Question 1

Rising input prices shift SAS rightward but leave LAS unchanged.

Accepted Answer

A) True 
 B)False

Question 2

What shifts the short-run aggregate supply (SAS) curve but not the long-run aggregate supply (LAS) curve?

Accepted Answer

A)  a change in input prices. 
B)  a change in the quantity of capital. 
C)  an improved technology. 
D)  an increase in population. 
E)  none of the above. 
A)  a change in input prices. 
B)  a change in the quantity of capital. 
C)  an improved technology. 
D)  an increase in population. 
E)  none of the above.

Question 3

The most volatile component of aggregate demand is spending by R.O.W.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Long-run aggregate supply represents the macroeconomic performance targets of economic growth and stable prices.

Accepted Answer

A) True 
 B)False

Question 6

For the "No - Markets Fail Often" camp, interest rates are more important than expectations for business investment decisions.

Accepted Answer

A) True 
 B)False

Question 7

The banking system can also be described as the market for loanable funds.

Accepted Answer

A) True 
 B)False

Question 8

A positive demand shock causes

Accepted Answer

A)  falling average prices. 
B)  decreased real GDP. 
C)  increased unemployment. 
D)  a deflationary gap. 
E)  none of the above. 
A)  falling average prices. 
B)  decreased real GDP. 
C)  increased unemployment. 
D)  a deflationary gap. 
E)  none of the above.

Question 9

The "No - Markets Fail Often" camp

Accepted Answer

A)  focuses on the long-run. 
B)  believes business cycles happen regularly. 
C)  believes in the economy's ability to hit macroeconomic performance targets. 
D)  believes in Say's Law. 
E)  does all of the above. 
A)  focuses on the long-run. 
B)  believes business cycles happen regularly. 
C)  believes in the economy's ability to hit macroeconomic performance targets. 
D)  believes in Say's Law. 
E)  does all of the above.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Which is a supply plan with existing inputs?

Accepted Answer

A)  an oil company's investment in new tar sands oil extraction technology. 
B)  a baby-boomer's decision not to retire but keep working. 
C)  a snow-removal business's decision to buy another plow to expand capacity. 
D)  a shoe factory's plan to install new, improved robots in its factory in Manitoba. 
E)  Toronto's plan to extend the subway system. 
A)  an oil company's investment in new tar sands oil extraction technology. 
B)  a baby-boomer's decision not to retire but keep working. 
C)  a snow-removal business's decision to buy another plow to expand capacity. 
D)  a shoe factory's plan to install new, improved robots in its factory in Manitoba. 
E)  Toronto's plan to extend the subway system.

Question 12

Long-run aggregate supply represents the macroeconomic performance targets of economic growth and full employment.

Accepted Answer

A) True 
 B)False

Question 13

Unemployment is represented by points outside the macro production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 14

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 rational. 
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 external to the economy. 
C)  supply shocks are more important than demand shocks for explaining business cycles. 
D)  business expectations are rational. 
E)  government is the solution to business cycles, not the problem.

Question 15

In explaining business cycles, the "Yes - Markets Self-Adjust" camp emphasizes demand shocks and the "No - Markets Fail Often" camp emphasizes supply shocks.

Accepted Answer

A) True 
 B)False

Question 16

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 savings with consumer savings. 
D)  the loanable funds market can rescue Say's Law. 
E)  there must be less economic growth. 
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 savings with consumer savings. 
D)  the loanable funds market can rescue Say's Law. 
E)  there must be less economic growth.

Question 17

Which is a supply plan with existing inputs?

Accepted Answer

A)  a couple's decision to have more children. 
B)  BlackBerry's decision to fund research and development for improved Blackberries. 
C)  a restaurant's decision to extend closing time from 10 pm to midnight. 
D)  a high school student's choice to go to college. 
E)  Rogers Wireless training new employees to work at its outlets in Saskatoon. 
A)  a couple's decision to have more children. 
B)  BlackBerry's decision to fund research and development for improved Blackberries. 
C)  a restaurant's decision to extend closing time from 10 pm to midnight. 
D)  a high school student's choice to go to college. 
E)  Rogers Wireless training new employees to work at its outlets in Saskatoon.

