Question 1

-In the above figure, which part corresponds to a fall in the money wage rate?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 2

If the economy is in long run equilibrium and then aggregate demand increases, in the long run the increase in aggregate demand means that the

Accepted Answer

A)  neither the price level nor real GDP will be unaffected. 
B)  the price level will be higher and real GDP will be larger. 
C)  price level will be higher but real GDP will be unaffected. 
D)  real GDP will be larger but the price level will be unaffected. 
A)  neither the price level nor real GDP will be unaffected. 
B)  the price level will be higher and real GDP will be larger. 
C)  price level will be higher but real GDP will be unaffected. 
D)  real GDP will be larger but the price level will be unaffected.

Question 3

Which of the following can be said about economic growth?
I. Economic growth is the result of increases in long-run aggregate supply.
II. Economic growth is the result of increases in aggregate demand.

Accepted Answer

A)  II only 
B)  I only 
C)  I and II 
D)  neither I or II 
A)  II only 
B)  I only 
C)  I and II 
D)  neither I or II

Question 4

-The curve labeled A in the above figure is a

Accepted Answer

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

Question 5

Which of the following statements is INCORRECT?

Accepted Answer

A)  A classical macroeconomist believes that the money wage rate adjusts slowly. 
B)  A Keynesian believes the business cycle is mainly influenced by changes in peopleʹs expectations. 
C)  A monetarist believes that recessions are the result of erratic monetary policy. 
D)  A new classical macroeconomist believes the business cycle is the efficient response to the uneven pace of technological change. 
A)  A classical macroeconomist believes that the money wage rate adjusts slowly. 
B)  A Keynesian believes the business cycle is mainly influenced by changes in peopleʹs expectations. 
C)  A monetarist believes that recessions are the result of erratic monetary policy. 
D)  A new classical macroeconomist believes the business cycle is the efficient response to the uneven pace of technological change.

Question 6

$$\begin{array} { | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Price } \
\text { level }
\end{array} & \begin{array} { l } 
\text { A ggregate } \
\text { demand } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { l } 
\text { Short-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { l } 
\text { Long-run } \
\text { aggregate } \
\text { supply } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 140 & 4 & 8 & 7 \
\hline 130 & 5 & 7 & 7 \
\hline 120 & 6 & 6 & 7 \
\hline 110 & 7 & 5 & 7 \
\hline 100 & 8 & 4 & 7 \
\hline
\end{array}$$
-The data in the above table show that the economy will be in a short -run macroeconomic equilibrium at a price level of

Accepted Answer

A)  100. 
B)  120. 
C)  110. 
D)  90. 
A)  100. 
B)  120. 
C)  110. 
D)  90.

Question 7

Other things constant, the economyʹs aggregate demand curve shows that

Accepted Answer

A)  the quantity of real GDP demanded decreases when the price level rises. 
B)  any change in the price level shifts the aggregate demand curve. 
C)  as the price level falls, real GDP decreases. 
D)  the quantity of real GDP demanded and the price level are not related. 
A)  the quantity of real GDP demanded decreases when the price level rises. 
B)  any change in the price level shifts the aggregate demand curve. 
C)  as the price level falls, real GDP decreases. 
D)  the quantity of real GDP demanded and the price level are not related.

Question 8

The long-run aggregate supply curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 9

Your real wealth is measured as the

Accepted Answer

A)  amount of goods and services your wealth will buy. 
B)  amount of money you have. 
C)  amount of assets you have in dollar terms. 
D)  amount of goods you have divided by the price level. 
A)  amount of goods and services your wealth will buy. 
B)  amount of money you have. 
C)  amount of assets you have in dollar terms. 
D)  amount of goods you have divided by the price level.

Question 10

-The above figure illustrates

Accepted Answer

A)  a recessionary gap. 
B)  an inflationary gap. 
C)  a full-employment equilibrium. 
D)  an equilibrium at the economyʹs physical limits. 
A)  a recessionary gap. 
B)  an inflationary gap. 
C)  a full-employment equilibrium. 
D)  an equilibrium at the economyʹs physical limits.

Question 11

One reason that the aggregate demand curve has a negative slope is because

Accepted Answer

A)  people earn more money when output rises. 
B)  people buy fewer goods and save more when the price level rises because their real wealth decreases. 
C)  firms produce more when the price rises. 
D)  The premise of the question is wrong because the aggregate demand curve has a positive slope. 
A)  people earn more money when output rises. 
B)  people buy fewer goods and save more when the price level rises because their real wealth decreases. 
C)  firms produce more when the price rises. 
D)  The premise of the question is wrong because the aggregate demand curve has a positive slope.

Question 12

A decrease in government expenditure on goods and services

Accepted Answer

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

Question 13

What is the difference between the long-run aggregate supply and the short-run aggregate supply curves?

Accepted Answer

The long-run aggregate supply curve, LAS

Question 14

A decrease in government expenditure shifts the AD curve __________and a decrease in taxes shifts the AD 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 15

Suppose that the money wage in the economy increases by 8 percent. As a result the

Accepted Answer

A)  short-run aggregate supply will decrease. 
B)  long-run aggregate supply will decrease. 
C)  long-run and the short-run aggregate supply both decrease. 
D)  long-run aggregate supply will increase and the short-run aggregate supply will decrease. 
A)  short-run aggregate supply will decrease. 
B)  long-run aggregate supply will decrease. 
C)  long-run and the short-run aggregate supply both decrease. 
D)  long-run aggregate supply will increase and the short-run aggregate supply will decrease.

Question 16

If the economy is at long run equilibrium then

Accepted Answer

A)  real GDP can be greater than, less than, or equal to potential GDP. 
B)  nominal GDP equals potential GDP. 
C)  real GDP cannot be equal to potential GDP. 
D)  real GDP equals potential GDP. 
A)  real GDP can be greater than, less than, or equal to potential GDP. 
B)  nominal GDP equals potential GDP. 
C)  real GDP cannot be equal to potential GDP. 
D)  real GDP equals potential GDP.

Question 17

One result of a decrease in aggregate demand and no change in aggregate supply is

Accepted Answer

A)  a rise in the price level. 
B)  an increase in employment levels. 
C)  an economic expansion. 
D)  a recession. 
A)  a rise in the price level. 
B)  an increase in employment levels. 
C)  an economic expansion. 
D)  a recession.

Question 18

If the money prices of resources changes,

Accepted Answer

A)  the SAS curve shifts. 
B)  the macroeconomic equilibrium is unaffected. 
C)  the AD curve shifts. 
D)  the LAS curve shifts. 
A)  the SAS curve shifts. 
B)  the macroeconomic equilibrium is unaffected. 
C)  the AD curve shifts. 
D)  the LAS curve shifts.

Question 19

-In the above figure, B is the current long-run aggregate supply curve and E is the current
Short-run aggregate supply curve. If there is an increase in the full -employment quantity of labor, then the long-run aggregate supply curve and the short-run aggregate supply curve

Accepted Answer

A)  remain B and E. 
B)  shift to A and F, respectively. 
C)  shift to C and F, respectively. 
D)  shift to A and D, respectively. 
A)  remain B and E. 
B)  shift to A and F, respectively. 
C)  shift to C and F, respectively. 
D)  shift to A and D, respectively.

Question 20

The short-run aggregate supply curve shifts leftward when the

Accepted Answer

A)  availability of on-the-job training expands to all workers. 
B)  money wage rate increases. 
C)  price level increases. 
D)  general level of technology advances. 
A)  availability of on-the-job training expands to all workers. 
B)  money wage rate increases. 
C)  price level increases. 
D)  general level of technology advances.

-In the above figure, which part corresponds to a fall in the money wage rate?

If the economy is in long run equilibrium and then aggregate demand increases, in the long run the increase in aggregate demand means that the

Which of the following can be said about economic growth? I. Economic growth is the result of increases in long-run aggregate supply. II. Economic growth is the result of increases in aggregate demand.

-The curve labeled A in the above figure is a

Which of the following statements is INCORRECT?

Other things constant, the economyʹs aggregate demand curve shows that

The long-run aggregate supply curve is upward sloping.

Your real wealth is measured as the

-The above figure illustrates

One reason that the aggregate demand curve has a negative slope is because

A decrease in government expenditure on goods and services

What is the difference between the long-run aggregate supply and the short-run aggregate supply curves?

A decrease in government expenditure shifts the AD curve and a decrease in taxes shifts the AD curve _.

Suppose that the money wage in the economy increases by 8 percent. As a result the

If the economy is at long run equilibrium then

One result of a decrease in aggregate demand and no change in aggregate supply is

If the money prices of resources changes,

-In the above figure, B is the current long-run aggregate supply curve and E is the current Short-run aggregate supply curve. If there is an increase in the full -employment quantity of labor, then the long-run aggregate supply curve and the short-run aggregate supply curve

The short-run aggregate supply curve shifts leftward when the

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 10: Aggregate Supply and Aggregate Demand

-In the above figure, which part corresponds to a fall in the money wage rate?

If the economy is in long run equilibrium and then aggregate demand increases, in the long run the increase in aggregate demand means that the

Which of the following can be said about economic growth? I. Economic growth is the result of increases in long-run aggregate supply. II. Economic growth is the result of increases in aggregate demand.

-The curve labeled A in the above figure is a

Which of the following statements is INCORRECT?

Other things constant, the economyʹs aggregate demand curve shows that

The long-run aggregate supply curve is upward sloping.

Your real wealth is measured as the

-The above figure illustrates

One reason that the aggregate demand curve has a negative slope is because

A decrease in government expenditure on goods and services

What is the difference between the long-run aggregate supply and the short-run aggregate supply curves?

A decrease in government expenditure shifts the AD curve __________and a decrease in taxes shifts the AD curve ___________.

Suppose that the money wage in the economy increases by 8 percent. As a result the

If the economy is at long run equilibrium then

One result of a decrease in aggregate demand and no change in aggregate supply is

If the money prices of resources changes,

-In the above figure, B is the current long-run aggregate supply curve and E is the current Short-run aggregate supply curve. If there is an increase in the full -employment quantity of labor, then the long-run aggregate supply curve and the short-run aggregate supply curve

The short-run aggregate supply curve shifts leftward when the

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

A decrease in government expenditure shifts the AD curve and a decrease in taxes shifts the AD curve _.