Question 1

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 2

An increase in the amount of resources would shift the long-run aggregate supply curve:

Accepted Answer

A) rightward. 
B) leftward. 
C) no shift. 
D) none of the above.

Question 3

Higher prices and price increases combined with lower real output and income,resulting from a major increase in input prices in the economy is called:

Accepted Answer

A) deflation. 
B) inflation. 
C) stagflation. 
D) none of the above.

Question 4

An increase in foreign real income 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 5

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

Accepted Answer

A) True 
 B)False

Question 6

An adverse oil price increase will shift the short-run aggregate supply curve:

Accepted Answer

A) leftward. 
B) rightward. 
C) will not shift. 
D) none of the above.

Question 7

Contractionary monetary 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 8

An increase in consumer wealth would shift the aggregate demand curve rightward.

Accepted Answer

A) True 
 B)False

Question 9

Using the aggregate demand-aggregate supply diagram,graphically illustrate and explain the impact of an escalating budget deficit on the price level and real income in the long-run.

Accepted Answer

The answer of Using the aggregate demand-aggregate supply diagram,graphically illustrate...

Question 10

At a given price level,an increase in stock market wealth will shift the aggregate demand curve:

Accepted Answer

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

Question 11

An increase in government expenditure 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 long-run aggregate supply curve is influenced by:

Accepted Answer

A) resources available. 
B) efficiency levels. 
C) level of technology. 
D) all of the above.

Question 13

An increase in resources,efficiency,or technology will 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 14

An aggregate supply curve that is either horizontal or upward sloping,depending on whether the absolute price level increases as firms produce more output is called:

Accepted Answer

A) short-run aggregate supply curve. 
B) long-run aggregate supply curve. 
C) potential GDP. 
D) NAIRU.

Question 15

An increase 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 16

A curve that shows the price level at which firms in the economy are willing to produce different levels of goods and services and the resulting level of real income is called:

Accepted Answer

A) aggregate demand. 
B) aggregate supply. 
C) potential output. 
D) natural rate of unemployment.

Question 17

Unemployment compensation is an example of:

Accepted Answer

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

Question 18

During the recession of 2007-2009,the U.S.economy was experiencing a decrease in home prices and consumer wealth,a credit crisis in the financial markets,and declining consumer and business confidence.What components of aggregate demand were affected and what was the impact on real output? What were the policy options?

Accepted Answer

The answer of During the recession of 2007-2009,the U.S.economy was...

Question 19

A vertical curve that defines the level of full-employment or potential output based on a given amount of resources,efficiency,and technology in the economy is called:

Accepted Answer

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

Question 20

The portion of the short-run aggregate supply that reflects the economy's resources are not fully employed is the:

Accepted Answer

A) vertical portion. 
B) horizontal portion. 
C) upward sloping portion. 
D) none of the above.

Exam 14: The Aggregate Model of the Macro Economy