Question 1

If actual output exceeds potential output, ________ shifts upward over time.

Accepted Answer

A)  the short-run AS curve 
B)  the short-run AD curve 
C)  the long-run AS curve 
D)  the long-run AD curve

Question 2

Explain how the interest rate effect can increase aggregate demand.

Accepted Answer

The answer of Explain how the interest rate effect can...

Question 3

Which one of the following would shift the aggregate demand curve to the left?

Accepted Answer

A)  an increase in the money supply 
B)  an increase in government spending 
C)  an increase in exports 
D)  an increase in taxes

Question 4

The long-run aggregate supply curve is

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  a vertical line at potential output. 
D)  a horizontal line at the current price level.

Question 5

Figure 9.1 shows three aggregate demand curves. A movement from curve AD1 to curve AD2 could be caused by a(n)

Accepted Answer

A)  decrease in the money supply. 
B)  increase in taxes. 
C)  decrease in the price level. 
D)  increase in government spending.

Question 6

Which one of the following statements is true?

Accepted Answer

A)  In the short run, the level of output is determined by demand. 
B)  In the long run, the level of output is determined by demand. 
C)  In the long run, the aggregate supply curve is horizontal. 
D)  Where aggregate demand and aggregate supply intersect is always the full-employment level of output.

Question 7

Prices of industrial products and wages tend to be the most "flexible."

Accepted Answer

A) True 
 B)False

Question 8

Aggregate demand and aggregate supply must be combined to determine the price level and the "real" GDP.

Accepted Answer

A) True 
 B)False

Question 9

Figure 9.2
 
-Refer to Figure 9.2. A movement from point d to point c could be caused by a(n)

Accepted Answer

A)  increase in government spending. 
B)  increase in the price of oil. 
C)  increase in taxes. 
D)  increase in short-run aggregate supply.

Question 10

The mechanism that normally coordinates what goes on in an economy is the

Accepted Answer

A)  government. 
B)  price system. 
C)  stock market. 
D)  Federal Reserve.

Question 11

Figure 9.2
 
-Refer to Figure 9.2. A movement from point c to point a could be caused by a(n)

Accepted Answer

A)  decrease in government spending. 
B)  increase in the price of oil. 
C)  decrease in taxes. 
D)  decrease in short-run aggregate supply.

Question 12

Which of the following is a problem with the price system that can lead to a breakdown in the coordination of economic activity?

Accepted Answer

A)  The price system works silently in the background. 
B)  Prices can be slow to adjust. 
C)  Prices may be flexible. 
D)  all of the above

Question 13

Which of the following would cause an increase in aggregate demand in the short run?

Accepted Answer

A)  an increase in the supply of money 
B)  a decrease in the price level 
C)  an increase in taxes 
D)  a crop failure

Question 14

In the short run, the price level is determined primarily by the supply of goods.

Accepted Answer

A) True 
 B)False

Question 15

The price system works in an economy on a day-to-day basis to match the desires of consumers with the output from producers.

Accepted Answer

A) True 
 B)False

Question 16

Aggregate demand refers to the relationship between

Accepted Answer

A)  prices and the quantity of a good supplied. 
B)  the price level and the quantity of real GDP supplied. 
C)  prices and the quantity of a good demanded. 
D)  the price level and the quantity of real GDP demanded.

Question 17

The multiplier represents the ratio of the total shift in aggregate demand to the

Accepted Answer

A)  total shift in short-run aggregate supply. 
B)  initial shift in short-run aggregate supply. 
C)  initial shift in aggregate demand. 
D)  total shift in long-run aggregate supply.

Question 18

Figure 9.1 shows three aggregate demand curves. A movement from point b to point a could be caused by a(n)

Accepted Answer

A)  decrease in the money supply. 
B)  increase in taxes. 
C)  increase in the price level. 
D)  increase in government spending.

Question 19

What is the total demand for goods and services in an entire economy called?

Accepted Answer

A)  supply and demand 
B)  aggregate demand 
C)  consumer demand 
D)  GDP demand

Question 20

Output in the short run is determined by which of the following factors when an economy operates at full employment?

Accepted Answer

A)  demand 
B)  supply 
C)  the price level 
D)  the labor force

Exam 9: Aggregate Demand and Aggregate Supply

If actual output exceeds potential output, ________ shifts upward over time.

Explain how the interest rate effect can increase aggregate demand.

Which one of the following would shift the aggregate demand curve to the left?

The long-run aggregate supply curve is

Figure 9.1 shows three aggregate demand curves. A movement from curve AD1 to curve AD2 could be caused by a(n)

Which one of the following statements is true?

Prices of industrial products and wages tend to be the most "flexible."

Aggregate demand and aggregate supply must be combined to determine the price level and the "real" GDP.

Figure 9.2 -Refer to Figure 9.2. A movement from point d to point c could be caused by a(n)

The mechanism that normally coordinates what goes on in an economy is the

Figure 9.2 -Refer to Figure 9.2. A movement from point c to point a could be caused by a(n)

Which of the following is a problem with the price system that can lead to a breakdown in the coordination of economic activity?

Which of the following would cause an increase in aggregate demand in the short run?

In the short run, the price level is determined primarily by the supply of goods.

The price system works in an economy on a day-to-day basis to match the desires of consumers with the output from producers.

Aggregate demand refers to the relationship between

The multiplier represents the ratio of the total shift in aggregate demand to the

Figure 9.1 shows three aggregate demand curves. A movement from point b to point a could be caused by a(n)

What is the total demand for goods and services in an entire economy called?

Output in the short run is determined by which of the following factors when an economy operates at full employment?