Question 1

Use the table below to answer the following questions.
Table 26.3.3
 
-Refer to Table 26.3.3.With no interference from the central bank or the government,the

Accepted Answer

A) money wage rate will eventually rise. 
B) money wage rate will eventually fall. 
C) short-run aggregate supply curve will shift leftward. 
D) long-run aggregate supply curve will shift leftward. 
E) aggregate demand curve will shift rightward.

Question 2

Which one,if any,of the following events shift the short-run aggregate supply curve but not the long-run aggregate supply curve?

Accepted Answer

A) A change in factor prices. 
B) A change in the quantity of capital. 
C) An advance in technology. 
D) An increase in the full-employment quantity of labour. 
E) None of the above.

Question 3

Full-employment equilibrium occurs when

Accepted Answer

A) aggregate demand equals short-run aggregate supply. 
B) all who are willing and able to work, are working. 
C) real GDP equals potential GDP. 
D) real GDP equals potential GDP and the wage level is set so that the GDP deflator equals 100. 
E) all who are willing and able to work, are working and the wage level is set so that the GDP deflator equals 100.

Question 4

The defining feature of the classical view of macroeconomics is that the economy is

Accepted Answer

A) rarely at full employment. 
B) driven by expectations called "animal spirits." 
C) self-regulating and always at full employment. 
D) constantly bombarded by shocks that arise from the uneven pace of technological change. 
E) the most significant influence on aggregate demand is expectations.

Question 5

If the price level rises,then the wealth effect leads to

Accepted Answer

A) an increase in real wealth, an increase in current consumption expenditure, and an increase in saving. 
B) an increase in real wealth, an increase in current consumption expenditure, and a decrease in saving. 
C) a decrease in real wealth, an increase in current consumption expenditure, and an increase in saving. 
D) a decrease in real wealth, an increase in current consumption expenditure, and a decrease in saving. 
E) a decrease in real wealth, a decrease in current consumption expenditure, and an increase in saving.

Question 6

Which one of the following variables is not held constant along a given aggregate demand curve?

Accepted Answer

A) fiscal policy 
B) real income 
C) tax rates 
D) expectations about inflation 
E) the price level

Question 7

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

Accepted Answer

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

Question 8

Use the figure below to answer the following questions.
  
Figure 26.3.1
-Refer to Figure 26.3.1.As Econoworld automatically adjusts to long-run equilibrium,the

Accepted Answer

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

Question 9

Use the figure below to answer the following questions.
  
Figure 26.3.2
-Refer to Figure 26.3.2.Short-run macroeconomic equilibrium real GDP in Mythlo is ________ billion.

Accepted Answer

A) $500 
B) $650 
C) $550 
D) $600 
E) $475

Question 10

Use the figure below to answer the following questions.
  
Figure 26.3.1
-Refer to Figure 26.3.1.If Econoworld automatically adjusts to a long-run equilibrium,then in the long-run macroeconomic equilibrium

Accepted Answer

A) the price level is 70. 
B) real GDP is $440 billion. 
C) actual unemployment exceeds the natural unemployment rate. 
D) potential GDP is greater than in the short run. 
E) both A and B.

Question 11

Use the figure below to answer the following questions.
  
Figure 26.3.2
-Refer to Figure 26.3.2.Consider statements (1)and (2)and select the correct answer. (1) The economy of Mythlo is experiencing an above full-employment equilibrium.
(2) SAS will automatically shift rightward as the economy adjusts to long-run equilibrium.

Accepted Answer

A) (1)is true; (2)is false. 
B) (2)is true; (1)is false. 
C) (1)and (2)are false. 
D) (1)and (2)are true. 
E) (1)is true; (2)is true only if the LAS curve shifts rightward at the same time.

Question 12

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3.Which of the graphs illustrates an above full-employment equilibrium?

Accepted Answer

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

Question 13

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3.Which one of the graphs illustrates a below full-employment equilibrium?

