Question 1

Which of the following factors could start a demand-pull inflation?

Accepted Answer

A) an increase in tax rates 
B) a decrease in government expenditure 
C) a decrease in the money wage rate 
D) an increase in the money wage rate 
E) an increase in the quantity of money 
A) an increase in tax rates 
B) a decrease in government expenditure 
C) a decrease in the money wage rate 
D) an increase in the money wage rate 
E) an increase in the quantity of money

Question 2

Starting from a situation of full employment,an increase in aggregate demand creates ________ and ________ the price level.

Accepted Answer

A) an inflationary gap;raises 
B) a recessionary gap;lowers 
C) a recessionary gap;raises 
D) an inflationary gap;lowers 
E) a recessionary gap;does not change 
A) an inflationary gap;raises 
B) a recessionary gap;lowers 
C) a recessionary gap;raises 
D) an inflationary gap;lowers 
E) a recessionary gap;does not change

Question 3

If the economy is at macroeconomic equilibrium,then real GDP

Accepted Answer

A) must equal potential GDP. 
B) must be less than potential GDP. 
C) must be great than potential GDP. 
D) might be equal to,greater than,or less than potential GDP. 
E) cannot be compared to potential GDP. 
A) must equal potential GDP. 
B) must be less than potential GDP. 
C) must be great than potential GDP. 
D) might be equal to,greater than,or less than potential GDP. 
E) cannot be compared to potential GDP.

Question 4

As the price level rises relative to costs and the real wage rate falls,profits ________ and the number of firms in business ________.

Accepted Answer

A) increase;increases 
B) increase;decreases 
C) decrease;increases 
D) decrease;decreases 
E) do not change;do not change 
A) increase;increases 
B) increase;decreases 
C) decrease;increases 
D) decrease;decreases 
E) do not change;do not change

Question 5

At a peak in the business cycle,the macroeconomic equilibrium is ________ the level of potential real GDP.

Accepted Answer

A) greater than 
B) equal to 
C) less than 
D) falling below 
E) None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion. 
A) greater than 
B) equal to 
C) less than 
D) falling below 
E) None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion.

Question 6

-In the figure above,the shift in the aggregate demand curve from AD1 to AD2 could be result of

Accepted Answer

A) a fall in the price level. 
B) a decrease in the quantity of money. 
C) an increase in government expenditures on goods and services. 
D) an increase in taxes. 
E) a rise in the price level. 
A) a fall in the price level. 
B) a decrease in the quantity of money. 
C) an increase in government expenditures on goods and services. 
D) an increase in taxes. 
E) a rise in the price level.

Question 7

A fall in the price level produces a ________ the aggregate supply curve.

Accepted Answer

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

Question 8

If firms' expectations about the future become pessimistic so that they think future profits will be lower,then

Accepted Answer

A) aggregate demand decreases and the AD curve shifts leftward. 
B) aggregate demand increases and the AD curve shifts rightward. 
C) the quantity of real GDP demanded decreases,and there is a movement up along the AD curve. 
D) the quantity of real GDP demanded increases,and there is a movement down along the AD curve. 
E) the aggregate demand curve does not shift,but potential GDP decreases. 
A) aggregate demand decreases and the AD curve shifts leftward. 
B) aggregate demand increases and the AD curve shifts rightward. 
C) the quantity of real GDP demanded decreases,and there is a movement up along the AD curve. 
D) the quantity of real GDP demanded increases,and there is a movement down along the AD curve. 
E) the aggregate demand curve does not shift,but potential GDP decreases.

Question 9

-In the above figure,illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.

Accepted Answer

@#IMG-DLM& An increase in the money price of a key

Question 10

Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar.If the price of a Chinese sweater was 120 yuan in both years,the new dollar price in 2011 would be ________ and imports of Chinese sweaters would ________.

Accepted Answer

A) $40;increase 
B) $30;decrease 
C) $40;decrease 
D) $30;increase 
E) $40;stay the same because the price stayed the same at 120 yuan 
A) $40;increase 
B) $30;decrease 
C) $40;decrease 
D) $30;increase 
E) $40;stay the same because the price stayed the same at 120 yuan

Question 11

A technological advance ________ aggregate supply,shifting the aggregate supply curve ________ and potentially bringing the ________ phase of the business cycle.

