Question 1

The short run is a period of time when all prices have adjusted to equilibrium prices.

Accepted Answer

A) True 
 B)False

Question 2

Which changes Canada's short-run aggregate supply?

Accepted Answer

A)  the Government of Canada legalizes the cultivation of marijuana 
B)  a senior citizen decides to keep working instead of retiring 
C)  a working mother decides to quite her job and go back to school full-time 
D)  American consumers stop buying Canadian beef during an outbreak of Mad Cow Disease 
E)  Canadian manufacturers want to increase their sales as prices rise 
A)  the Government of Canada legalizes the cultivation of marijuana 
B)  a senior citizen decides to keep working instead of retiring 
C)  a working mother decides to quite her job and go back to school full-time 
D)  American consumers stop buying Canadian beef during an outbreak of Mad Cow Disease 
E)  Canadian manufacturers want to increase their sales as prices rise

Question 3

In the loanable funds market, which statement is false?

Accepted Answer

A)  The interest rate is the price of loanable funds. 
B)  An increase in demand for loanable funds causes the interest rate to rise. 
C)  An increase in consumer savings causes the interest rate to rise. 
D)  A decrease in the interest rate causes business borrowing to rise. 
E)  A decrease in the supply of loanable funds causes the interest rate to rise. 
A)  The interest rate is the price of loanable funds. 
B)  An increase in demand for loanable funds causes the interest rate to rise. 
C)  An increase in consumer savings causes the interest rate to rise. 
D)  A decrease in the interest rate causes business borrowing to rise. 
E)  A decrease in the supply of loanable funds causes the interest rate to rise.

Question 4

When consumers save their income instead of spending it,

Accepted Answer

A)  Say's Law cannot be true. 
B)  there must be a mismatch between short-run aggregate supply and aggregate demand. 
C)  the interest rate in the loanable funds market can match business investment spending with consumer savings. 
D)  there must be less economic growth. 
E)  all of the above are true. 
A)  Say's Law cannot be true. 
B)  there must be a mismatch between short-run aggregate supply and aggregate demand. 
C)  the interest rate in the loanable funds market can match business investment spending with consumer savings. 
D)  there must be less economic growth. 
E)  all of the above are true.

Question 5

Which media headline describes a leftward shift of the LAS curve?

Accepted Answer

A)  "Decreased consumer spending may lead to recession." 
B)  "Increased consumer spending is expected to lead to inflation, with no change in real GDP." 
C)  "Higher wage settlements may lead to inflation." 
D)  "Faster growth may be due to more women entering the labour force." 
E)  "Recent tornadoes destroyed factories in Edmonton and Calgary." 
A)  "Decreased consumer spending may lead to recession." 
B)  "Increased consumer spending is expected to lead to inflation, with no change in real GDP." 
C)  "Higher wage settlements may lead to inflation." 
D)  "Faster growth may be due to more women entering the labour force." 
E)  "Recent tornadoes destroyed factories in Edmonton and Calgary."

Question 6

When GDP in R.O.W. increases, Canadian aggregate demand increases.

Accepted Answer

A) True 
 B)False

Question 7

On the graph of the macro production possibilities frontier (PPF), inputs

Accepted Answer

A)  are on the horizontal axis and outputs are on the vertical axis. 
B)  are on the vertical axis and outputs are on the horizontal axis. 
C)  do not appear. 
D)  increase as you move down along the PPF. 
E)  increase as you move up along the PPF. 
A)  are on the horizontal axis and outputs are on the vertical axis. 
B)  are on the vertical axis and outputs are on the horizontal axis. 
C)  do not appear. 
D)  increase as you move down along the PPF. 
E)  increase as you move up along the PPF.

Question 8

A negative aggregate supply shock results in

Accepted Answer

A)  decreased GDP, increased unemployment and falling prices. 
B)  decreased GDP, decreased unemployment and falling prices. 
C)  increased GDP, increased unemployment and rising prices. 
D)  decreased GDP, increased unemployment and rising prices. 
E)  decreased GDP, decreased unemployment and rising prices. 
A)  decreased GDP, increased unemployment and falling prices. 
B)  decreased GDP, decreased unemployment and falling prices. 
C)  increased GDP, increased unemployment and rising prices. 
D)  decreased GDP, increased unemployment and rising prices. 
E)  decreased GDP, decreased unemployment and rising prices.

Question 9

In long-run macroeconomic equilibrium, aggregate quantity demanded equals aggregate quantity supplied equals potential GDP.

Accepted Answer

A) True 
 B)False

Question 10

The reasons behind the microeconomic law of demand and the macroeconomic law of demand are the same.

Accepted Answer

A) True 
 B)False

Question 11

Which does not increase aggregate demand?

Accepted Answer

A)  technological innovations. 
B)  lower interest rates. 
C)  consumers become more optimistic. 
D)  lower value of Canadian dollar. 
E)  lower income taxes. 
A)  technological innovations. 
B)  lower interest rates. 
C)  consumers become more optimistic. 
D)  lower value of Canadian dollar. 
E)  lower income taxes.

Question 12

A lower world price for oil is a negative supply shock.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6.3.1  
-Look at the macro production possibilities frontier in Figure 6.3.1. Which point(s) represent real GDP greater than potential GDP?

