Question 1

Use the figure below to answer the following questions.
  Figure 10.2.1
-Refer to Figure 10.2.1.Which graph illustrates the effect of an increase in expected future income?

Accepted Answer

A) a only 
B) b only 
C) c only 
D) d only 
E) Both a and c

Question 2

Use the table below to answer the following questions.
Table 10.3.1
 
-Refer to Table 10.3.1.As this economy moves to long- run equilibrium, the

Accepted Answer

A) AD curve shifts rightward. 
B) AD curve shifts leftward. 
C) SAS curve shifts leftward. 
D) LAS curve shifts leftward. 
E) SAS curve shifts rightward.

Question 3

Which one of the following variables can change without creating a shift of the aggregate demand curve?

Accepted Answer

A) the tax rate 
B) expectations about inflation 
C) monetary policy 
D) the interest rate 
E) the price level

Question 4

Keynesian macroeconomists recommend

Accepted Answer

A) policies that actively offset changes in long- run aggregate supply that result in negative economic growth. 
B) policies that minimize the disincentive effects of taxes on employment, investment, and technological change. 
C) policies that actively offset changes in aggregate demand that bring recession. 
D) an increase in the quantity of money to offset decreases in aggregate demand and a decrease in the quantity of money to offset increases in aggregate demand. 
E) none of the above

Question 5

Which of the following does not change short- run aggregate supply?

Accepted Answer

A) technological change 
B) an increase in the quantity of capital 
C) a change in the full- employment quantity of labour 
D) a change in the money wage rate 
E) a change in expected future profits

Question 6

An inflationary gap is the amount by which

Accepted Answer

A) real GDP exceeds potential GDP. 
B) potential GDP exceeds real GDP. 
C) the price level must adjust to achieve full employment. 
D) aggregate demand must increase to achieve full employment at a given price level. 
E) potential GDP must increase to achieve full employment at a given price level.

Question 7

Beginning at a long- run equilibrium, an increase in aggregate demand

Accepted Answer

A) increases the price level and in the long run increases real GDP. 
B) increases the price level, but in the long run there is no change in real GDP. 
C) increases the price level and in the long run decreases real GDP. 
D) decreases the price level and in the long run increases real GDP. 
E) decreases the price level and in the long run decreases real GDP.

Question 8

Foreign exchange dealers expect the Canadian dollar next year to appreciate against all currencies.What is the effect on the quantity of real GDP demanded or aggregate demand in Canada?

Accepted Answer

A) The quantity of Canadian real GDP demanded increases. 
B) The quantity of Canadian real GDP demanded decreases. 
C) Canadian aggregate demand increases. 
D) Canadian aggregate demand decreases. 
E) There is no change to either the quantity of Canadian real GDP demanded or to Canadian aggregate demand.

Question 9

Use the figure below to answer the following questions.
  Figure 10.3.3
-Refer to Figure 10.3.3b.You might expect the government to

Accepted Answer

A) do nothing except maintain the current equilibrium. 
B) pursue trade policies that reduce exports. 
C) increase government expenditure. 
D) raise taxes. 
E) cut government expenditure.

Exam 10: Aggregate Supply and Aggregate Demand

Use the figure below to answer the following questions. Figure 10.2.1 -Refer to Figure 10.2.1.Which graph illustrates the effect of an increase in expected future income?

Use the table below to answer the following questions. Table 10.3.1 -Refer to Table 10.3.1.As this economy moves to long- run equilibrium, the