Question 1

If government spending increases,then the IS curve shifts to the right.

Accepted Answer

A) True 
 B)False  True

Question 2

An increase in aggregate demand when the economy is operating at full capacity is likely to result in

Accepted Answer

A) an increase in both output and the overall price level. 
B) an increase in output but no increase in the overall price level. 
C) an increase in the overall price level but no increase in output. 
D) no increase in either output or the overall price level. 
A) an increase in both output and the overall price level. 
B) an increase in output but no increase in the overall price level. 
C) an increase in the overall price level but no increase in output. 
D) no increase in either output or the overall price level. C

Question 3

Refer to the information provided in Figure 12.3 below to answer the questions that follow.   Figure 12.3
-Refer to Figure 12.3.An increase in aggregate supply is represented by

Accepted Answer

A) a movement from Point B to Point A along AS1. 
B) a movement from Point B to Point C along AS1. 
C) a shift from AS1 to AS2. 
D) a shift from AS1 to AS0. 
A) a movement from Point B to Point A along AS1. 
B) a movement from Point B to Point C along AS1. 
C) a shift from AS1 to AS2. 
D) a shift from AS1 to AS0. D

Question 4

A decrease in the price level raises the real value of wealth.

Accepted Answer

A) True 
 B)False

Question 5

The change in consumption brought about by a change in purchasing power of savings that results from a change in the price level is the

Accepted Answer

A) consumption effect. 
B) money supply effect. 
C) real wealth effect. 
D) interest rate effect. 
A) consumption effect. 
B) money supply effect. 
C) real wealth effect. 
D) interest rate effect.

Question 6

An increase in the price level will cause a decrease in the aggregate amount of output supplied.

Accepted Answer

A) True 
 B)False

Question 7

To increase the price level the government could adopt policies that

Accepted Answer

A) increase aggregate supply and aggregate demand. 
B) decrease aggregate supply and aggregate demand. 
C) increase aggregate supply and decrease aggregate demand. 
D) decrease aggregate supply and increase aggregate demand. 
A) increase aggregate supply and aggregate demand. 
B) decrease aggregate supply and aggregate demand. 
C) increase aggregate supply and decrease aggregate demand. 
D) decrease aggregate supply and increase aggregate demand.

Question 8

If the combination r = 10% and Y = $200 billion is on the IS curve,we know that the combination r = 10% and Y = $300 billion would represent

Accepted Answer

A) the IS curve shifting to the right. 
B) the IS curve shifting to the left. 
C) a movement up the IS curve. 
D) a movement down the IS curve. 
A) the IS curve shifting to the right. 
B) the IS curve shifting to the left. 
C) a movement up the IS curve. 
D) a movement down the IS curve.

Question 9

If there is a decrease in the percentage of employees whose wages adjust automatically with changes in the price level,the aggregate supply curve will become

Accepted Answer

A) steeper. 
B) flatter. 
C) horizontal. 
D) vertical. 
A) steeper. 
B) flatter. 
C) horizontal. 
D) vertical.

Question 10

An increase in the price of inputs will most likely lead to a higher price level.

Accepted Answer

A) True 
 B)False

Question 11

If the price level falls,the aggregate supply decreases as a result of the aggregate demand curve shifting left.

Accepted Answer

A) True 
 B)False

Question 12

Other things equal,an increase in government spending shifts

Accepted Answer

A) the AD curve to the left. 
B) the AD curve to the right. 
C) the AS curve to the left. 
D) the AS curve to the right. 
A) the AD curve to the left. 
B) the AD curve to the right. 
C) the AS curve to the left. 
D) the AS curve to the right.

Question 13

Refer to the information provided in Figure 12.4 below to answer the questions that follow.   Figure 12.4
-Refer to Figure 12.4.Suppose the economy is at Point A,an oil price increase could move the economy to Point

Accepted Answer

A) E. 
B) B. 
C) C. 
D) D. 
A) E. 
B) B. 
C) C. 
D) D.

Question 14

Refer to the information provided in Figure 12.5 below to answer the questions that follow.   Figure 12.5
-Refer to Figure 12.5.An increase in government spending shifts the ________ to the ________.

Accepted Answer

A) IS curve;left 
B) Fed rule;right 
C) IS curve;right 
D) Fed rule;left 
A) IS curve;left 
B) Fed rule;right 
C) IS curve;right 
D) Fed rule;left

Question 15

The IS curve shows combinations of output and interest rates consistent with equilibrium in the goods market.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the information provided in Figure 12.7 below to answer the questions that follow.   Figure 12.7
-Refer to Figure 12.7.Potential output

Accepted Answer

A) is $400 million. 
B) is $700 million. 
C) is $800 million. 
D) cannot be determined from this information because aggregate demand is not given. 
A) is $400 million. 
B) is $700 million. 
C) is $800 million. 
D) cannot be determined from this information because aggregate demand is not given.

Question 17

An increase in aggregate demand when the economy is operating at high levels of output is likely to result in

Accepted Answer

A) a large increase in both output and the overall price level. 
B) an increase in the overall price level but little or no increase in output. 
C) an increase in output but little or no increase in the overall price level. 
D) little or no increase in either output or the overall price level. 
A) a large increase in both output and the overall price level. 
B) an increase in the overall price level but little or no increase in output. 
C) an increase in output but little or no increase in the overall price level. 
D) little or no increase in either output or the overall price level.

Question 18

Refer to the information provided in Figure 12.5 below to answer the questions that follow.   Figure 12.5
-Refer to Figure 12.5.Which of the following combinations would definitely increase the equilibrium interest rate?

Accepted Answer

A) government spending increases and the price level increases 
B) government spending increases and the price level decreases 
C) government spending decreases and the price level increases 
D) government spending decreases and the price level decreases 
A) government spending increases and the price level increases 
B) government spending increases and the price level decreases 
C) government spending decreases and the price level increases 
D) government spending decreases and the price level decreases

Question 19

Refer to the information provided in Figure 12.1 below to answer the questions that follow.   Figure 12.1
-Refer to Figure 12.1.At aggregate output levels above $1,500 billion,firms in this economy are most likely experiencing

Accepted Answer

A) costs increasing as fast as output prices. 
B) costs lagging behind increases in output prices. 
C) costs falling as prices output increase. 
D) costs rising faster than output prices. 
A) costs increasing as fast as output prices. 
B) costs lagging behind increases in output prices. 
C) costs falling as prices output increase. 
D) costs rising faster than output prices.

Question 20

Refer to the information provided in Figure 12.2 below to answer the questions that follow.   Figure 12.2
-Refer to Figure 12.2.Between the output levels of $300 billion and $600 billion,the relationship between the price level and output is

Accepted Answer

A) negative. 
B) positive. 
C) constant. 
D) There is no relationship between the price level and output. 
A) negative. 
B) positive. 
C) constant. 
D) There is no relationship between the price level and output.

Exam 12: The Determination of Aggregate Output, the Price Level, and the Interest Rate

If government spending increases,then the IS curve shifts to the right.

An increase in aggregate demand when the economy is operating at full capacity is likely to result in

Refer to the information provided in Figure 12.3 below to answer the questions that follow. Figure 12.3 -Refer to Figure 12.3.An increase in aggregate supply is represented by

A decrease in the price level raises the real value of wealth.

The change in consumption brought about by a change in purchasing power of savings that results from a change in the price level is the

An increase in the price level will cause a decrease in the aggregate amount of output supplied.

To increase the price level the government could adopt policies that

If the combination r = 10% and Y = $200 billion is on the IS curve,we know that the combination r = 10% and Y = $300 billion would represent

If there is a decrease in the percentage of employees whose wages adjust automatically with changes in the price level,the aggregate supply curve will become

An increase in the price of inputs will most likely lead to a higher price level.

If the price level falls,the aggregate supply decreases as a result of the aggregate demand curve shifting left.

Other things equal,an increase in government spending shifts

Refer to the information provided in Figure 12.4 below to answer the questions that follow. Figure 12.4 -Refer to Figure 12.4.Suppose the economy is at Point A,an oil price increase could move the economy to Point

Refer to the information provided in Figure 12.5 below to answer the questions that follow. Figure 12.5 -Refer to Figure 12.5.An increase in government spending shifts the ________ to the ________.

The IS curve shows combinations of output and interest rates consistent with equilibrium in the goods market.

Refer to the information provided in Figure 12.7 below to answer the questions that follow. Figure 12.7 -Refer to Figure 12.7.Potential output

An increase in aggregate demand when the economy is operating at high levels of output is likely to result in

Refer to the information provided in Figure 12.5 below to answer the questions that follow. Figure 12.5 -Refer to Figure 12.5.Which of the following combinations would definitely increase the equilibrium interest rate?

Refer to the information provided in Figure 12.1 below to answer the questions that follow. Figure 12.1 -Refer to Figure 12.1.At aggregate output levels above $1,500 billion,firms in this economy are most likely experiencing

Refer to the information provided in Figure 12.2 below to answer the questions that follow. Figure 12.2 -Refer to Figure 12.2.Between the output levels of $300 billion and $600 billion,the relationship between the price level and output is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

Policy Effects and Costs Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade,comparative Advantage,and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters

Refer to the information provided in Figure 12.5 below to answer the questions that follow. Figure 12.5 -Refer to Figure 12.5.An increase in government spending shifts the to the .