Question 1

According to the law of aggregate demand, as the price level rises, aggregate

Accepted Answer

A)  quantity demanded does not change. 
B)  demand decreases. 
C)  quantity demanded decreases. 
D)  demand increases. 
E)  quantity demanded increases. 
A)  quantity demanded does not change. 
B)  demand decreases. 
C)  quantity demanded decreases. 
D)  demand increases. 
E)  quantity demanded increases.

Question 2

Government can affect aggregate quantity supplied with changes in immigration policies.

Accepted Answer

A) True 
 B)False

Question 3

The "No - Markets Fail Often" camp argues that

Accepted Answer

A)  interest rates are more important than expectations for business investment decisions. 
B)  most shocks are external to the economy. 
C)  supply shocks are more important than demand shocks for explaining business cycles. 
D)  business expectations are quickly changeable. 
E)  government is part of the problem of business cycles. 
A)  interest rates are more important than expectations for business investment decisions. 
B)  most shocks are external to the economy. 
C)  supply shocks are more important than demand shocks for explaining business cycles. 
D)  business expectations are quickly changeable. 
E)  government is part of the problem of business cycles.

Question 4

When the price level falls, aggregate quantity supplied decreases.

Accepted Answer

A) True 
 B)False

Question 5

Business investment based on borrowed funds helps to explain steady growth in living standards.

Accepted Answer

A) True 
 B)False

Question 6

The short run is a period of time

Accepted Answer

A)  when all input prices have adjusted to clear markets. 
B)  when all prices have adjusted to equilibrium prices. 
C)  when some prices have not adjusted to clear markets. 
D)  shorter than 10 years. 
E)  shorter than 1 year. 
A)  when all input prices have adjusted to clear markets. 
B)  when all prices have adjusted to equilibrium prices. 
C)  when some prices have not adjusted to clear markets. 
D)  shorter than 10 years. 
E)  shorter than 1 year.

Question 7

Canadian aggregate demand increases immediately when

Accepted Answer

A)  Honda Canada adds another shift of workers at its Ontario factory. 
B)  Blue Jays baseball fans visit Boston to see a game. 
C)  a Canadian high school student goes to Harvard. 
D)  an economist at York University buys 6 cases of wine from Chile. 
E)  Yankee baseball fans visit Toronto to see a game. 
A)  Honda Canada adds another shift of workers at its Ontario factory. 
B)  Blue Jays baseball fans visit Boston to see a game. 
C)  a Canadian high school student goes to Harvard. 
D)  an economist at York University buys 6 cases of wine from Chile. 
E)  Yankee baseball fans visit Toronto to see a game.

Question 8

In the loanable funds market,

Accepted Answer

A)  when interest rates are higher, businesses borrow more money for investment. 
B)  when interest rates are higher, consumers borrow more money for mortgages. 
C)  an increase in consumer savings causes the interest rate to rise. 
D)  savers are the demanders, and borrowers are the suppliers. 
E)  none of the above are true. 
A)  when interest rates are higher, businesses borrow more money for investment. 
B)  when interest rates are higher, consumers borrow more money for mortgages. 
C)  an increase in consumer savings causes the interest rate to rise. 
D)  savers are the demanders, and borrowers are the suppliers. 
E)  none of the above are true.

Question 9

The short run is a period of time when

Accepted Answer

A)  the economy is a full employment. 
B)  all prices have adjusted to equilibrium prices. 
C)  Adam Smith's invisible hand works well. 
D)  the economy is at potential GDP. 
E)  none of the above are true. 
A)  the economy is a full employment. 
B)  all prices have adjusted to equilibrium prices. 
C)  Adam Smith's invisible hand works well. 
D)  the economy is at potential GDP. 
E)  none of the above are true.

Question 10

When the Canadian dollar rises in value, aggregate demand increases.

Accepted Answer

A) True 
 B)False

Question 11

The "No - Markets Fail Often" camp argues that

Accepted Answer

A)  expectations are changeable. 
B)  animal spirits are rational. 
C)  most supply shocks are external to the economy. 
D)  business investors can predict the future. 
E)  in a recessionary gap, business investors remain optimistic even when sales are falling. 
A)  expectations are changeable. 
B)  animal spirits are rational. 
C)  most supply shocks are external to the economy. 
D)  business investors can predict the future. 
E)  in a recessionary gap, business investors remain optimistic even when sales are falling.

Question 12

An increase in interest rates decreases aggregate demand.

Accepted Answer

A) True 
 B)False

Question 13

Unemployment is represented by points 1 inside the macro PPF.
2 outside the macro PPF.
3 on the macro PPF.
4 to the left of LAS.
5 to the right of LAS.
6 on LAS.

Accepted Answer

A)  1 and 4 
B)  1 and 5 
C)  2 and 4 
D)  2 and 5 
E)  3 and 6 
A)  1 and 4 
B)  1 and 5 
C)  2 and 4 
D)  2 and 5 
E)  3 and 6

Question 14

Falling input prices increase short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 15

Falling average prices and lower unemployment most likely come from

Accepted Answer

A)  negative demand shocks. 
B)  increased consumer confidence. 
C)  improved technologies. 
D)  negative supply shocks. 
E)  higher interest rates. 
A)  negative demand shocks. 
B)  increased consumer confidence. 
C)  improved technologies. 
D)  negative supply shocks. 
E)  higher interest rates.

Question 16

Changes in the quantity used of existing inputs affect aggregate quantity supplied, while changes in the quality of inputs affect both long-run and short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 17

If the population grows slower than real GDP, real GDP per person decreases.

Accepted Answer

A) True 
 B)False

Question 18

Long-run aggregate supply represents the macroeconomic performance targets of potential GDP and stable prices.

Accepted Answer

A) True 
 B)False

Question 19

Increases in the quality of inputs that do not affect the quantity of those inputs shift both LAS and SAS rightward.

Accepted Answer

A) True 
 B)False

Question 20

Business investment increases the quantity and quality of inputs, increasing potential GDP.

Accepted Answer

A) True 
 B)False

According to the law of aggregate demand, as the price level rises, aggregate

Government can affect aggregate quantity supplied with changes in immigration policies.

The "No - Markets Fail Often" camp argues that

When the price level falls, aggregate quantity supplied decreases.

Business investment based on borrowed funds helps to explain steady growth in living standards.

The short run is a period of time

Canadian aggregate demand increases immediately when

In the loanable funds market,

The short run is a period of time when

When the Canadian dollar rises in value, aggregate demand increases.

The "No - Markets Fail Often" camp argues that

An increase in interest rates decreases aggregate demand.

Unemployment is represented by points 1 inside the macro PPF. 2 outside the macro PPF. 3 on the macro PPF. 4 to the left of LAS. 5 to the right of LAS. 6 on LAS.

Falling input prices increase short-run aggregate supply.

Falling average prices and lower unemployment most likely come from

Changes in the quantity used of existing inputs affect aggregate quantity supplied, while changes in the quality of inputs affect both long-run and short-run aggregate supply.

If the population grows slower than real GDP, real GDP per person decreases.

Long-run aggregate supply represents the macroeconomic performance targets of potential GDP and stable prices.

Increases in the quality of inputs that do not affect the quantity of those inputs shift both LAS and SAS rightward.

Business investment increases the quantity and quality of inputs, increasing potential GDP.

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

According to the law of aggregate demand, as the price level rises, aggregate

Government can affect aggregate quantity supplied with changes in immigration policies.

The "No - Markets Fail Often" camp argues that

When the price level falls, aggregate quantity supplied decreases.

Business investment based on borrowed funds helps to explain steady growth in living standards.

The short run is a period of time

Canadian aggregate demand increases immediately when

In the loanable funds market,

The short run is a period of time when

When the Canadian dollar rises in value, aggregate demand increases.

The "No - Markets Fail Often" camp argues that

An increase in interest rates decreases aggregate demand.

Unemployment is represented by points 1 inside the macro PPF. 2 outside the macro PPF. 3 on the macro PPF. 4 to the left of LAS. 5 to the right of LAS. 6 on LAS.

Falling input prices increase short-run aggregate supply.

Falling average prices and lower unemployment most likely come from

Changes in the quantity used of existing inputs affect aggregate quantity supplied, while changes in the quality of inputs affect both long-run and short-run aggregate supply.

If the population grows slower than real GDP, real GDP per person decreases.

Long-run aggregate supply represents the macroeconomic performance targets of potential GDP and stable prices.

Increases in the quality of inputs that do not affect the quantity of those inputs shift both LAS and SAS rightward.

Business investment increases the quantity and quality of inputs, increasing potential GDP.

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