Question 1

The most volatile component of aggregate demand is spending by

Accepted Answer

A)  R.O.W. 
B)  businesses. 
C)  consumers. 
D)  governments. 
E)  economists. 
A)  R.O.W. 
B)  businesses. 
C)  consumers. 
D)  governments. 
E)  economists. B

Question 2

Falling average prices and continued full employment most likely come from

Accepted Answer

A)  a negative demand shock. 
B)  a negative supply shock. 
C)  a positive demand shock. 
D)  a positive supply shock. 
E)  OPEC 
A)  a negative demand shock. 
B)  a negative supply shock. 
C)  a positive demand shock. 
D)  a positive supply shock. 
E)  OPEC D

Question 3

The "No - Markets Fail Often" camp

Accepted Answer

A)  focuses on the short-run. 
B)  believes business cycles happen regularly. 
C)  believes the economy's self-adjusting mechanisms are slow. 
D)  rejects Say's Law. 
E)  does all of the above. 
A)  focuses on the short-run. 
B)  believes business cycles happen regularly. 
C)  believes the economy's self-adjusting mechanisms are slow. 
D)  rejects Say's Law. 
E)  does all of the above. E

Question 4

The long run is a period of time

Accepted Answer

A)  when some input prices do not change. 
B)  when all prices have adjusted to equilibrium. 
C)  when the inflation rate is zero. 
D)  longer than 1 year. 
E)  longer than 10 years. 
A)  when some input prices do not change. 
B)  when all prices have adjusted to equilibrium. 
C)  when the inflation rate is zero. 
D)  longer than 1 year. 
E)  longer than 10 years.

Question 5

Which increases aggregate demand?

Accepted Answer

A)  earthquake destruction. 
B)  technological innovations. 
C)  consumers become more optimistic. 
D)  higher value of the Canadian dollar. 
E)  higher interest rates. 
A)  earthquake destruction. 
B)  technological innovations. 
C)  consumers become more optimistic. 
D)  higher value of the Canadian dollar. 
E)  higher interest rates.

Question 6

For the "Yes - Markets Self-Adjust" camp, expectations are more important than interest rates for business investment decisions.

Accepted Answer

A) True 
 B)False

Question 7

An increase in the price level means that there is economic growth.

Accepted Answer

A) True 
 B)False

Question 8

An increase in interest rates is a positive demand shock.

Accepted Answer

A) True 
 B)False

Question 9

Increases in the quality of inputs that do not affect the quantity of those inputs,

Accepted Answer

A)  shift LAS rightward but not SAS. 
B)  increase aggregate quantity supplied. 
C)  shift both LAS and SAS rightward. 
D)  shift SAS rightward but not LAS. 
E)  shift LAS rightward and increase aggregate quantity supplied. 
A)  shift LAS rightward but not SAS. 
B)  increase aggregate quantity supplied. 
C)  shift both LAS and SAS rightward. 
D)  shift SAS rightward but not LAS. 
E)  shift LAS rightward and increase aggregate quantity supplied.

Question 10

Increases in the quality of inputs that do not affect the quantity of those inputs increase long-run aggregate supply but not short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 11

Supply plans to increase inputs affect both long-run and short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 12

Which is a positive demand shock?

Accepted Answer

A)  earthquake destruction. 
B)  technological innovations. 
C)  consumers become more optimistic. 
D)  higher value of the Canadian dollar. 
E)  higher interest rates. 
A)  earthquake destruction. 
B)  technological innovations. 
C)  consumers become more optimistic. 
D)  higher value of the Canadian dollar. 
E)  higher interest rates.

Question 13

Price stability is represented by points on the long-run aggregate supply curve (LAS).

Accepted Answer

A) True 
 B)False

Question 14

The "Yes - Markets Self-Adjust" camp argues that a positive supply shock results in

Accepted Answer

A)  falling Canadian average prices, increasing Canadian spending on imports. 
B)  falling wages, increasing the quantity of labour supplied. 
C)  falling wages, decreasing the quantity of labour demanded. 
D)  rising Canadian average prices, decreasing net exports. 
E)  falling Canadian average prices, increasing R.O.W. spending on Canadian exports. 
A)  falling Canadian average prices, increasing Canadian spending on imports. 
B)  falling wages, increasing the quantity of labour supplied. 
C)  falling wages, decreasing the quantity of labour demanded. 
D)  rising Canadian average prices, decreasing net exports. 
E)  falling Canadian average prices, increasing R.O.W. spending on Canadian exports.

Question 15

Higher world oil prices

Accepted Answer

A)  decrease short-run aggregate supply. 
B)  decrease aggregate demand. 
C)  increase aggregate quantity demanded. 
D)  increase short-run aggregate supply. 
E)  increase aggregate quantity supplied. 
A)  decrease short-run aggregate supply. 
B)  decrease aggregate demand. 
C)  increase aggregate quantity demanded. 
D)  increase short-run aggregate supply. 
E)  increase aggregate quantity supplied.

