Question 1

Which of the following changes while moving along the aggregate demand curve?

Accepted Answer

A)  future profits from investment projects 
B)  the amount of money in the economy 
C)  future incomes of households 
D)  the price level 
A)  future profits from investment projects 
B)  the amount of money in the economy 
C)  future incomes of households 
D)  the price level

Question 2

The country of Mu has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing _ aggregate supply.

Accepted Answer

A)  much faster than long- run 
B)  much slower than long- run 
C)  at much the same pace as long- run 
D)  at the same pace as short- run 
A)  much faster than long- run 
B)  much slower than long- run 
C)  at much the same pace as long- run 
D)  at the same pace as short- run

Question 3

A rise in the price level changes aggregate demand because

Accepted Answer

A)  the real value of people's wealth decreases and so they decrease their consumption. 
B)  the real value of people's wealth varies directly with the price level and so does their spending. 
C)  people like to spend more when prices are higher. 
D)  the more money people have, the more it is worth and hence the more goods and services they demand. 
A)  the real value of people's wealth decreases and so they decrease their consumption. 
B)  the real value of people's wealth varies directly with the price level and so does their spending. 
C)  people like to spend more when prices are higher. 
D)  the more money people have, the more it is worth and hence the more goods and services they demand.

Question 4

All of the following shift the LAS curve EXCEPT

Accepted Answer

A)  an increase in the stock of human capital. 
B)  technological progress. 
C)  a change in the capital stock. 
D)  an increase in the money wage rate. 
A)  an increase in the stock of human capital. 
B)  technological progress. 
C)  a change in the capital stock. 
D)  an increase in the money wage rate.

Question 5

Which of the following statements is incorrect?

Accepted Answer

A)  Taxes and transfer payments affect aggregate demand by changing disposable income. 
B)  An increase in disposable income leads to a decrease in aggregate demand. 
C)  Fiscal policy is the attempt to influence the economy using taxes, transfer payments, and government expenditures. 
D)  Government expenditures affect aggregate demand directly because government expenditures are a component of aggregate demand. 
A)  Taxes and transfer payments affect aggregate demand by changing disposable income. 
B)  An increase in disposable income leads to a decrease in aggregate demand. 
C)  Fiscal policy is the attempt to influence the economy using taxes, transfer payments, and government expenditures. 
D)  Government expenditures affect aggregate demand directly because government expenditures are a component of aggregate demand.

Question 6

How does the aggregate demand curve reflect an increase in aggregate demand?

Accepted Answer

A rightward shift of

Question 7

-In the above figure, what is the short- run equilibrium real GDP and the short- run equilibrium price level?

Accepted Answer

The short- run equilibrium occ

Question 8

In the short- run, real GDP can be greater than or less than potential GDP because in the short run the money wage rate is fixed.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following decreases aggregate demand?

Accepted Answer

A)  The government increases taxes on both business and personal income. 
B)  Households believe that the economy is headed for good times, with higher future incomes. 
C)  The quantity of money in the economy increases. 
D)  Foreign incomes rise. 
A)  The government increases taxes on both business and personal income. 
B)  Households believe that the economy is headed for good times, with higher future incomes. 
C)  The quantity of money in the economy increases. 
D)  Foreign incomes rise.

Question 10

When the quantity of capital increases, then the

Accepted Answer

A)  SAS curve shifts rightward and the LAS curve shifts rightward. 
B)  LAS curve shifts rightward and the SAS curve does not shift. 
C)  SAS curve shifts rightward and the LAS curve does not shift. 
D)  SAS curve shifts rightward and the LAS curve does shifts leftward. 
A)  SAS curve shifts rightward and the LAS curve shifts rightward. 
B)  LAS curve shifts rightward and the SAS curve does not shift. 
C)  SAS curve shifts rightward and the LAS curve does not shift. 
D)  SAS curve shifts rightward and the LAS curve does shifts leftward.

Question 11

-Based on the figure above, short- run equilibrium occurs at the price level of

Accepted Answer

A)  130 and real GDP of $8 trillion. 
B)  140 and real GDP of $12 trillion. 
C)  120 and real GDP of $4 trillion. 
D)  130 and real GDP of $12 trillion. 
A)  130 and real GDP of $8 trillion. 
B)  140 and real GDP of $12 trillion. 
C)  120 and real GDP of $4 trillion. 
D)  130 and real GDP of $12 trillion.

Question 12

Japan's population increased by 3 percent in 2007. As a result, which of the following occurred?
i. an increase in potential GDP
ii. a rightward shift in the long- run aggregate supply curve
iii. a rightward shift in the short- run aggregate supply curve.

Accepted Answer

A)  i and ii only 
B)  i, ii and iii 
C)  ii and iii 
D)  iii only 
A)  i and ii only 
B)  i, ii and iii 
C)  ii and iii 
D)  iii only

Question 13

-Use the figure above to answer this question. At a price level of 110,

Accepted Answer

A)  real GDP is greater than the aggregate quantity demanded and firms will cut production. 
B)  inventories will decrease. 
C)  real GDP is less than the aggregate quantity demanded and firms will increase production. 
D)  real GDP less than the aggregate quantity demanded and firms will increase prices. 
A)  real GDP is greater than the aggregate quantity demanded and firms will cut production. 
B)  inventories will decrease. 
C)  real GDP is less than the aggregate quantity demanded and firms will increase production. 
D)  real GDP less than the aggregate quantity demanded and firms will increase prices.