Accepted Answer

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

Question 12

What are sources that can start a demand-pull inflation?

Accepted Answer

Demand-pull inflation starts with an inc

Question 13

Which of the following shifts the aggregate demand curve rightward?

Accepted Answer

A) a decrease in expected future income 
B) a decrease in the price level 
C) a tax cut 
D) a decrease in the quantity of money 
E) a decrease in government expenditures on goods and services 
A) a decrease in expected future income 
B) a decrease in the price level 
C) a tax cut 
D) a decrease in the quantity of money 
E) a decrease in government expenditures on goods and services

Question 14

Which of the following statements is true?

Accepted Answer

A) An increase in potential GDP increases aggregate supply and shifts the AS curve leftward. 
B) A decrease in potential GDP decreases aggregate supply and shifts the AS curve leftward. 
C) An increase in the money wage rate shifts the AS curve rightward. 
D) A fall in the price level shifts the AS curve leftward. 
E) An increase in the money wage rate increases potential GDP. 
A) An increase in potential GDP increases aggregate supply and shifts the AS curve leftward. 
B) A decrease in potential GDP decreases aggregate supply and shifts the AS curve leftward. 
C) An increase in the money wage rate shifts the AS curve rightward. 
D) A fall in the price level shifts the AS curve leftward. 
E) An increase in the money wage rate increases potential GDP.

Question 15

The aggregate supply curve shifts rightward when

Accepted Answer

A) potential GDP decreases. 
B) the money wage rate falls. 
C) income taxes increase. 
D) government purchases increase. 
E) the money wage rate rises. 
A) potential GDP decreases. 
B) the money wage rate falls. 
C) income taxes increase. 
D) government purchases increase. 
E) the money wage rate rises.

Question 16

The quantity of real GDP supplied increases when the price level increases because

Accepted Answer

A) investment increases. 
B) the quantity of money increases. 
C) the real wage rate falls. 
D) the real wage rate rises. 
E) aggregate demand increases. 
A) investment increases. 
B) the quantity of money increases. 
C) the real wage rate falls. 
D) the real wage rate rises. 
E) aggregate demand increases.

Question 17

By itself,a supply shock,such as a hike in the price of oil,can

Accepted Answer

A) cause real GDP to permanently decrease year after year. 
B) not result in persisting inflation. 
C) be inflationary as long as there is no policy response. 
D) result in persisting inflation if aggregate supply persistently increases. 
E) result in a persisting wage-price spiral. 
A) cause real GDP to permanently decrease year after year. 
B) not result in persisting inflation. 
C) be inflationary as long as there is no policy response. 
D) result in persisting inflation if aggregate supply persistently increases. 
E) result in a persisting wage-price spiral.

Question 18

If the costs of production decrease,there is

Accepted Answer

A) an increase in aggregate supply and the AS curve shifts rightward. 
B) a decrease in aggregate supply and the AS curve shifts leftward. 
C) an increase in the quantity of real GDP supplied and a movement up along the AS curve. 
D) a decrease in the quantity of real GDP supplied and a movement down along the AS curve. 
E) an increase in aggregate supply and the AS curve shifts leftward. 
A) an increase in aggregate supply and the AS curve shifts rightward. 
B) a decrease in aggregate supply and the AS curve shifts leftward. 
C) an increase in the quantity of real GDP supplied and a movement up along the AS curve. 
D) a decrease in the quantity of real GDP supplied and a movement down along the AS curve. 
E) an increase in aggregate supply and the AS curve shifts leftward.

Question 19

A crisis in the Middle East drastically raises the price of petroleum.If the aggregate demand curve does not shift,then aggregate supply will ________,real GDP will ________,and the price level will ________.

Accepted Answer

A) increase;remain the same;increase 
B) decrease;decrease;increase 
C) increase;increase;increase 
D) remain the same;increase;increase 
E) decrease;remain the same;decrease 
A) increase;remain the same;increase 
B) decrease;decrease;increase 
C) increase;increase;increase 
D) remain the same;increase;increase 
E) decrease;remain the same;decrease

Question 20

The aggregate supply curve is a(n)________ curve because it represents the relationship between price level and the quantity of real GDP supplied,two items that are ________ correlated.