Question 16

The short-run aggregate supply (SAS) curve is the relationship between the quantity of real GDP that macroeconomic players plan to supply and the

Accepted Answer

A)  quantity of real GDP demanded. 
B)  exchange rate. 
C)  inflation rate. 
D)  unemployment rate. 
E)  price level. 
A)  quantity of real GDP demanded. 
B)  exchange rate. 
C)  inflation rate. 
D)  unemployment rate. 
E)  price level.

Question 17

In the loanable funds market, consumers do most of the borrowing to finance mortgages and car loans.

Accepted Answer

A) True 
 B)False

Question 18

A negative demand shock causes

Accepted Answer

A)  rising average prices. 
B)  increased real GDP. 
C)  increased unemployment. 
D)  an inflationary gap. 
E)  none of the above. 
A)  rising average prices. 
B)  increased real GDP. 
C)  increased unemployment. 
D)  an inflationary gap. 
E)  none of the above.

Question 19

The "No - Markets Fail Often" camp argues that investors who are pessimistic about the future may respond to lower interest rates by decreasing investment.

Accepted Answer

A) True 
 B)False

Question 20

The "No - Markets Fail Often" camp argues that an increase in savings

Accepted Answer

A)  always causes savers and investors to be pessimistic about the future. 
B)  always causes interest rates to fall and increase business investment. 
C)  always causes interest rates to rise and decrease business investment. 
D)  might cause interest rates to rise and decrease business investment but only if savers and investors are optimistic about the future. 
E)  might cause interest rates to fall and increase business investment, but only if savers and investors stay optimistic about the future. 
A)  always causes savers and investors to be pessimistic about the future. 
B)  always causes interest rates to fall and increase business investment. 
C)  always causes interest rates to rise and decrease business investment. 
D)  might cause interest rates to rise and decrease business investment but only if savers and investors are optimistic about the future. 
E)  might cause interest rates to fall and increase business investment, but only if savers and investors stay optimistic about the future.

The most volatile component of aggregate demand is spending by

Falling average prices and continued full employment most likely come from

The "No - Markets Fail Often" camp

The long run is a period of time

Which increases aggregate demand?

For the "Yes - Markets Self-Adjust" camp, expectations are more important than interest rates for business investment decisions.

An increase in the price level means that there is economic growth.

An increase in interest rates is a positive demand shock.

Increases in the quality of inputs that do not affect the quantity of those inputs,

Increases in the quality of inputs that do not affect the quantity of those inputs increase long-run aggregate supply but not short-run aggregate supply.

Supply plans to increase inputs affect both long-run and short-run aggregate supply.

Which is a positive demand shock?

Price stability is represented by points on the long-run aggregate supply curve (LAS).

The "Yes - Markets Self-Adjust" camp argues that a positive supply shock results in

Higher world oil prices

The short-run aggregate supply (SAS) curve is the relationship between the quantity of real GDP that macroeconomic players plan to supply and the

In the loanable funds market, consumers do most of the borrowing to finance mortgages and car loans.

A negative demand shock causes

The "No - Markets Fail Often" camp argues that investors who are pessimistic about the future may respond to lower interest rates by decreasing investment.

The "No - Markets Fail Often" camp argues that an increase in savings

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Costs of Not Working and Living: Unemployment and Inflation

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

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Exam 8: Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

The most volatile component of aggregate demand is spending by

Falling average prices and continued full employment most likely come from

The "No - Markets Fail Often" camp

The long run is a period of time

Which increases aggregate demand?

For the "Yes - Markets Self-Adjust" camp, expectations are more important than interest rates for business investment decisions.

An increase in the price level means that there is economic growth.

An increase in interest rates is a positive demand shock.

Increases in the quality of inputs that do not affect the quantity of those inputs,

Increases in the quality of inputs that do not affect the quantity of those inputs increase long-run aggregate supply but not short-run aggregate supply.

Supply plans to increase inputs affect both long-run and short-run aggregate supply.

Which is a positive demand shock?

Price stability is represented by points on the long-run aggregate supply curve (LAS).

The "Yes - Markets Self-Adjust" camp argues that a positive supply shock results in

Higher world oil prices

The short-run aggregate supply (SAS) curve is the relationship between the quantity of real GDP that macroeconomic players plan to supply and the

In the loanable funds market, consumers do most of the borrowing to finance mortgages and car loans.

A negative demand shock causes

The "No - Markets Fail Often" camp argues that investors who are pessimistic about the future may respond to lower interest rates by decreasing investment.

The "No - Markets Fail Often" camp argues that an increase in savings

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Costs of Not Working and Living: Unemployment and Inflation

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

Filters