Accepted Answer

A)  a only 
B)  b only 
C)  a, b, c 
D)  d only 
E)  e only 
A)  a only 
B)  b only 
C)  a, b, c 
D)  d only 
E)  e only

Question 14

In long-run macroeconomic equilibrium

Accepted Answer

A)  short-run aggregate supply (SAS) equals aggregate demand (A
D) . 
B)  the price level is stable. 
C)  real GDP equals potential GDP. 
D)  Say's Law is true. 
E)  all of the above are true. 
A)  short-run aggregate supply (SAS) equals aggregate demand (A
D) . 
B)  the price level is stable. 
C)  real GDP equals potential GDP. 
D)  Say's Law is true. 
E)  all of the above are true.

Question 15

The language of output gaps - recessionary gaps and inflationary gaps - applies only to outcomes of supply shocks.

Accepted Answer

A) True 
 B)False

Question 16

The "No - Markets Fail Often" camp argues that in a recessionary gap, all of the following will happen except,

Accepted Answer

A)  workers and employers accept unemployment instead of wage cuts. 
B)  consumer spending increases. 
C)  savings increase in loanable funds markets. 
D)  falling output creates pessimistic expectations that decrease business investment. 
E)  wages in labour markets are sticky. 
A)  workers and employers accept unemployment instead of wage cuts. 
B)  consumer spending increases. 
C)  savings increase in loanable funds markets. 
D)  falling output creates pessimistic expectations that decrease business investment. 
E)  wages in labour markets are sticky.

Question 17

Higher world oil prices

Accepted Answer

A)  shift both SAS and LAS leftward. 
B)  shift SAS leftward only. 
C)  shift both SAS and LAS rightward. 
D)  shift SAS rightward only. 
E)  increase aggregate quantity supplied. 
A)  shift both SAS and LAS leftward. 
B)  shift SAS leftward only. 
C)  shift both SAS and LAS rightward. 
D)  shift SAS rightward only. 
E)  increase aggregate quantity supplied.

Question 18

Inputs increase as you move down along the macro production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 19

Rising average prices and decreased unemployment could be caused by increases in the price of oil.

Accepted Answer

A) True 
 B)False

Question 20

Nori earns an income of $30,000, pays $10,000 in taxes and receives $5,000 in transfer payments. He saved $8,000 at Scotiabank. What is his disposable income?

Accepted Answer

A)  $22,000 
B)  $25,000 
C)  $20,000 
D)  $17,000 
E)  $15,000 
A)  $22,000 
B)  $25,000 
C)  $20,000 
D)  $17,000 
E)  $15,000

The short run is a period of time when all prices have adjusted to equilibrium prices.

Which changes Canada's short-run aggregate supply?

In the loanable funds market, which statement is false?

When consumers save their income instead of spending it,

Which media headline describes a leftward shift of the LAS curve?

When GDP in R.O.W. increases, Canadian aggregate demand increases.

On the graph of the macro production possibilities frontier (PPF), inputs

A negative aggregate supply shock results in

In long-run macroeconomic equilibrium, aggregate quantity demanded equals aggregate quantity supplied equals potential GDP.

The reasons behind the microeconomic law of demand and the macroeconomic law of demand are the same.

Which does not increase aggregate demand?

A lower world price for oil is a negative supply shock.

Figure 6.3.1 -Look at the macro production possibilities frontier in Figure 6.3.1. Which point(s) represent real GDP greater than potential GDP?

In long-run macroeconomic equilibrium

The language of output gaps - recessionary gaps and inflationary gaps - applies only to outcomes of supply shocks.

The "No - Markets Fail Often" camp argues that in a recessionary gap, all of the following will happen except,

Higher world oil prices

Inputs increase as you move down along the macro production possibilities frontier.

Rising average prices and decreased unemployment could be caused by increases in the price of oil.

Nori earns an income of $30,000, pays $10,000 in taxes and receives $5,000 in transfer payments. He saved $8,000 at Scotiabank. What is his disposable income?

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

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

The short run is a period of time when all prices have adjusted to equilibrium prices.

Which changes Canada's short-run aggregate supply?

In the loanable funds market, which statement is false?

When consumers save their income instead of spending it,

Which media headline describes a leftward shift of the LAS curve?

When GDP in R.O.W. increases, Canadian aggregate demand increases.

On the graph of the macro production possibilities frontier (PPF), inputs

A negative aggregate supply shock results in

In long-run macroeconomic equilibrium, aggregate quantity demanded equals aggregate quantity supplied equals potential GDP.

The reasons behind the microeconomic law of demand and the macroeconomic law of demand are the same.

Which does not increase aggregate demand?

A lower world price for oil is a negative supply shock.

Figure 6.3.1 -Look at the macro production possibilities frontier in Figure 6.3.1. Which point(s) represent real GDP greater than potential GDP?

In long-run macroeconomic equilibrium

The language of output gaps - recessionary gaps and inflationary gaps - applies only to outcomes of supply shocks.

The "No - Markets Fail Often" camp argues that in a recessionary gap, all of the following will happen except,

Higher world oil prices

Inputs increase as you move down along the macro production possibilities frontier.

Rising average prices and decreased unemployment could be caused by increases in the price of oil.

Nori earns an income of $30,000, pays $10,000 in taxes and receives $5,000 in transfer payments. He saved $8,000 at Scotiabank. What is his disposable income?

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