Question 14

-In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 120 and real GDP of $11.0 trillion, then it must be the case that

Accepted Answer

A)  aggregate demand has increased. 
B)  aggregate supply has increased. 
C)  aggregate demand has decreased. 
D)  aggregate supply has decreased. 
A)  aggregate demand has increased. 
B)  aggregate supply has increased. 
C)  aggregate demand has decreased. 
D)  aggregate supply has decreased.

Question 15

In the short- run, real GDP can be greater than or less than potential GDP because in the short run the

Accepted Answer

A)  full- employment level of employment is fixed. 
B)  money wage rate is fixed. 
C)  price level is fixed. 
D)  quantity of capital is fixed. 
A)  full- employment level of employment is fixed. 
B)  money wage rate is fixed. 
C)  price level is fixed. 
D)  quantity of capital is fixed.

Question 16

The long- run aggregate supply curve is

Accepted Answer

A)  the same as the short- run aggregate supply curve. 
B)  horizontal at the full employment price level. 
C)  vertical at the full employment level of real GDP. 
D)  upward sloping because of the effects of price level changes on real GDP. 
A)  the same as the short- run aggregate supply curve. 
B)  horizontal at the full employment price level. 
C)  vertical at the full employment level of real GDP. 
D)  upward sloping because of the effects of price level changes on real GDP.

Question 17

The short- run aggregate supply curve shifts when

Accepted Answer

A)  the quantity of capital changes. 
B)  advances in technology occur. 
C)  the full- employment quantity of labor changes. 
D)  All of the above answers are correct. 
A)  the quantity of capital changes. 
B)  advances in technology occur. 
C)  the full- employment quantity of labor changes. 
D)  All of the above answers are correct.

Question 18

An increase in the money wage rate shifts the short- run aggregate supply curve ; an increase in technology shifts the long- run aggregate supply curve .

Accepted Answer

A)  leftward; leftward 
B)  rightward; leftward 
C)  leftward; rightward 
D)  rightward; rightward 
A)  leftward; leftward 
B)  rightward; leftward 
C)  leftward; rightward 
D)  rightward; rightward

Question 19

A decrease in government transfer payments

Accepted Answer

A)  increases aggregate demand. 
B)  decreases the aggregate quantity demanded. 
C)  increases the aggregate quantity demanded. 
D)  decreases aggregate demand. 
A)  increases aggregate demand. 
B)  decreases the aggregate quantity demanded. 
C)  increases the aggregate quantity demanded. 
D)  decreases aggregate demand.

Question 20

An increase in the money wage rate

Accepted Answer

A)  decreases the long- run aggregate supply. 
B)  increases the long- run aggregate supply. 
C)  increases the short- run aggregate supply. 
D)  decreases the short- run aggregate supply. 
A)  decreases the long- run aggregate supply. 
B)  increases the long- run aggregate supply. 
C)  increases the short- run aggregate supply. 
D)  decreases the short- run aggregate supply.

Which of the following changes while moving along the aggregate demand curve?

The country of Mu has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing _ aggregate supply.

A rise in the price level changes aggregate demand because

All of the following shift the LAS curve EXCEPT

Which of the following statements is incorrect?

How does the aggregate demand curve reflect an increase in aggregate demand?

-In the above figure, what is the short- run equilibrium real GDP and the short- run equilibrium price level?

In the short- run, real GDP can be greater than or less than potential GDP because in the short run the money wage rate is fixed.

Which of the following decreases aggregate demand?

When the quantity of capital increases, then the

-Based on the figure above, short- run equilibrium occurs at the price level of

Japan's population increased by 3 percent in 2007. As a result, which of the following occurred? i. an increase in potential GDP ii. a rightward shift in the long- run aggregate supply curve iii. a rightward shift in the short- run aggregate supply curve.

-Use the figure above to answer this question. At a price level of 110,

-In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 120 and real GDP of $11.0 trillion, then it must be the case that

In the short- run, real GDP can be greater than or less than potential GDP because in the short run the

The long- run aggregate supply curve is

The short- run aggregate supply curve shifts when

An increase in the money wage rate shifts the short- run aggregate supply curve ; an increase in technology shifts the long- run aggregate supply curve .

A decrease in government transfer payments

An increase in the money wage rate

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 10: Aggregate Supply and Aggregate Demand

Which of the following changes while moving along the aggregate demand curve?

The country of Mu has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing _ aggregate supply.

A rise in the price level changes aggregate demand because

All of the following shift the LAS curve EXCEPT

Which of the following statements is incorrect?

How does the aggregate demand curve reflect an increase in aggregate demand?

-In the above figure, what is the short- run equilibrium real GDP and the short- run equilibrium price level?

In the short- run, real GDP can be greater than or less than potential GDP because in the short run the money wage rate is fixed.

Which of the following decreases aggregate demand?

When the quantity of capital increases, then the

-Based on the figure above, short- run equilibrium occurs at the price level of

Japan's population increased by 3 percent in 2007. As a result, which of the following occurred? i. an increase in potential GDP ii. a rightward shift in the long- run aggregate supply curve iii. a rightward shift in the short- run aggregate supply curve.

-Use the figure above to answer this question. At a price level of 110,

-In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 120 and real GDP of $11.0 trillion, then it must be the case that

In the short- run, real GDP can be greater than or less than potential GDP because in the short run the

The long- run aggregate supply curve is

The short- run aggregate supply curve shifts when

An increase in the money wage rate shifts the short- run aggregate supply curve ; an increase in technology shifts the long- run aggregate supply curve .

A decrease in government transfer payments

An increase in the money wage rate

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters