an inflationary gap;increase;decrease 
C) a recessionary gap;increase;increase 
D) an inflationary gap;decrease;increase 
E) a recessionary gap;decrease;increase

Question 7

The table gives the aggregate demand and aggregate supply schedules for a nation.
-Refer to the table above.If the price level is 120,then the aggregate quantity demanded is ________ than the aggregate quantity supplied and the price level ________.

Accepted Answer

A) greater;rises 
B) greater;falls 
C) less;rises 
D) less;falls 
E) less;might fall,rise or not change depending on whether real GDP is more than,less than,or equal to potential GDP. 
A) greater;rises 
B) greater;falls 
C) less;rises 
D) less;falls 
E) less;might fall,rise or not change depending on whether real GDP is more than,less than,or equal to potential GDP.

Question 8

All of the following actions shift the aggregate demand curve to the right EXCEPT

Accepted Answer

A) the Fed raises the interest rate. 
B) an increase in government transfer payments. 
C) inflation is expected to rise next year. 
D) an increase in expected future profit. 
E) a decrease in taxes. 
A) the Fed raises the interest rate. 
B) an increase in government transfer payments. 
C) inflation is expected to rise next year. 
D) an increase in expected future profit. 
E) a decrease in taxes.

Question 9

An increase in the money wage rate ________ and an increase in the money prices of raw materials ________.

Accepted Answer

A) shifts the AS curve rightward;shifts the AS curve rightward 
B) shifts the AS curve leftward;shifts the AS curve leftward 
C) shifts the AS curve rightward;shifts the AS curve leftward 
D) shifts the AS curve leftward;shifts the AS curve rightward 
E) shifts the AS curve leftward;does not shift the AS curve 
A) shifts the AS curve rightward;shifts the AS curve rightward 
B) shifts the AS curve leftward;shifts the AS curve leftward 
C) shifts the AS curve rightward;shifts the AS curve leftward 
D) shifts the AS curve leftward;shifts the AS curve rightward 
E) shifts the AS curve leftward;does not shift the AS curve

Question 10

In a demand-pull inflation,if the Fed stops expanding the quantity of money,

Accepted Answer

A) a cost-push inflation will occur. 
B) government expenditure will cause the demand-pull inflation to continue. 
C) a deflation will occur. 
D) the demand-pull inflation ends. 
E) None of the above answers is correct. 
A) a cost-push inflation will occur. 
B) government expenditure will cause the demand-pull inflation to continue. 
C) a deflation will occur. 
D) the demand-pull inflation ends. 
E) None of the above answers is correct.

Question 11

The table gives the aggregate demand and aggregate supply schedules for a nation.
-Based on the table above,equilibrium real GDP is

Accepted Answer

A) $10 trillion. 
B) $9 trillion. 
C) $8 trillion. 
D) $7 trillion. 
E) $6 trillion. 
A) $10 trillion. 
B) $9 trillion. 
C) $8 trillion. 
D) $7 trillion. 
E) $6 trillion.

Question 12

Aggregate demand

Accepted Answer

A) decreases if expected future income rises. 
B) increases if the exchange rate rises. 
C) increases if government expenditures decrease. 
D) increases if the expected inflation rate increases. 
E) increases if aggregate supply increases. 
A) decreases if expected future income rises. 
B) increases if the exchange rate rises. 
C) increases if government expenditures decrease. 
D) increases if the expected inflation rate increases. 
E) increases if aggregate supply increases.

Question 13

Which of the following statements is correct?

Accepted Answer

A) The price level does not affect the level of real GDP demanded. 
B) The lower the price level,the greater the quantity of real GDP demanded. 
C) The lower the price level,the more the aggregate demand curve shifts rightward. 
D) The lower the price level,the more the aggregate demand curve shifts leftward. 
E) The higher the price level,the more the aggregate demand curve shifts rightward. 
A) The price level does not affect the level of real GDP demanded. 
B) The lower the price level,the greater the quantity of real GDP demanded. 
C) The lower the price level,the more the aggregate demand curve shifts rightward. 
D) The lower the price level,the more the aggregate demand curve shifts leftward. 
E) The higher the price level,the more the aggregate demand curve shifts rightward.

Question 14

If the money wage rate is constant and the price level increases,what happens to the real wage rate,firms' profits,and the aggregate quantity supplied?

Accepted Answer

The real wage rate falls.Because the pri

Question 15

An increase in the price level leads to

Accepted Answer

A) an upward movement along the aggregate supply curve. 
B) a downward movement along the aggregate supply curve. 
C) a leftward shift of the aggregate supply curve. 
D) a rightward shift of the aggregate supply curve. 
E) neither a movement along the aggregate supply curve nor a shift of the aggregate supply curve. 
A) an upward movement along the aggregate supply curve. 
B) a downward movement along the aggregate supply curve. 
C) a leftward shift of the aggregate supply curve. 
D) a rightward shift of the aggregate supply curve. 
E) neither a movement along the aggregate supply curve nor a shift of the aggregate supply curve.

Question 16

Which of the following shifts the aggregate supply curve rightward?
I.The money wage rate rises.
Ii.Potential GDP increases.
Iii.Government expenditure on goods and services increases.

Accepted Answer

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

Question 17

Which of the following shifts the aggregate demand curve leftward?

Accepted Answer

A) a decrease in government expenditure on goods and services 
B) an increase in the price level 
C) a tax cut 
D) an increase in foreign income 
E) a decrease in the price level 
A) a decrease in government expenditure on goods and services 
B) an increase in the price level 
C) a tax cut 
D) an increase in foreign income 
E) a decrease in the price level

Question 18

An increase in the money wage rate leads to

Accepted Answer

A) an upward movement along the aggregate supply curve. 
B) a downward movement along the aggregate supply curve. 
C) a leftward shift of the aggregate supply curve. 
D) a rightward shift of the aggregate supply curve. 
E) a leftward shift of the aggregate demand curve. 
A) an upward movement along the aggregate supply curve. 
B) a downward movement along the aggregate supply curve. 
C) a leftward shift of the aggregate supply curve. 
D) a rightward shift of the aggregate supply curve. 
E) a leftward shift of the aggregate demand curve.

Question 19

Which of the following decreases aggregate demand and shifts the AD curve leftward?

Accepted Answer

A) a tax cut 
B) an interest rate hike 
C) an increase in quantity of money 
D) an increase in government expenditures on goods and services 
E) a decrease in potential GDP 
A) a tax cut 
B) an interest rate hike 
C) an increase in quantity of money 
D) an increase in government expenditures on goods and services 
E) a decrease in potential GDP

Question 20

If people's expectations about future income improve so they think their future income will be higher than previously believed,then the AD curve

Accepted Answer

A) will not change until income actually rises. 
B) will shift leftward because people will spend less now. 
C) will shift rightward because people will increase spending now. 
D) and the AS curve will both shift leftward because people will increase their saving. 
E) will not shift,but potential GDP will increase. 
A) will not change until income actually rises. 
B) will shift leftward because people will spend less now. 
C) will shift rightward because people will increase spending now. 
D) and the AS curve will both shift leftward because people will increase their saving. 
E) will not shift,but potential GDP will increase.

If the AD curve shifts rightward while the AS curve and potential GDP don't change,then

During 2012,a country reports that its price level fell and the money wage rate did not change.These changes led to a(n) because their country experienced a(n).

Demand-pull inflation starts with

If the money wage rate increases,then the

Increases in the quantity of money can start a inflation,and an increase in government expenditure can start a inflation.

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP,the economy is suffering from ,and the government policy to eliminate this gap will real GDP and the price level.

The table gives the aggregate demand and aggregate supply schedules for a nation. -Refer to the table above.If the price level is 120,then the aggregate quantity demanded is than the aggregate quantity supplied and the price level .

All of the following actions shift the aggregate demand curve to the right EXCEPT

An increase in the money wage rate and an increase in the money prices of raw materials .

In a demand-pull inflation,if the Fed stops expanding the quantity of money,

The table gives the aggregate demand and aggregate supply schedules for a nation. -Based on the table above,equilibrium real GDP is

Aggregate demand

Which of the following statements is correct?

If the money wage rate is constant and the price level increases,what happens to the real wage rate,firms' profits,and the aggregate quantity supplied?

An increase in the price level leads to

Which of the following shifts the aggregate supply curve rightward? I.The money wage rate rises. Ii.Potential GDP increases. Iii.Government expenditure on goods and services increases.

Which of the following shifts the aggregate demand curve leftward?

An increase in the money wage rate leads to

Which of the following decreases aggregate demand and shifts the AD curve leftward?

If people's expectations about future income improve so they think their future income will be higher than previously believed,then the AD curve

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

If the AD curve shifts rightward while the AS curve and potential GDP don't change,then

During 2012,a country reports that its price level fell and the money wage rate did not change.These changes led to a(n)________ because their country experienced a(n)________.

Demand-pull inflation starts with

If the money wage rate increases,then the

Increases in the quantity of money can start a ________ inflation,and an increase in government expenditure can start a ________ inflation.

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP,the economy is suffering from ________,and the government policy to eliminate this gap will ________ real GDP and ________ the price level.

The table gives the aggregate demand and aggregate supply schedules for a nation. -Refer to the table above.If the price level is 120,then the aggregate quantity demanded is ________ than the aggregate quantity supplied and the price level ________.

All of the following actions shift the aggregate demand curve to the right EXCEPT

An increase in the money wage rate ________ and an increase in the money prices of raw materials ________.

In a demand-pull inflation,if the Fed stops expanding the quantity of money,

The table gives the aggregate demand and aggregate supply schedules for a nation. -Based on the table above,equilibrium real GDP is

Aggregate demand

Which of the following statements is correct?

If the money wage rate is constant and the price level increases,what happens to the real wage rate,firms' profits,and the aggregate quantity supplied?

An increase in the price level leads to

Which of the following shifts the aggregate supply curve rightward? I.The money wage rate rises. Ii.Potential GDP increases. Iii.Government expenditure on goods and services increases.

Which of the following shifts the aggregate demand curve leftward?

An increase in the money wage rate leads to

Which of the following decreases aggregate demand and shifts the AD curve leftward?

If people's expectations about future income improve so they think their future income will be higher than previously believed,then the AD curve

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

During 2012,a country reports that its price level fell and the money wage rate did not change.These changes led to a(n) because their country experienced a(n).

Increases in the quantity of money can start a inflation,and an increase in government expenditure can start a inflation.

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP,the economy is suffering from ,and the government policy to eliminate this gap will real GDP and the price level.

The table gives the aggregate demand and aggregate supply schedules for a nation. -Refer to the table above.If the price level is 120,then the aggregate quantity demanded is than the aggregate quantity supplied and the price level .

An increase in the money wage rate and an increase in the money prices of raw materials .