Question 1

Decreasing government spending and an oil embargo will both have an effect towards increasing the price level.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the information provided in Figure 12.6 below to answer the questions that follow.   Figure 12.6
-Refer to Figure 12.6.Suppose the equilibrium output is initially $600 billion.An oil embargo would probably

Accepted Answer

A) increase both the equilibrium output and the price level. 
B) decrease the equilibrium output and increase the price level. 
C) increase the equilibrium output and decrease the price level. 
D) decrease both the equilibrium output and the price level. 
A) increase both the equilibrium output and the price level. 
B) decrease the equilibrium output and increase the price level. 
C) increase the equilibrium output and decrease the price level. 
D) decrease both the equilibrium output and the price level.

Question 3

Refer to the information provided in Figure 12.7 below to answer the questions that follow.   Figure 12.7
-Refer to Figure 12.7.Which of the following statements characterizes an output level of $800 billion?

Accepted Answer

A) It is sustainable over the long run without inflation. 
B) It is achievable only in the long run. 
C) It is attainable in the short run but it is associated with increases in the price level. 
D) It can be achieved only if investment is independent of the interest rate. 
A) It is sustainable over the long run without inflation. 
B) It is achievable only in the long run. 
C) It is attainable in the short run but it is associated with increases in the price level. 
D) It can be achieved only if investment is independent of the interest rate.

Question 4

Decreasing government spending and decreasing the minimum wage are two policies that both work to decrease the price level.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following sequence of events follows an open market purchase by the Fed?

Accepted Answer

A) r↑ ⇒ I↓ ⇒ AE↓ ⇒ Y↓ 
B) r↑ ⇒ I↑ ⇒ AE↓ ⇒ Y↑ 
C) r↓ ⇒ I↑ ⇒ AE↑ ⇒ Y↑ 
D) r↓ ⇒ I↓ ⇒ AE↓ ⇒ Y↓ 
A) r↑ ⇒ I↓ ⇒ AE↓ ⇒ Y↓ 
B) r↑ ⇒ I↑ ⇒ AE↓ ⇒ Y↑ 
C) r↓ ⇒ I↑ ⇒ AE↑ ⇒ Y↑ 
D) r↓ ⇒ I↓ ⇒ AE↓ ⇒ Y↓

Question 6

Potential output is equal to

Accepted Answer

A) long run aggregate demand. 
B) short-run aggregate demand. 
C) short-run aggregate supply. 
D) long-run aggregate supply. 
A) long run aggregate demand. 
B) short-run aggregate demand. 
C) short-run aggregate supply. 
D) long-run aggregate supply.

Question 7

Refer to the information provided in Figure 12.2 below to answer the questions that follow.   Figure 12.2
-Refer to Figure 12.2.This economy reaches capacity at

Accepted Answer

A) $300 billion. 
B) $600 billion. 
C) $900 billion. 
D) an output level that is indeterminate from this information because aggregate demand is not given. 
A) $300 billion. 
B) $600 billion. 
C) $900 billion. 
D) an output level that is indeterminate from this information because aggregate demand is not given.

Question 8

________ shifts the Fed rule to the right.

Accepted Answer

A) An increase in government spending 
B) A decrease in government spending 
C) A decrease in the price level 
D) An increase in the Z factors 
A) An increase in government spending 
B) A decrease in government spending 
C) A decrease in the price level 
D) An increase in the Z factors

Question 9

An oil price increase would

Accepted Answer

A) increase aggregate demand. 
B) decrease short-run aggregate supply. 
C) decrease aggregate demand. 
D) increase short-run aggregate supply. 
A) increase aggregate demand. 
B) decrease short-run aggregate supply. 
C) decrease aggregate demand. 
D) increase short-run aggregate supply.

