Question 1

Which media headline describes a shift of the SAS curve only?

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 2

The largest component of aggregate demand in Canada is consumer spending.

Accepted Answer

A) True 
 B)False

Question 3

Potential GDP 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 4

Government can affect both long-run and short-run aggregate supply with changes in labour market policies.

Accepted Answer

A) True 
 B)False

Question 5

The law of short-run aggregate supply states that aggregate supply increases as the price level rises.

Accepted Answer

A) True 
 B)False

Question 6

In explaining business investment spending, the "Yes - Markets Self-Adjust" camp emphasizes interest rates and the "No - Markets Fail Often" camp emphasizes expectations.

Accepted Answer

A) True 
 B)False

Question 7

A positive aggregate demand shock results in

Accepted Answer

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

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The long-run aggregate supply curve (LAS) is a vertical line at potential GDP.

Accepted Answer

A) True 
 B)False

Question 10

The technology boom of the late 1990s was an example of

Accepted Answer

A)  a negative demand shock. 
B)  a negative supply shock. 
C)  a positive demand shock. 
D)  a positive supply shock. 
E)  what happens from drinking too much kool aid. 
A)  a negative demand shock. 
B)  a negative supply shock. 
C)  a positive demand shock. 
D)  a positive supply shock. 
E)  what happens from drinking too much kool aid.

Question 11

If the government cuts taxes, this

Accepted Answer

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

Question 12

The "Yes - Markets Self-Adjust" camp argues that an increase in savings results in a decrease in investment.

Accepted Answer

A) True 
 B)False

Question 13

The "Yes - Markets Self-Adjust" camp

Accepted Answer

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

Question 14

A rise in the price level decreases aggregate demand.

Accepted Answer

A) True 
 B)False

Question 15

Which is a supply plan to increase inputs?

Accepted Answer

A)  a government plan to allow more logging on Crown land in British Columbia. 
B)  a snow-removal business's decision to buy another plow to expand capacity. 
C)  a baby-boomer's decision not to retire but keep working. 
D)  a shoe factory's choice to increase output from its factory in Manitoba. 
E)  a worker's choice to accept more overtime shifts in order to pay off a big VISA bill. 
A)  a government plan to allow more logging on Crown land in British Columbia. 
B)  a snow-removal business's decision to buy another plow to expand capacity. 
C)  a baby-boomer's decision not to retire but keep working. 
D)  a shoe factory's choice to increase output from its factory in Manitoba. 
E)  a worker's choice to accept more overtime shifts in order to pay off a big VISA bill.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

A drought that reduces wheat production is a positive supply shock.

Accepted Answer

A) True 
 B)False

Question 18

Aggregate demand increases if

Accepted Answer

A)  the price level falls. 
B)  GDP in R.O.W. increases. 
C)  the value of the Canadian dollar rises. 
D)  the price level rises. 
E)  interest rates rise. 
A)  the price level falls. 
B)  GDP in R.O.W. increases. 
C)  the value of the Canadian dollar rises. 
D)  the price level rises. 
E)  interest rates rise.

Question 19

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

Accepted Answer

A)  expectations are more important than interest rates 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 part of the problem of business cycles. 
A)  expectations are more important than interest rates 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 part of the problem of business cycles.

Question 20

Lower world coal 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)  decrease 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)  decrease aggregate quantity supplied.

Which media headline describes a shift of the SAS curve only?

The largest component of aggregate demand in Canada is consumer spending.

Potential GDP 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.

Government can affect both long-run and short-run aggregate supply with changes in labour market policies.

The law of short-run aggregate supply states that aggregate supply increases as the price level rises.

In explaining business investment spending, the "Yes - Markets Self-Adjust" camp emphasizes interest rates and the "No - Markets Fail Often" camp emphasizes expectations.

A positive aggregate demand shock results in

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

The long-run aggregate supply curve (LAS) is a vertical line at potential GDP.

The technology boom of the late 1990s was an example of

If the government cuts taxes, this

The "Yes - Markets Self-Adjust" camp argues that an increase in savings results in a decrease in investment.

The "Yes - Markets Self-Adjust" camp

A rise in the price level decreases aggregate demand.

Which is a supply plan to increase inputs?

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

A drought that reduces wheat production is a positive supply shock.

Aggregate demand increases if

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

Lower world coal prices

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

Which media headline describes a shift of the SAS curve only?

The largest component of aggregate demand in Canada is consumer spending.

Potential GDP 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.

Government can affect both long-run and short-run aggregate supply with changes in labour market policies.

The law of short-run aggregate supply states that aggregate supply increases as the price level rises.

In explaining business investment spending, the "Yes - Markets Self-Adjust" camp emphasizes interest rates and the "No - Markets Fail Often" camp emphasizes expectations.

A positive aggregate demand shock results in

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

The long-run aggregate supply curve (LAS) is a vertical line at potential GDP.

The technology boom of the late 1990s was an example of

If the government cuts taxes, this

The "Yes - Markets Self-Adjust" camp argues that an increase in savings results in a decrease in investment.

The "Yes - Markets Self-Adjust" camp

A rise in the price level decreases aggregate demand.

Which is a supply plan to increase inputs?

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

A drought that reduces wheat production is a positive supply shock.

Aggregate demand increases if

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

Lower world coal prices

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