Accepted Answer

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

Question 14

Which of the following does not change aggregate demand?

Accepted Answer

A) an increase in expected future income 
B) a change in fiscal policy 
C) a change in monetary policy 
D) an advance in technology 
E) a rise in the exchange rate

Question 15

Which one of the following newspaper quotations describes a movement along an LAS curve?

Accepted Answer

A) "The decrease in consumer spending may lead to a recession." 
B) "The increase in consumer spending is expected to lead to inflation, without any increase in real GDP." 
C) "Recent higher wage settlements are expected to cause higher inflation this year." 
D) "Growth has been unusually high the last few years due to more women entering the labour force." 
E) "The recent tornadoes destroyed many factories in Calgary and Edmonton."

Question 16

Use the figure below to answer the following questions.
  
Figure 26.1.1
-Refer to Figure 26.1.1.Which graph illustrates what happens when factor prices rise?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) (a)and (b)

Question 17

Use the figure below to answer the following questions.
  
Figure 26.3.5
-Refer to Figure 26.3.5.When the economy is at full employment,real GDP is

Accepted Answer

A) $13 trillion. 
B) $13.5 trillion. 
C) more than $13 trillion and less than $13.5 trillion. 
D) less than $13 trillion. 
E) 100.

Question 18

Consider an economy starting from a position of full employment.Which one of the following changes does not occur as a result of an increase in aggregate demand?

Accepted Answer

A) The price level rises. 
B) Real GDP increases in the short run. 
C) An inflationary gap arises. 
D) Factor prices rise in the long run, shifting the short-run aggregate supply curve to the left. 
E) The long-run aggregate supply curve shifts rightward to create the new long-run equilibrium.

Question 19

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3.Which one of the graphs illustrates a full-employment equilibrium?

Accepted Answer

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

Question 20

Consider an economy starting from a position of full employment.Which one of the following occurs as a result of an advance in technology?

Accepted Answer

A) The price level falls. 
B) Real GDP decreases in the short run. 
C) An inflationary gap arises. 
D) Factor prices rise in the long run, shifting the short-run aggregate supply curve leftward. 
E) The long-run aggregate supply curve shifts leftward to create the new long-run equilibrium.

Exam 26: Aggregate Supply and Aggregate Demand

Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.With no interference from the central bank or the government,the

Which one,if any,of the following events shift the short-run aggregate supply curve but not the long-run aggregate supply curve?

Full-employment equilibrium occurs when

The defining feature of the classical view of macroeconomics is that the economy is

If the price level rises,then the wealth effect leads to

Which one of the following variables is not held constant along a given aggregate demand curve?

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

Use the figure below to answer the following questions. Figure 26.3.1 -Refer to Figure 26.3.1.As Econoworld automatically adjusts to long-run equilibrium,the

Use the figure below to answer the following questions. Figure 26.3.2 -Refer to Figure 26.3.2.Short-run macroeconomic equilibrium real GDP in Mythlo is ________ billion.

Use the figure below to answer the following questions. Figure 26.3.1 -Refer to Figure 26.3.1.If Econoworld automatically adjusts to a long-run equilibrium,then in the long-run macroeconomic equilibrium

Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.Which of the graphs illustrates an above full-employment equilibrium?

Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.Which one of the graphs illustrates a below full-employment equilibrium?

Which of the following does not change aggregate demand?

Which one of the following newspaper quotations describes a movement along an LAS curve?

Use the figure below to answer the following questions. Figure 26.1.1 -Refer to Figure 26.1.1.Which graph illustrates what happens when factor prices rise?

Use the figure below to answer the following questions. Figure 26.3.5 -Refer to Figure 26.3.5.When the economy is at full employment,real GDP is

Consider an economy starting from a position of full employment.Which one of the following changes does not occur as a result of an increase in aggregate demand?

Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.Which one of the graphs illustrates a full-employment equilibrium?

Consider an economy starting from a position of full employment.Which one of the following occurs as a result of an advance in technology?