Question 1

In a demand-pull inflation,money wage rates rise because

Accepted Answer

A) a decrease in aggregate demand creates a labor shortage. 
B) an increase in aggregate demand creates a labor surplus. 
C) an increase in aggregate demand creates a labor shortage. 
D) a decrease in aggregate demand creates a labor surplus. 
E) an increase in aggregate supply creates a labor shortage. 
A) a decrease in aggregate demand creates a labor shortage. 
B) an increase in aggregate demand creates a labor surplus. 
C) an increase in aggregate demand creates a labor shortage. 
D) a decrease in aggregate demand creates a labor surplus. 
E) an increase in aggregate supply creates a labor shortage.

Question 2

Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve?

Accepted Answer

A) a change in foreign incomes 
B) a change in the price level 
C) a change in monetary policy 
D) a change in expectations about the future 
E) a change in government expenditures on goods and services 
A) a change in foreign incomes 
B) a change in the price level 
C) a change in monetary policy 
D) a change in expectations about the future 
E) a change in government expenditures on goods and services

Question 3

The figure above shows the aggregate supply curve and potential GDP.
-Based on the figure above,the aggregate supply curve shifts rightward and the potential GDP line does not change when

Accepted Answer

A) the money wage rate rises. 
B) the price level rises. 
C) the money wage rate falls. 
D) the price level falls. 
E) both the price level and money wage rate rise by the same proportion. 
A) the money wage rate rises. 
B) the price level rises. 
C) the money wage rate falls. 
D) the price level falls. 
E) both the price level and money wage rate rise by the same proportion.

Question 4

Which of the following does NOT affect potential GDP?

Accepted Answer

A) the quantity of money 
B) the quantity of labor employed 
C) the quantity of capital and human capital 
D) the amount of entrepreneurial talent available 
E) the quantity of land and natural resources 
A) the quantity of money 
B) the quantity of labor employed 
C) the quantity of capital and human capital 
D) the amount of entrepreneurial talent available 
E) the quantity of land and natural resources

Question 5

Moving along the potential GDP line,the money wage rate changes by the same percentage as the change in the price level so that the real wage rate

Accepted Answer

A) increases. 
B) decreases. 
C) stays at the full-employment equilibrium level. 
D) might either increase or decrease. 
E) stays the same,though not necessarily at the full-employment equilibrium level. 
A) increases. 
B) decreases. 
C) stays at the full-employment equilibrium level. 
D) might either increase or decrease. 
E) stays the same,though not necessarily at the full-employment equilibrium level.

Question 6

If potential GDP increases,

Accepted Answer

A) aggregate supply does not change. 
B) the quantity of aggregate supply decreases. 
C) aggregate supply increases. 
D) the price level rises. 
E) the money wage rate must have fallen. 
A) aggregate supply does not change. 
B) the quantity of aggregate supply decreases. 
C) aggregate supply increases. 
D) the price level rises. 
E) the money wage rate must have fallen.

Question 7

The figure above shows aggregate demand curves.
-Based on the figure above,the aggregate demand curve will shift from AD0 to AD2 when

Accepted Answer

A) potential GDP increases. 
B) the price level falls. 
C) the price level rises. 
D) government expenditure decreases. 
E) taxes are lowered. 
A) potential GDP increases. 
B) the price level falls. 
C) the price level rises. 
D) government expenditure decreases. 
E) taxes are lowered.

Question 8

The government passes a law which doubles the wages of all workers.Aggregate supply will ________,and real GDP will ________,and the price level will ________.

Accepted Answer

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

Question 9

Last year the price level increased from 118 to 122.The increase in the price level leads to a decrease in

Accepted Answer

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

Question 10

A change in the price level produces a ________ the aggregate demand curve.
I.shift in
Ii.change in the slope of
Iii.movement along

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 11

How does a fall in the money wage rate affect the aggregate supply curve?

Accepted Answer

A fall in the money

Question 12

A deep recession hits the world economy,and real GDP in the rest of the world decreases.In the United States,

Accepted Answer

A) aggregate supply and aggregate demand both increase,and the price level rises. 
B) aggregate supply decreases while aggregate demand does not change,and the price level rises. 
C) aggregate demand decreases while aggregate supply does not change,and the price level falls. 
D) aggregate supply increases and aggregate demand decreases,so the effect on the price level is uncertain. 
E) aggregate supply and aggregate demand both decrease,and the price level rises. 
A) aggregate supply and aggregate demand both increase,and the price level rises. 
B) aggregate supply decreases while aggregate demand does not change,and the price level rises. 
C) aggregate demand decreases while aggregate supply does not change,and the price level falls. 
D) aggregate supply increases and aggregate demand decreases,so the effect on the price level is uncertain. 
E) aggregate supply and aggregate demand both decrease,and the price level rises.

Question 13

In reality,AD rarely ________;however,the economy performs as though it does when it ________.

Accepted Answer

A) decreases;fluctuates with potential GDP 
B) increases;decreases at a pace much slower than potential GDP 
C) stagnates;increases at a pace much faster than potential GDP 
D) decreases;increases at a pace much slower than potential GDP 
E) decreases;increases at a pace much faster than potential GDP 
A) decreases;fluctuates with potential GDP 
B) increases;decreases at a pace much slower than potential GDP 
C) stagnates;increases at a pace much faster than potential GDP 
D) decreases;increases at a pace much slower than potential GDP 
E) decreases;increases at a pace much faster than potential GDP

Question 14

When cost-push inflation starts,real GDP ________ and the unemployment rate ________.

