Question 1

To decrease 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 2

An oil price decrease 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 3

Other things equal, a decrease 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 4

To decrease output the government could

Accepted Answer

A)  adopt policies that discourage immigration and increase government spending. 
B)  adopt policies that encourage immigration and decrease government spending. 
C)  adopt policies that encourage technological advancement and increase government spending. 
D)  adopt policies that discourage technological advancement and decrease government spending. 
A)  adopt policies that discourage immigration and increase government spending. 
B)  adopt policies that encourage immigration and decrease government spending. 
C)  adopt policies that encourage technological advancement and increase government spending. 
D)  adopt policies that discourage technological advancement and decrease government spending.

Question 5

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 6

Refer to the information provided in Figure 11.1 below to answer the questions that follow.   Figure 11.1
-Refer to Figure 11.1. At $1,500 billion, this economy

Accepted Answer

A)  is producing below its capacity. 
B)  is above its production capacity. 
C)  reaches its capacity. 
D)  any of the above can be correct 
A)  is producing below its capacity. 
B)  is above its production capacity. 
C)  reaches its capacity. 
D)  any of the above can be correct

Question 7

11.3 The Final Equilibrium
Refer to the information provided in Figure 11.6 below to answer the questions that follow.   Figure 11.6
-Refer to Figure 11.6. Suppose the equilibrium price level is 110. An increase in the supply of oil 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 8

A decrease in the "Z" factors shifts the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 9

Other things equal, an increase in the Z factors ________ the equilibrium interest rate and ________ equilibrium output.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 10

When the general price level falls

Accepted Answer

A)  consumption rises as a result of the real wealth effect. 
B)  consumption decreases as a result of the multiplier effect. 
C)  investment falls as a result of the real wealth effect. 
D)  investment falls as a result of the multiplier effect. 
A)  consumption rises as a result of the real wealth effect. 
B)  consumption decreases as a result of the multiplier effect. 
C)  investment falls as a result of the real wealth effect. 
D)  investment falls as a result of the multiplier effect.

Question 11

If the United States were to pass legislation that would make it harder for people to emigrate to the United States, this would cause

Accepted Answer

A)  the short-run aggregate supply curve to become nearly vertical at all levels of output. 
B)  the short-run aggregate supply curve to shift to the left. 
C)  the short-run aggregate supply curve to become flatter. 
D)  the short-run aggregate supply curve to shift to the right. 
A)  the short-run aggregate supply curve to become nearly vertical at all levels of output. 
B)  the short-run aggregate supply curve to shift to the left. 
C)  the short-run aggregate supply curve to become flatter. 
D)  the short-run aggregate supply curve to shift to the right.

Question 12

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

Accepted Answer

A)  aggregate demand; aggregate supply 
B)  aggregate supply; aggregate demand 
C)  output; price level 
D)  price level; output 
A)  aggregate demand; aggregate supply 
B)  aggregate supply; aggregate demand 
C)  output; price level 
D)  price level; output

Question 13

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 14

Refer to the information provided in Figure 11.1 below to answer the questions that follow.   Figure 11.1
-Refer to Figure 11.1. This economy is most likely experiencing costs increasing as fast as output prices are increasing at aggregate output levels

Accepted Answer

A)  above $1,500 billion. 
B)  between $1,000 billion and $1,500 billion. 
C)  between $500 billion and $1,000 billion. 
D)  below $500 billion. 
A)  above $1,500 billion. 
B)  between $1,000 billion and $1,500 billion. 
C)  between $500 billion and $1,000 billion. 
D)  below $500 billion.

Question 15

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 16

If input prices change at exactly the same rate as output prices, the aggregate supply curve will be vertical.

Accepted Answer

A) True 
 B)False

Question 17

Refer to the information provided in Figure 11.3 below to answer the questions that follow.   Figure 11.3
-Refer to Figure 11.3. Following the recession of 2008-2009, many firms in the United States eventually began investing in new capital. This increase in investment in new capital would cause

Accepted Answer

A)  the short-run aggregate supply curve to shift from AS1 to AS0. 
B)  the short-run aggregate supply curve to shift from AS1 to AS2. 
C)  the economy to move from Point B to Point A along AS1. 
D)  the economy to move from Point C to Point B along AS1. 
A)  the short-run aggregate supply curve to shift from AS1 to AS0. 
B)  the short-run aggregate supply curve to shift from AS1 to AS2. 
C)  the economy to move from Point B to Point A along AS1. 
D)  the economy to move from Point C to Point B along AS1.

Question 18

When the aggregate supply curve is horizontal,

Accepted Answer

A)  many firms are likely to have excess capacity. 
B)  the economy is close to full capacity. 
C)  resources are being utilized at full capacity. 
D)  the prices level increases with additional production. 
A)  many firms are likely to have excess capacity. 
B)  the economy is close to full capacity. 
C)  resources are being utilized at full capacity. 
D)  the prices level increases with additional production.

Question 19

11.5 The Long-Run AS Curve
Refer to the information provided in Figure 11.7 below to answer the questions that follow.   Figure 11.7
-Refer to Figure 11.7. The level of aggregate output that can be sustained in the long run without inflation

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 20

In an economy, when the price level falls, consumers and firms buy more goods and services. This relationship is represented by the

Accepted Answer

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

Exam 11: The Determination of Aggregate Output, the Price Level, and the Interest Rate

To decrease the price level the government could adopt policies that

An oil price decrease would

Other things equal, a decrease in government spending shifts

To decrease output the government could

The aggregate supply curve

Refer to the information provided in Figure 11.1 below to answer the questions that follow. Figure 11.1 -Refer to Figure 11.1. At $1,500 billion, this economy

11.3 The Final Equilibrium Refer to the information provided in Figure 11.6 below to answer the questions that follow. Figure 11.6 -Refer to Figure 11.6. Suppose the equilibrium price level is 110. An increase in the supply of oil would probably

A decrease in the "Z" factors shifts the aggregate demand curve to the left.

Other things equal, an increase in the Z factors ________ the equilibrium interest rate and ________ equilibrium output.

When the general price level falls

If the United States were to pass legislation that would make it harder for people to emigrate to the United States, this would cause

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

Potential output is equal to

Refer to the information provided in Figure 11.1 below to answer the questions that follow. Figure 11.1 -Refer to Figure 11.1. This economy is most likely experiencing costs increasing as fast as output prices are increasing at aggregate output levels

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.

If input prices change at exactly the same rate as output prices, the aggregate supply curve will be vertical.

Refer to the information provided in Figure 11.3 below to answer the questions that follow. Figure 11.3 -Refer to Figure 11.3. Following the recession of 2008-2009, many firms in the United States eventually began investing in new capital. This increase in investment in new capital would cause

When the aggregate supply curve is horizontal,

11.5 The Long-Run AS Curve Refer to the information provided in Figure 11.7 below to answer the questions that follow. Figure 11.7 -Refer to Figure 11.7. The level of aggregate output that can be sustained in the long run without inflation

In an economy, when the price level falls, consumers and firms buy more goods and services. This relationship is represented by the

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

Money, the Federal Reserve, and the Interest Rate

Policy Effects and Cost 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 Economies

Critical Thinking About Research

Filters

Other things equal, an increase in the Z factors the equilibrium interest rate and equilibrium output.

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

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.