Question 1

The increase in income generated by the additional government expenditure decreases the demand for money.

Accepted Answer

A) True 
 B)False

Question 2

Increases in resources and efficiency would increase potential GDP.

Accepted Answer

A) True 
 B)False

Question 3

The OPEC oil shocks in 1973-1974 are an example of:

Accepted Answer

A)  favorable supply shock, shifting the short-run aggregate supply curve rightward. 
B)  favorable supply shock, shifting the short-run aggregate supply curve leftward. 
C)  adverse supply shock, shifting the short-run aggregate supply curve rightward. 
D)  adverse supply shock, shifting the short-run aggregate supply curve leftward.

Question 4

Average weekly hours in manufacturing is an example of a:

Accepted Answer

A)  leading indicator. 
B)  coincident indicator. 
C)  lagging indicator. 
D)  none of the above.

Question 5

A decrease in consumer confidence would shift the aggregate demand curve rightward.

Accepted Answer

A) True 
 B)False

Question 6

An increase in the price level will shift the aggregate demand curve:

Accepted Answer

A)  rightward. 
B)  leftward. 
C)  both. 
D)  none of the above.

Question 7

Economic variables that generally move in tandem with the overall phases of the business cycle are called:

Accepted Answer

A)  leading indicators. 
B)  coincident indicators. 
C)  lagging indicators. 
D)  none of the above.

Question 8

Discretionary expenditures are federal government expenditures for programs whose funds are authorized and appropriated by Congress and signed by the President, where explicit decisions are made on the size of the programs.

Accepted Answer

A) True 
 B)False

Question 9

An increase in resources available would decrease potential GDP and the long-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 10

The full-employment level of output is called:

Accepted Answer

A)  aggregate demand. 
B)  aggregate supply. 
C)  potential output. 
D)  none of the above.

Question 11

A decrease in wealth would shift the:

Accepted Answer

A)  aggregate demand curve rightward. 
B)  aggregate demand curve leftward. 
C)  aggregate supply curve rightward. 
D)  aggregate supply curve leftward.

Question 12

The curve that shows alternative combinations of the price level and real income that result in equilibrium in both the real goods and the money markets is called the

Accepted Answer

A)  aggregate demand curve. 
B)  short-run aggregate supply curve. 
C)  long-run aggregate supply curve. 
D)  none of the above.

Question 13

Briefly explain the difference between leading, coincident, and lagging indicators.

Accepted Answer

The answer of Briefly explain the difference between leading, coincident,...

Question 14

A decrease in the costs of resources or inputs of production would shift the:

Accepted Answer

A)  short-run aggregate supply curve rightward. 
B)  short-run aggregate supply curve leftward. 
C)  long-run aggregate supply curve rightward. 
D)  long-run aggregate supply curve leftward.

Question 15

An increase in wealth would shift the:

Accepted Answer

A)  aggregate demand curve rightward. 
B)  aggregate demand curve leftward. 
C)  aggregate supply curve rightward. 
D)  aggregate supply curve leftward.

Question 16

The decrease in consumption and investment interest-related spending that occurs when the interest rate rises as government spending increases is called:

Accepted Answer

A)  crowding in. 
B)  crowding out. 
C)  neutral. 
D)  none of the above.

Question 17

In the long-run, an increase in the budget deficit and an expansionary monetary policy would:

Accepted Answer

A)  increase the price level only. 
B)  increase both the price level and real income. 
C)  increase real income only. 
D)  none of the above.

Question 18

Contractionary fiscal policy should be used if:

Accepted Answer

A)  aggregate demand-aggregate supply equilibrium is below potential output. 
B)  aggregate demand-aggregate supply equilibrium is above potential output. 
C)  aggregate demand-aggregate supply equilibrium is equal to potential output. 
D)  none of the above.

Question 19

Unemployment compensation is an example of:

Accepted Answer

A)  non-discretionary expenditures. 
B)  discretionary expenditures. 
C)  taxes. 
D)  none of the above.

Question 20

Decreases in the NAIRU represent a:

Accepted Answer

A)  leftward shift in the aggregate demand curve. 
B)  leftward shift of the long-run aggregate supply curve. 
C)  rightward shift of the long-run aggregate supply curve. 
D)  rightward shift in the aggregate demand curve.

Exam 14: The Aggregate Model of the Macro Economy

The increase in income generated by the additional government expenditure decreases the demand for money.

Increases in resources and efficiency would increase potential GDP.

The OPEC oil shocks in 1973-1974 are an example of:

Average weekly hours in manufacturing is an example of a:

A decrease in consumer confidence would shift the aggregate demand curve rightward.

An increase in the price level will shift the aggregate demand curve:

Economic variables that generally move in tandem with the overall phases of the business cycle are called:

Discretionary expenditures are federal government expenditures for programs whose funds are authorized and appropriated by Congress and signed by the President, where explicit decisions are made on the size of the programs.

An increase in resources available would decrease potential GDP and the long-run aggregate supply curve.

The full-employment level of output is called:

A decrease in wealth would shift the:

The curve that shows alternative combinations of the price level and real income that result in equilibrium in both the real goods and the money markets is called the

Briefly explain the difference between leading, coincident, and lagging indicators.

A decrease in the costs of resources or inputs of production would shift the:

An increase in wealth would shift the:

The decrease in consumption and investment interest-related spending that occurs when the interest rate rises as government spending increases is called:

In the long-run, an increase in the budget deficit and an expansionary monetary policy would:

Contractionary fiscal policy should be used if:

Unemployment compensation is an example of:

Decreases in the NAIRU represent a: