Question 1

The "Yes - Markets Self-Adjust" camp argues that a positive demand shock results in

Accepted Answer

A)  falling Canadian average prices, increasing net exports. 
B)  falling wages, reducing excess demand for labour. 
C)  rising wages, reducing excess supply of labour. 
D)  rising interest rates, decreasing business investment spending, and decreasing aggregate demand. 
E)  falling interest rates, increasing business investment spending, and increasing aggregate demand. 
A)  falling Canadian average prices, increasing net exports. 
B)  falling wages, reducing excess demand for labour. 
C)  rising wages, reducing excess supply of labour. 
D)  rising interest rates, decreasing business investment spending, and decreasing aggregate demand. 
E)  falling interest rates, increasing business investment spending, and increasing aggregate demand.

Question 2

A negative demand shock combined with a positive supply shock has no effect on the level of average prices.

Accepted Answer

A) True 
 B)False

Question 3

Aggregate demand decreases when

Accepted Answer

A)  interest rates fall. 
B)  consumers become more optimistic. 
C)  government reduces net taxes. 
D)  interest rates rise. 
E)  government spending increases. 
A)  interest rates fall. 
B)  consumers become more optimistic. 
C)  government reduces net taxes. 
D)  interest rates rise. 
E)  government spending increases.

Question 4

The "No - Markets Fail Often" camp believes that investors behave like rational Vulcans.

Accepted Answer

A) True 
 B)False

Question 5

The "No - Markets Fail Often" camp argues that

Accepted Answer

A)  wages are slow to rise. 
B)  wages are slow to fall. 
C)  most supply shocks originate outside the economy. 
D)  business investors can predict the future. 
E)  consumers save more when interest rates fall. 
A)  wages are slow to rise. 
B)  wages are slow to fall. 
C)  most supply shocks originate outside the economy. 
D)  business investors can predict the future. 
E)  consumers save more when interest rates fall.

Question 6

Short-run aggregate supply decreases if

Accepted Answer

A)  the price level falls. 
B)  prices for resource inputs fall. 
C)  prices for resource inputs rise. 
D)  the price level rises. 
E)  government transfer payments decrease. 
A)  the price level falls. 
B)  prices for resource inputs fall. 
C)  prices for resource inputs rise. 
D)  the price level rises. 
E)  government transfer payments decrease.

Question 7

An increasing price level and increased unemployment rate most likely come from

Accepted Answer

A)  rising input prices. 
B)  higher income taxes. 
C)  lower interest rates. 
D)  increases in the value of the Canadian dollar. 
E)  improvements in technology. 
A)  rising input prices. 
B)  higher income taxes. 
C)  lower interest rates. 
D)  increases in the value of the Canadian dollar. 
E)  improvements in technology.

Question 8

A fall in the price level

Accepted Answer

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

Question 9

Planned spending on aggregate demand is calculated as

Accepted Answer

A)  C + I + G + X - IM 
B)  C + I + G + X + IM 
C)  C + I - G + X - IM 
D)  I + G + X - IM 
E)  IM - C - I - G - X 
A)  C + I + G + X - IM 
B)  C + I + G + X + IM 
C)  C + I - G + X - IM 
D)  I + G + X - IM 
E)  IM - C - I - G - X

Question 10

The "Yes - Markets Self-Adjust" camp argues that after a negative supply shock, the price level in Canada

Accepted Answer

A)  rises, decreasing Canadian spending on imports. 
B)  falls, increasing R.O.W. spending on Canadian exports. 
C)  falls, increasing Canadian spending on imports. 
D)  rises, decreasing R.O.W. spending on Canadian exports. 
E)  falls, decreasing Canadian spending on imports. 
A)  rises, decreasing Canadian spending on imports. 
B)  falls, increasing R.O.W. spending on Canadian exports. 
C)  falls, increasing Canadian spending on imports. 
D)  rises, decreasing R.O.W. spending on Canadian exports. 
E)  falls, decreasing Canadian spending on imports.

Question 11

The "Yes - Markets Self-Adjust" camp believes that investors behave like herds of animals.

Accepted Answer

A) True 
 B)False

Question 12

The "No - Markets Fail Often" camp argues that an increase in savings may result in a decrease in investment.

Accepted Answer

A) True 
 B)False

Question 13

Investor pessimism results in decreasing unemployment.

Accepted Answer

A) True 
 B)False

Question 14

Which decreases aggregate demand?

Accepted Answer

A)  lower interest rates. 
B)  lower value of Canadian dollar. 
C)  higher income taxes. 
D)  rising price level. 
E)  rising input prices. 
A)  lower interest rates. 
B)  lower value of Canadian dollar. 
C)  higher income taxes. 
D)  rising price level. 
E)  rising input prices.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

A negative supply shock causes

Accepted Answer

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

Question 17

A rise in the price level is a positive demand shock.

Accepted Answer

A) True 
 B)False

Question 18

An increase in the Consumer Price Index (CPI) means that there is economic growth.

Accepted Answer

A) True 
 B)False

Question 19

The long run is a period of time when the price level equals 100.

Accepted Answer

A) True 
 B)False

Question 20

The best measure of "growth in living standards" is increasing real GDP per person.

Accepted Answer

A) True 
 B)False

The "Yes - Markets Self-Adjust" camp argues that a positive demand shock results in

A negative demand shock combined with a positive supply shock has no effect on the level of average prices.

Aggregate demand decreases when

The "No - Markets Fail Often" camp believes that investors behave like rational Vulcans.

The "No - Markets Fail Often" camp argues that

Short-run aggregate supply decreases if

An increasing price level and increased unemployment rate most likely come from

A fall in the price level

Planned spending on aggregate demand is calculated as

The "Yes - Markets Self-Adjust" camp argues that after a negative supply shock, the price level in Canada

The "Yes - Markets Self-Adjust" camp believes that investors behave like herds of animals.

The "No - Markets Fail Often" camp argues that an increase in savings may result in a decrease in investment.

Investor pessimism results in decreasing unemployment.

Which decreases aggregate demand?

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

A negative supply shock causes

A rise in the price level is a positive demand shock.

An increase in the Consumer Price Index (CPI) means that there is economic growth.

The long run is a period of time when the price level equals 100.

The best measure of "growth in living standards" is increasing real GDP per person.

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 "Yes - Markets Self-Adjust" camp argues that a positive demand shock results in

A negative demand shock combined with a positive supply shock has no effect on the level of average prices.

Aggregate demand decreases when

The "No - Markets Fail Often" camp believes that investors behave like rational Vulcans.

The "No - Markets Fail Often" camp argues that

Short-run aggregate supply decreases if

An increasing price level and increased unemployment rate most likely come from

A fall in the price level

Planned spending on aggregate demand is calculated as

The "Yes - Markets Self-Adjust" camp argues that after a negative supply shock, the price level in Canada

The "Yes - Markets Self-Adjust" camp believes that investors behave like herds of animals.

The "No - Markets Fail Often" camp argues that an increase in savings may result in a decrease in investment.

Investor pessimism results in decreasing unemployment.

Which decreases aggregate demand?

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

A negative supply shock causes

A rise in the price level is a positive demand shock.

An increase in the Consumer Price Index (CPI) means that there is economic growth.

The long run is a period of time when the price level equals 100.

The best measure of "growth in living standards" is increasing real GDP per person.

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