Accepted Answer

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

Question 15

It is profitable to hire more labor if the price level ________ and the money wage rate ________.

Accepted Answer

A) rises;falls 
B) falls;rises 
C) falls;does not change 
D) does not change;rises 
E) rises;rises by the same percentage 
A) rises;falls 
B) falls;rises 
C) falls;does not change 
D) does not change;rises 
E) rises;rises by the same percentage

Question 16

The aggregate supply curve is

Accepted Answer

A) upward sloping. 
B) downward sloping. 
C) a vertical line. 
D) a horizontal line. 
E) U-shaped. 
A) upward sloping. 
B) downward sloping. 
C) a vertical line. 
D) a horizontal line. 
E) U-shaped.

Question 17

A rise in the price level

Accepted Answer

A) raises the buying power of money. 
B) decreases the prices of exports. 
C) lowers the buying power of money. 
D) increases aggregate demand. 
E) makes the aggregate demand curve steeper. 
A) raises the buying power of money. 
B) decreases the prices of exports. 
C) lowers the buying power of money. 
D) increases aggregate demand. 
E) makes the aggregate demand curve steeper.

Question 18

When the price level rises there is a ________ the aggregate demand curve.

Accepted Answer

A) rightward shift of 
B) movement down along 
C) leftward shift of 
D) movement up along 
E) rotation of 
A) rightward shift of 
B) movement down along 
C) leftward shift of 
D) movement up along 
E) rotation of

Question 19

To prevent demand-pull inflation,

Accepted Answer

A) firms must refuse to increase the money wage rate. 
B) firms must refuse to increase the real wage rate. 
C) the Fed must not let the quantity of money persistently rise. 
D) the natural unemployment rate must increase. 
E) real GDP must increase. 
A) firms must refuse to increase the money wage rate. 
B) firms must refuse to increase the real wage rate. 
C) the Fed must not let the quantity of money persistently rise. 
D) the natural unemployment rate must increase. 
E) real GDP must increase.

Question 20

Cost-push inflation can be started by

Accepted Answer

A) a decrease in the money wage rate. 
B) an increase in the money prices of raw materials. 
C) an increase in the quantity of money. 
D) an increase in government expenditure on goods and services. 
E) a decrease in government expenditure on goods and services. 
A) a decrease in the money wage rate. 
B) an increase in the money prices of raw materials. 
C) an increase in the quantity of money. 
D) an increase in government expenditure on goods and services. 
E) a decrease in government expenditure on goods and services.

In a demand-pull inflation,money wage rates rise because

Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve?

The figure above shows the aggregate supply curve and potential GDP. -Based on the figure above,the aggregate supply curve shifts rightward and the potential GDP line does not change when

Which of the following does NOT affect potential GDP?

Moving along the potential GDP line,the money wage rate changes by the same percentage as the change in the price level so that the real wage rate

If potential GDP increases,

The figure above shows aggregate demand curves. -Based on the figure above,the aggregate demand curve will shift from AD0 to AD2 when

The government passes a law which doubles the wages of all workers.Aggregate supply will ,and real GDP will ,and the price level will .

Last year the price level increased from 118 to 122.The increase in the price level leads to a decrease in

A change in the price level produces a ________ the aggregate demand curve. I.shift in Ii.change in the slope of Iii.movement along

How does a fall in the money wage rate affect the aggregate supply curve?

A deep recession hits the world economy,and real GDP in the rest of the world decreases.In the United States,

In reality,AD rarely ;however,the economy performs as though it does when it .

When cost-push inflation starts,real GDP and the unemployment rate .

It is profitable to hire more labor if the price level and the money wage rate .

The aggregate supply curve is

A rise in the price level

When the price level rises there is a ________ the aggregate demand curve.

To prevent demand-pull inflation,

Cost-push inflation can be started by

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 a demand-pull inflation,money wage rates rise because

Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve?

The figure above shows the aggregate supply curve and potential GDP. -Based on the figure above,the aggregate supply curve shifts rightward and the potential GDP line does not change when

Which of the following does NOT affect potential GDP?

Moving along the potential GDP line,the money wage rate changes by the same percentage as the change in the price level so that the real wage rate

If potential GDP increases,

The figure above shows aggregate demand curves. -Based on the figure above,the aggregate demand curve will shift from AD0 to AD2 when

The government passes a law which doubles the wages of all workers.Aggregate supply will ________,and real GDP will ________,and the price level will ________.

Last year the price level increased from 118 to 122.The increase in the price level leads to a decrease in

A change in the price level produces a ________ the aggregate demand curve. I.shift in Ii.change in the slope of Iii.movement along

How does a fall in the money wage rate affect the aggregate supply curve?

A deep recession hits the world economy,and real GDP in the rest of the world decreases.In the United States,

In reality,AD rarely ________;however,the economy performs as though it does when it ________.

When cost-push inflation starts,real GDP ________ and the unemployment rate ________.

It is profitable to hire more labor if the price level ________ and the money wage rate ________.

The aggregate supply curve is

A rise in the price level

When the price level rises there is a ________ the aggregate demand curve.

To prevent demand-pull inflation,

Cost-push inflation can be started by

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

The government passes a law which doubles the wages of all workers.Aggregate supply will ,and real GDP will ,and the price level will .

In reality,AD rarely ;however,the economy performs as though it does when it .

When cost-push inflation starts,real GDP and the unemployment rate .

It is profitable to hire more labor if the price level and the money wage rate .