Accepted Answer

A) upward-sloping;negatively 
B) downward-sloping;positively 
C) upward-sloping;positively 
D) downward-sloping;negatively 
E) vertical;not 
A) upward-sloping;negatively 
B) downward-sloping;positively 
C) upward-sloping;positively 
D) downward-sloping;negatively 
E) vertical;not

Which of the following factors could start a demand-pull inflation?

Starting from a situation of full employment,an increase in aggregate demand creates and the price level.

If the economy is at macroeconomic equilibrium,then real GDP

As the price level rises relative to costs and the real wage rate falls,profits and the number of firms in business .

At a peak in the business cycle,the macroeconomic equilibrium is ________ the level of potential real GDP.

-In the figure above,the shift in the aggregate demand curve from AD1 to AD2 could be result of

A fall in the price level produces a ________ the aggregate supply curve.

If firms' expectations about the future become pessimistic so that they think future profits will be lower,then

-In the above figure,illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.

Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar.If the price of a Chinese sweater was 120 yuan in both years,the new dollar price in 2011 would be and imports of Chinese sweaters would .

A technological advance aggregate supply,shifting the aggregate supply curve and potentially bringing the phase of the business cycle.

What are sources that can start a demand-pull inflation?

Which of the following shifts the aggregate demand curve rightward?

Which of the following statements is true?

The aggregate supply curve shifts rightward when

The quantity of real GDP supplied increases when the price level increases because

By itself,a supply shock,such as a hike in the price of oil,can

If the costs of production decrease,there is

A crisis in the Middle East drastically raises the price of petroleum.If the aggregate demand curve does not shift,then aggregate supply will ,real GDP will ,and the price level will .

The aggregate supply curve is a(n) curve because it represents the relationship between price level and the quantity of real GDP supplied,two items that are correlated.

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

Which of the following factors could start a demand-pull inflation?

Starting from a situation of full employment,an increase in aggregate demand creates ________ and ________ the price level.

If the economy is at macroeconomic equilibrium,then real GDP

As the price level rises relative to costs and the real wage rate falls,profits ________ and the number of firms in business ________.

At a peak in the business cycle,the macroeconomic equilibrium is ________ the level of potential real GDP.

-In the figure above,the shift in the aggregate demand curve from AD1 to AD2 could be result of

A fall in the price level produces a ________ the aggregate supply curve.

If firms' expectations about the future become pessimistic so that they think future profits will be lower,then

-In the above figure,illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.

Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar.If the price of a Chinese sweater was 120 yuan in both years,the new dollar price in 2011 would be ________ and imports of Chinese sweaters would ________.

A technological advance ________ aggregate supply,shifting the aggregate supply curve ________ and potentially bringing the ________ phase of the business cycle.

What are sources that can start a demand-pull inflation?

Which of the following shifts the aggregate demand curve rightward?

Which of the following statements is true?

The aggregate supply curve shifts rightward when

The quantity of real GDP supplied increases when the price level increases because

By itself,a supply shock,such as a hike in the price of oil,can

If the costs of production decrease,there is

A crisis in the Middle East drastically raises the price of petroleum.If the aggregate demand curve does not shift,then aggregate supply will ________,real GDP will ________,and the price level will ________.

The aggregate supply curve is a(n)________ curve because it represents the relationship between price level and the quantity of real GDP supplied,two items that are ________ correlated.

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

Starting from a situation of full employment,an increase in aggregate demand creates and the price level.

As the price level rises relative to costs and the real wage rate falls,profits and the number of firms in business .

Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar.If the price of a Chinese sweater was 120 yuan in both years,the new dollar price in 2011 would be and imports of Chinese sweaters would .

A technological advance aggregate supply,shifting the aggregate supply curve and potentially bringing the phase of the business cycle.

A crisis in the Middle East drastically raises the price of petroleum.If the aggregate demand curve does not shift,then aggregate supply will ,real GDP will ,and the price level will .

The aggregate supply curve is a(n) curve because it represents the relationship between price level and the quantity of real GDP supplied,two items that are correlated.