Question 10

The aggregate supply curve

Accepted Answer

A) is the sum of the individual supply curves in the economy. 
B) is a market supply curve. 
C) embodies the same logic that lies behind an individual firm's supply curve. 
D) relates output with the price level. 
A) is the sum of the individual supply curves in the economy. 
B) is a market supply curve. 
C) embodies the same logic that lies behind an individual firm's supply curve. 
D) relates output with the price level.

Question 11

The quantity of output supplied at different price levels is represented by the

Accepted Answer

A) production function. 
B) aggregate demand curve. 
C) aggregate supply curve. 
D) aggregate expenditures curve. 
A) production function. 
B) aggregate demand curve. 
C) aggregate supply curve. 
D) aggregate expenditures curve.

Question 12

If ________ equilibrium output ________,the price level rises.

Accepted Answer

A) actual;is below potential GDP 
B) potential;is equal to actual GDP 
C) potential;exceeds actual GDP 
D) actual;exceeds potential GDP 
A) actual;is below potential GDP 
B) potential;is equal to actual GDP 
C) potential;exceeds actual GDP 
D) actual;exceeds potential GDP

Question 13

The aggregate demand curve shows a ________ relationship between ________ and aggregate output ________.

Accepted Answer

A) positive;the interest rate;demanded 
B) negative;the price level;supplied 
C) positive;the price level;demanded 
D) negative;the price level;demanded 
A) positive;the interest rate;demanded 
B) negative;the price level;supplied 
C) positive;the price level;demanded 
D) negative;the price level;demanded

Question 14

A movement down the aggregate supply curve is caused by a(n)

Accepted Answer

A) decrease in aggregate supply. 
B) increase in aggregate supply. 
C) decrease in the price level. 
D) increase in the price level. 
A) decrease in aggregate supply. 
B) increase in aggregate supply. 
C) decrease in the price level. 
D) increase in the price level.

Question 15

When the ________ increases,then potential output increases.

Accepted Answer

A) long-run aggregate supply 
B) short-run aggregate supply 
C) long-run aggregate demand 
D) short-run aggregate demand 
A) long-run aggregate supply 
B) short-run aggregate supply 
C) long-run aggregate demand 
D) short-run aggregate demand

Question 16

Refer to the information provided in Figure 12.8 below to answer the questions that follow.   Figure 12.8
-Refer to Figure 12.8.If the economy is currently at Point D producing output level Y2,which of the following is NOT true?

Accepted Answer

A) The economy is operating below full employment. 
B) Input prices are likely to fall. 
C) Aggregate supply shifts to the right and the economy ends up at Point E. 
D) The economy is operating above full employment. 
A) The economy is operating below full employment. 
B) Input prices are likely to fall. 
C) Aggregate supply shifts to the right and the economy ends up at Point E. 
D) The economy is operating above full employment.

Question 17

Refer to the information provided in Figure 12.8 below to answer the questions that follow.   Figure 12.8
-Refer to Figure 12.8.For this economy to produce Y1 and sustain it without inflation

Accepted Answer

A) the price of oil must increase. 
B) the government must increase spending. 
C) the government must decrease spending. 
D) potential output must increase. 
A) the price of oil must increase. 
B) the government must increase spending. 
C) the government must decrease spending. 
D) potential output must increase.

Question 18

________ shifts the IS curve to the left.

Accepted Answer

A) An increase in government spending 
B) A decrease in government spending 
C) A decrease in the price level 
D) An increase in the Z factors 
A) An increase in government spending 
B) A decrease in government spending 
C) A decrease in the price level 
D) An increase in the Z factors

Question 19

If the economy is operating on the relatively vertical segment of the aggregate supply curve,an increase in aggregate demand causes a ________ change in the price level and a ________ change in output.

Accepted Answer

A) small;small 
B) big;big 
C) big;small 
D) small;big 
A) small;small 
B) big;big 
C) big;small 
D) small;big

Question 20

Refer to the information provided in Figure 12.8 below to answer the questions that follow.   Figure 12.8
-Refer to Figure 12.8.Suppose the economy is currently at Point A producing potential output Y0.If the government increases spending,the economy moves to Point ________ in the short-run and to Point ________ in the long-run.

Accepted Answer

A) D;E 
B) B;C 
C) C;B 
D) B;D 
A) D;E 
B) B;C 
C) C;B 
D) B;D

Decreasing government spending and an oil embargo will both have an effect towards increasing the price level.

Refer to the information provided in Figure 12.6 below to answer the questions that follow. Figure 12.6 -Refer to Figure 12.6.Suppose the equilibrium output is initially $600 billion.An oil embargo would probably

Refer to the information provided in Figure 12.7 below to answer the questions that follow. Figure 12.7 -Refer to Figure 12.7.Which of the following statements characterizes an output level of $800 billion?

Decreasing government spending and decreasing the minimum wage are two policies that both work to decrease the price level.

Which of the following sequence of events follows an open market purchase by the Fed?

Potential output is equal to

Refer to the information provided in Figure 12.2 below to answer the questions that follow. Figure 12.2 -Refer to Figure 12.2.This economy reaches capacity at

________ shifts the Fed rule to the right.

An oil price increase would

The aggregate supply curve

The quantity of output supplied at different price levels is represented by the

If equilibrium output ,the price level rises.

The aggregate demand curve shows a relationship between and aggregate output .

A movement down the aggregate supply curve is caused by a(n)

When the ________ increases,then potential output increases.

Refer to the information provided in Figure 12.8 below to answer the questions that follow. Figure 12.8 -Refer to Figure 12.8.If the economy is currently at Point D producing output level Y2,which of the following is NOT true?

Refer to the information provided in Figure 12.8 below to answer the questions that follow. Figure 12.8 -Refer to Figure 12.8.For this economy to produce Y1 and sustain it without inflation

________ shifts the IS curve to the left.

If the economy is operating on the relatively vertical segment of the aggregate supply curve,an increase in aggregate demand causes a change in the price level and a change in output.

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

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

Decreasing government spending and an oil embargo will both have an effect towards increasing the price level.

Refer to the information provided in Figure 12.6 below to answer the questions that follow. Figure 12.6 -Refer to Figure 12.6.Suppose the equilibrium output is initially $600 billion.An oil embargo would probably

Refer to the information provided in Figure 12.7 below to answer the questions that follow. Figure 12.7 -Refer to Figure 12.7.Which of the following statements characterizes an output level of $800 billion?

Decreasing government spending and decreasing the minimum wage are two policies that both work to decrease the price level.

Which of the following sequence of events follows an open market purchase by the Fed?

Potential output is equal to

Refer to the information provided in Figure 12.2 below to answer the questions that follow. Figure 12.2 -Refer to Figure 12.2.This economy reaches capacity at

________ shifts the Fed rule to the right.

An oil price increase would

The aggregate supply curve

The quantity of output supplied at different price levels is represented by the

If ________ equilibrium output ________,the price level rises.

The aggregate demand curve shows a ________ relationship between ________ and aggregate output ________.

A movement down the aggregate supply curve is caused by a(n)

When the ________ increases,then potential output increases.

Refer to the information provided in Figure 12.8 below to answer the questions that follow. Figure 12.8 -Refer to Figure 12.8.If the economy is currently at Point D producing output level Y2,which of the following is NOT true?

Refer to the information provided in Figure 12.8 below to answer the questions that follow. Figure 12.8 -Refer to Figure 12.8.For this economy to produce Y1 and sustain it without inflation

________ shifts the IS curve to the left.

If the economy is operating on the relatively vertical segment of the aggregate supply curve,an increase in aggregate demand causes a ________ change in the price level and a ________ change in output.

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

If equilibrium output ,the price level rises.

The aggregate demand curve shows a relationship between and aggregate output .

If the economy is operating on the relatively vertical segment of the aggregate supply curve,an increase in aggregate demand causes a change in the price level and a change in output.