Question 1

The microeconomic law of demand is an example of the fallacy of composition.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Improvements in technology result in falling average prices and increasing unemployment.

Accepted Answer

A) True 
 B)False

Question 4

The origins of most shocks are external to the economy for the "Yes - Markets Self-Adjust" camp and internal to the economy for the "No - Markets Fail Often" camp.

Accepted Answer

A) True 
 B)False

Question 5

Demand shocks cause unemployment and inflation to move in opposite directions.

Accepted Answer

A) True 
 B)False

Question 6

As the price level in Canada rises, consumers switch to cheaper Canadian products and services.

Accepted Answer

A) True 
 B)False

Question 7

When aggregate supply and aggregate demand match, that equilibrium is the world of Say's Law.

Accepted Answer

A) True 
 B)False

Question 8

The "Yes - Markets Self-Adjust" camp argues that

Accepted Answer

A)  interest rates are more important than expectations for business investment decisions. 
B)  most shocks are internal to the economy. 
C)  demand shocks are more important than supply shocks for explaining business cycles. 
D)  business expectations are quickly changeable. 
E)  government is the solution to business cycles, not the problem. 
A)  interest rates are more important than expectations for business investment decisions. 
B)  most shocks are internal to the economy. 
C)  demand shocks are more important than supply shocks for explaining business cycles. 
D)  business expectations are quickly changeable. 
E)  government is the solution to business cycles, not the problem.

Question 9

Low prices in the domestic wheat market cause farmers to switch some sales to export markets. This decision reduces aggregate quantity supplied.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Figure 6.3.1  
-Look at the macro production possibilities frontier in Figure 6.3.1. Which point(s) represent real GDP less 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 12

Demand shocks cause unemployment and inflation to move in the same direction.

Accepted Answer

A) True 
 B)False

Question 13

Reductions in government subsidies on electricity prices are a positive supply shock.

Accepted Answer

A) True 
 B)False

Question 14

Aggregate demand increases when the value of the Canadian dollar rises.

Accepted Answer

A) True 
 B)False

Question 15

Rising input prices shift SAS leftward but leave LAS unchanged.

Accepted Answer

A) True 
 B)False

Question 16

When there is economic growth with rising living standards,

Accepted Answer

A)  business investment increases both LAS and SAS. 
B)  business investment increases the quantity and quality of inputs. 
C)  increased employment in new factories increases income, so AD increases. 
D)  potential GDP is greater in the new long-run macroeconomic equilibrium. 
E)  all of the above are true. 
A)  business investment increases both LAS and SAS. 
B)  business investment increases the quantity and quality of inputs. 
C)  increased employment in new factories increases income, so AD increases. 
D)  potential GDP is greater in the new long-run macroeconomic equilibrium. 
E)  all of the above are true.

Question 17

The "Yes - Markets Self-Adjust" camp believes that investors behave like

Accepted Answer

A)  herds of animals. 
B)  logical, rational Vulcans. 
C)  Wayne Gretzky. 
D)  animal spirits. 
E)  broken thermostats. 
A)  herds of animals. 
B)  logical, rational Vulcans. 
C)  Wayne Gretzky. 
D)  animal spirits. 
E)  broken thermostats.

Question 18

Which is not a positive demand shock?

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 19

"Stable prices" means the average price level is constant or is increasing at a low, predictable inflation rate.

Accepted Answer

A) True 
 B)False

Question 20

In long-run macroeconomic equilibrium

Accepted Answer

A)  the price level and aggregate demand are what suppliers expected. 
B)  all spending plans are realized. 
C)  consumers earn enough income to buy the products and services they planned to buy. 
D)  no one is kicking himself. 
E)  all of the above are true. 
A)  the price level and aggregate demand are what suppliers expected. 
B)  all spending plans are realized. 
C)  consumers earn enough income to buy the products and services they planned to buy. 
D)  no one is kicking himself. 
E)  all of the above are true.

The microeconomic law of demand is an example of the fallacy of composition.

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

Improvements in technology result in falling average prices and increasing unemployment.

The origins of most shocks are external to the economy for the "Yes - Markets Self-Adjust" camp and internal to the economy for the "No - Markets Fail Often" camp.

Demand shocks cause unemployment and inflation to move in opposite directions.

As the price level in Canada rises, consumers switch to cheaper Canadian products and services.

When aggregate supply and aggregate demand match, that equilibrium is the world of Say's Law.

The "Yes - Markets Self-Adjust" camp argues that

Low prices in the domestic wheat market cause farmers to switch some sales to export markets. This decision reduces aggregate quantity supplied.

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

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

Demand shocks cause unemployment and inflation to move in the same direction.

Reductions in government subsidies on electricity prices are a positive supply shock.

Aggregate demand increases when the value of the Canadian dollar rises.

Rising input prices shift SAS leftward but leave LAS unchanged.

When there is economic growth with rising living standards,

The "Yes - Markets Self-Adjust" camp believes that investors behave like

Which is not a positive demand shock?

"Stable prices" means the average price level is constant or is increasing at a low, predictable inflation rate.

In long-run macroeconomic equilibrium

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 microeconomic law of demand is an example of the fallacy of composition.

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

Improvements in technology result in falling average prices and increasing unemployment.

The origins of most shocks are external to the economy for the "Yes - Markets Self-Adjust" camp and internal to the economy for the "No - Markets Fail Often" camp.

Demand shocks cause unemployment and inflation to move in opposite directions.

As the price level in Canada rises, consumers switch to cheaper Canadian products and services.

When aggregate supply and aggregate demand match, that equilibrium is the world of Say's Law.

The "Yes - Markets Self-Adjust" camp argues that

Low prices in the domestic wheat market cause farmers to switch some sales to export markets. This decision reduces aggregate quantity supplied.

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

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

Demand shocks cause unemployment and inflation to move in the same direction.

Reductions in government subsidies on electricity prices are a positive supply shock.

Aggregate demand increases when the value of the Canadian dollar rises.

Rising input prices shift SAS leftward but leave LAS unchanged.

When there is economic growth with rising living standards,

The "Yes - Markets Self-Adjust" camp believes that investors behave like

Which is not a positive demand shock?

"Stable prices" means the average price level is constant or is increasing at a low, predictable inflation rate.

In long-run macroeconomic equilibrium

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