Question 18

The "Yes - Markets Self-Adjust" and "No - Markets Fail Often" camps agree on the origins of shocks, but disagree on the responses of markets to the shocks.

Accepted Answer

A) True 
 B)False

Question 19

Stagflation most likely comes from

Accepted Answer

A)  a negative demand shock. 
B)  a negative supply shock. 
C)  a positive demand shock. 
D)  a positive supply shock. 
E)  the North American Free Trade Agreement (NAFT
A) . 
A)  a negative demand shock. 
B)  a negative supply shock. 
C)  a positive demand shock. 
D)  a positive supply shock. 
E)  the North American Free Trade Agreement (NAFT
A) .

Question 20

Which is a negative supply shock?

Accepted Answer

A)  a lower world price for oil. 
B)  a lower world price for copper. 
C)  a drought on the Prairies that reduces wheat production. 
D)  a scientific discovery that lowers costs for solar energy. 
E)  all of the above are negative supply shocks. 
A)  a lower world price for oil. 
B)  a lower world price for copper. 
C)  a drought on the Prairies that reduces wheat production. 
D)  a scientific discovery that lowers costs for solar energy. 
E)  all of the above are negative supply shocks.

Rising input prices shift SAS rightward but leave LAS unchanged.

What shifts the short-run aggregate supply (SAS) curve but not the long-run aggregate supply (LAS) curve?

The most volatile component of aggregate demand is spending by R.O.W.

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

Long-run aggregate supply represents the macroeconomic performance targets of economic growth and stable prices.

For the "No - Markets Fail Often" camp, interest rates are more important than expectations for business investment decisions.

The banking system can also be described as the market for loanable funds.

A positive demand shock causes

The "No - Markets Fail Often" camp

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

Which is a supply plan with existing inputs?

Long-run aggregate supply represents the macroeconomic performance targets of economic growth and full employment.

Unemployment is represented by points outside the macro production possibilities frontier.

The "No - Markets Fail Often" camp argues that

In explaining business cycles, the "Yes - Markets Self-Adjust" camp emphasizes demand shocks and the "No - Markets Fail Often" camp emphasizes supply shocks.

When consumers save their income instead of spending it,

Which is a supply plan with existing inputs?

The "Yes - Markets Self-Adjust" and "No - Markets Fail Often" camps agree on the origins of shocks, but disagree on the responses of markets to the shocks.

Stagflation most likely comes from

Which is a negative supply shock?

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

Rising input prices shift SAS rightward but leave LAS unchanged.

What shifts the short-run aggregate supply (SAS) curve but not the long-run aggregate supply (LAS) curve?

The most volatile component of aggregate demand is spending by R.O.W.

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

Long-run aggregate supply represents the macroeconomic performance targets of economic growth and stable prices.

For the "No - Markets Fail Often" camp, interest rates are more important than expectations for business investment decisions.

The banking system can also be described as the market for loanable funds.

A positive demand shock causes

The "No - Markets Fail Often" camp

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

Which is a supply plan with existing inputs?

Long-run aggregate supply represents the macroeconomic performance targets of economic growth and full employment.

Unemployment is represented by points outside the macro production possibilities frontier.

The "No - Markets Fail Often" camp argues that

In explaining business cycles, the "Yes - Markets Self-Adjust" camp emphasizes demand shocks and the "No - Markets Fail Often" camp emphasizes supply shocks.

When consumers save their income instead of spending it,

Which is a supply plan with existing inputs?

The "Yes - Markets Self-Adjust" and "No - Markets Fail Often" camps agree on the origins of shocks, but disagree on the responses of markets to the shocks.

Stagflation most likely comes from

Which is a negative supply shock?

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