Question 1

Full-employment GDP is also known as

Accepted Answer

A) realized GDP. 
B) potential GDP. 
C) politico-economic GDP. 
D) balanced-budget GDP. 
A) realized GDP. 
B) potential GDP. 
C) politico-economic GDP. 
D) balanced-budget GDP. B

Question 2

An increase in the price level will

Accepted Answer

A) shift the aggregate demand curve to the left. 
B) shift the aggregate demand curve to the right. 
C) move the economy up along a stationary aggregate demand curve. 
D) move the economy down along a stationary aggregate demand curve. 
A) shift the aggregate demand curve to the left. 
B) shift the aggregate demand curve to the right. 
C) move the economy up along a stationary aggregate demand curve. 
D) move the economy down along a stationary aggregate demand curve. C

Question 3

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

Accepted Answer

A) decrease;a higher price level reduces consumption,investment,and net exports. 
B) increase;a higher price level reduces consumption,investment,and net exports. 
C) decrease;a higher price level increases consumption,investment,and net exports. 
D) increase;a higher price level increases consumption,investment,and net exports. 
A) decrease;a higher price level reduces consumption,investment,and net exports. 
B) increase;a higher price level reduces consumption,investment,and net exports. 
C) decrease;a higher price level increases consumption,investment,and net exports. 
D) increase;a higher price level increases consumption,investment,and net exports. A

Question 4

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

Accepted Answer

@#IMG-DLM& The increase in the interest rate will

Question 5

The long-run aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 6

The ________ shows the relationship between the price level and quantity of real GDP demanded.

Accepted Answer

A) consumer price index 
B) aggregate expenditure line 
C) 45-degree line 
D) aggregate demand curve 
A) consumer price index 
B) aggregate expenditure line 
C) 45-degree line 
D) aggregate demand curve

Question 7

At a short-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

Accepted Answer

A) True 
 B)False

Question 8

Monetarists believe that the quantity of money should be increased at an increasing rate.

Accepted Answer

A) True 
 B)False

Question 9

FedEx plays such a large role in moving packages around the country that there is usually a close relationship between fluctuations in FedEx's business and fluctuations in GDP.Some economists refer to this relationship as the

Accepted Answer

A) shipping cycle. 
B) FedEx indicator. 
C) overnight delivery index. 
D) package prognostication process. 
A) shipping cycle. 
B) FedEx indicator. 
C) overnight delivery index. 
D) package prognostication process.

Question 10

Figure 15-1  
-Refer to Figure 15-1.Ceteris paribus,an increase in households' expectations of their future income would be represented by a movement from

Accepted Answer

A) AD1 to AD2. 
B) AD2 to AD1. 
C) point A to point B. 
D) point B to point A. 
A) AD1 to AD2. 
B) AD2 to AD1. 
C) point A to point B. 
D) point B to point A.

Question 11

At the beginning of the recession of 2007-2009,real GDP in the United States was ________ potential GDP,and in June 2009,real GDP was ________ potential GDP.

Accepted Answer

A) below;above 
B) below;below 
C) above;below 
D) above;above 
A) below;above 
B) below;below 
C) above;below 
D) above;above

Question 12

Figure 15-3  
-Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.

Accepted Answer

A) A and B 
B) A and C 
C) C and D 
D) B and D 
A) A and B 
B) A and C 
C) C and D 
D) B and D

Question 13

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Accepted Answer

A) falling oil prices 
B) increases in housing prices 
C) the financial crisis 
D) a decline in government spending 
A) falling oil prices 
B) increases in housing prices 
C) the financial crisis 
D) a decline in government spending

Question 14

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

Accepted Answer

A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. 
B) Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. 
C) Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. 
D) Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices. 
A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. 
B) Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. 
C) Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. 
D) Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.

Question 15

Figure 15-2  
-Refer to Figure 15-2.Ceteris paribus,a decrease in the capital stock would be represented by a movement from

Accepted Answer

A) SRAS1 to SRAS2. 
B) SRAS2 to SRAS1. 
C) point A to point B. 
D) point B to point A. 
A) SRAS1 to SRAS2. 
B) SRAS2 to SRAS1. 
C) point A to point B. 
D) point B to point A.

Question 16

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

Accepted Answer

A) True 
 B)False

Question 17

Figure 15-3  
-Refer to Figure 15-3.Suppose the economy is at point A.If the economy experiences a supply shock,where will the eventual short-run equilibrium be?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 18

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply and the price level.

Accepted Answer

A) negative;short-run 
B) positive;short-run 
C) negative;long-run 
D) positive;long-run 
A) negative;short-run 
B) positive;short-run 
C) negative;long-run 
D) positive;long-run

Question 19

Long-run macroeconomic equilibrium occurs when

Accepted Answer

A) aggregate demand equals short-run aggregate supply. 
B) aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve. 
C) structural and frictional unemployment equals zero. 
D) output is above potential GDP. 
A) aggregate demand equals short-run aggregate supply. 
B) aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve. 
C) structural and frictional unemployment equals zero. 
D) output is above potential GDP.

Question 20

What is potential GDP?

Accepted Answer

A) It is the level of real GDP in the long run. 
B) It is the difference between current GDP and maximum GDP. 
C) It is the level of real GDP in the short run. 
D) It is the level of GDP at which inflation is constant. 
A) It is the level of real GDP in the long run. 
B) It is the difference between current GDP and maximum GDP. 
C) It is the level of real GDP in the short run. 
D) It is the level of GDP at which inflation is constant.

Full-employment GDP is also known as

An increase in the price level will

An increase in the price level results in a(n) in the quantity of real GDP demanded because .

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

The long-run aggregate supply curve is vertical.

The ________ shows the relationship between the price level and quantity of real GDP demanded.

At a short-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

Monetarists believe that the quantity of money should be increased at an increasing rate.

FedEx plays such a large role in moving packages around the country that there is usually a close relationship between fluctuations in FedEx's business and fluctuations in GDP.Some economists refer to this relationship as the

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in households' expectations of their future income would be represented by a movement from

At the beginning of the recession of 2007-2009,real GDP in the United States was potential GDP,and in June 2009,real GDP was potential GDP.

Figure 15-3 -Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,a decrease in the capital stock would be represented by a movement from

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point A.If the economy experiences a supply shock,where will the eventual short-run equilibrium be?

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This relationship represents the relationship between the quantity of real GDP firms are willing to supply and the price level.

Long-run macroeconomic equilibrium occurs when

What is potential GDP?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 15: Aggregate Demand and Aggregate Supply Analysis

Full-employment GDP is also known as

An increase in the price level will

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

The long-run aggregate supply curve is vertical.

The ________ shows the relationship between the price level and quantity of real GDP demanded.

At a short-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

Monetarists believe that the quantity of money should be increased at an increasing rate.

FedEx plays such a large role in moving packages around the country that there is usually a close relationship between fluctuations in FedEx's business and fluctuations in GDP.Some economists refer to this relationship as the

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in households' expectations of their future income would be represented by a movement from

At the beginning of the recession of 2007-2009,real GDP in the United States was ________ potential GDP,and in June 2009,real GDP was ________ potential GDP.

Figure 15-3 -Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,a decrease in the capital stock would be represented by a movement from

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point A.If the economy experiences a supply shock,where will the eventual short-run equilibrium be?

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply and the price level.

Long-run macroeconomic equilibrium occurs when

What is potential GDP?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

An increase in the price level results in a(n) in the quantity of real GDP demanded because .

At the beginning of the recession of 2007-2009,real GDP in the United States was potential GDP,and in June 2009,real GDP was potential GDP.

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This relationship represents the relationship between the quantity of real GDP firms are willing to supply and the price level.