Question 1

The short- run aggregate supply curve indicates

Accepted Answer

A) the relationship between the price level and the natural unemployment rate. 
B) the relationship between the purchasing power of wages and the quantity of labour supplied by households. 
C) the relationship between the quantity of real GDP supplied and the price level when the money wage rate, the prices of other resources, and potential GDP remain constant. 
D) the various quantities of real GDP producers supply at different income levels. 
E) the relationship between the price level and real GDP demanded by consumers, investors, governments, and net exporters. 
A) the relationship between the price level and the natural unemployment rate. 
B) the relationship between the purchasing power of wages and the quantity of labour supplied by households. 
C) the relationship between the quantity of real GDP supplied and the price level when the money wage rate, the prices of other resources, and potential GDP remain constant. 
D) the various quantities of real GDP producers supply at different income levels. 
E) the relationship between the price level and real GDP demanded by consumers, investors, governments, and net exporters.

Question 2

Which of the following news quotes best describes a Keynesian view of a recession?

Accepted Answer

A) "Rapid computerization is creating obsolete workers and higher unemployment." 
B) "The cuts in government spending have helped lower consumer spending and created unemployment." 
C) "Businesses are very worried about future sales and have lowered their purchases of capital equipment." 
D) "The unexpectedly tight fiscal policy is raising spending and lowering unemployment." 
E) "The anti- inflationary policy of the Bank of Canada is increasing spending." 
A) "Rapid computerization is creating obsolete workers and higher unemployment." 
B) "The cuts in government spending have helped lower consumer spending and created unemployment." 
C) "Businesses are very worried about future sales and have lowered their purchases of capital equipment." 
D) "The unexpectedly tight fiscal policy is raising spending and lowering unemployment." 
E) "The anti- inflationary policy of the Bank of Canada is increasing spending."

Question 3

Canadian businesses expect future profits to rise.Starting from a position of long- run equilibrium, what effect does this event have on Canada's economy in the short run?

Accepted Answer

A) Real GDP increases and the price level rises. 
B) Real GDP decreases and the price level falls. 
C) Real GDP increases and the price level falls. 
D) Real GDP decreases and the price level rises. 
E) There is no change in either real GDP or the price level. 
A) Real GDP increases and the price level rises. 
B) Real GDP decreases and the price level falls. 
C) Real GDP increases and the price level falls. 
D) Real GDP decreases and the price level rises. 
E) There is no change in either real GDP or the price level.

Question 4

An increase in oil prices to a country that is a net importer of oil shifts

Accepted Answer

A) both the short- run aggregate supply and long- run aggregate supply curves leftward. 
B) both the short- run aggregate supply and long- run aggregate supply curves rightward. 
C) the long- run aggregate supply curve rightward, but leaves the short- run aggregate supply curve unchanged. 
D) the short- run aggregate supply curve leftward, but shifts the long- run aggregate supply curve rightward. 
E) the short- run aggregate supply curve leftward, but leaves the long- run aggregate supply curve unchanged. 
A) both the short- run aggregate supply and long- run aggregate supply curves leftward. 
B) both the short- run aggregate supply and long- run aggregate supply curves rightward. 
C) the long- run aggregate supply curve rightward, but leaves the short- run aggregate supply curve unchanged. 
D) the short- run aggregate supply curve leftward, but shifts the long- run aggregate supply curve rightward. 
E) the short- run aggregate supply curve leftward, but leaves the long- run aggregate supply curve unchanged.

Question 5

Use the figure below to answer the following questions.
   Figure 10.3.3
-Refer to Figure 10.3.3.Which of the graphs illustrates an above full- employment equilibrium?

Accepted Answer

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

Question 6

Use the figure below to answer the following question.
   Figure 10.3.4
-Refer to Figure 10.3.4.The shifts of the SAS and AD curves

Accepted Answer

A) cause a proportionate increase in long run aggregate supply. 
B) increase real GDP. 
C) create an above full- employment equilibrium. 
D) lead to a recessionary gap. 
E) lead to an inflationary gap. 
A) cause a proportionate increase in long run aggregate supply. 
B) increase real GDP. 
C) create an above full- employment equilibrium. 
D) lead to a recessionary gap. 
E) lead to an inflationary gap.

Question 7

Everything else remaining the same, which one of the following increases aggregate demand?

Accepted Answer

A) a decrease in government spending 
B) an increase in taxes 
C) a decrease in the price level 
D) a decrease in the quantity of money 
E) an increase in transfer payments 
A) a decrease in government spending 
B) an increase in taxes 
C) a decrease in the price level 
D) a decrease in the quantity of money 
E) an increase in transfer payments

Question 8

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

Accepted Answer

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

Question 9

Which one of the following shifts the aggregate demand curve leftward?

Accepted Answer

A) an increase in the money wage rate 
B) a decrease in the interest rate 
C) an increase in expected inflation 
D) an increase in taxes 
E) an increase in the price level 
A) an increase in the money wage rate 
B) a decrease in the interest rate 
C) an increase in expected inflation 
D) an increase in taxes 
E) an increase in the price level

Question 10

The Canadian government increases its expenditure on goods and services in a time of war or increased international tension.Starting from a position of long- run equilibrium, what effect does this event have on Canada's economy in the short run?

Accepted Answer

A) Real GDP increases and the price level rises. 
B) Real GDP decreases and the price level falls. 
C) Real GDP increases and the price level falls. 
D) Real GDP decreases and the price level rises. 
E) There is no change in either real GDP or the price level. 
A) Real GDP increases and the price level rises. 
B) Real GDP decreases and the price level falls. 
C) Real GDP increases and the price level falls. 
D) Real GDP decreases and the price level rises. 
E) There is no change in either real GDP or the price level.

Question 11

Everything else remaining the same, the short- run aggregate supply curve shifts rightward if

Accepted Answer

A) the full- employment quantity of labour increases. 
B) the quantity of capital decreases. 
C) factor prices increase. 
D) the money wage rate increases. 
E) aggregate demand increases. 
A) the full- employment quantity of labour increases. 
B) the quantity of capital decreases. 
C) factor prices increase. 
D) the money wage rate increases. 
E) aggregate demand increases.

Question 12

Everything else remaining the same, an increase in the interest rate increases saving and

Accepted Answer

A) increases aggregate demand through the wealth effect. 
B) decreases aggregate demand through the international substitution effect. 
C) decreases aggregate demand through the intertemporal substitution effect. 
D) increases aggregate demand through the international substitution effect. 
E) increases aggregate demand through the intertemporal substitution effect. 
A) increases aggregate demand through the wealth effect. 
B) decreases aggregate demand through the international substitution effect. 
C) decreases aggregate demand through the intertemporal substitution effect. 
D) increases aggregate demand through the international substitution effect. 
E) increases aggregate demand through the intertemporal substitution effect.

Question 13

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

Question 14

The Canadian price level rises.This event

Accepted Answer

A) increases short- run aggregate supply. 
B) decreases short- run aggregate supply. 
C) decreases the quantity of real GDP supplied. 
D) increases the quantity of real GDP supplied. 
E) increases long- run aggregate supply. 
A) increases short- run aggregate supply. 
B) decreases short- run aggregate supply. 
C) decreases the quantity of real GDP supplied. 
D) increases the quantity of real GDP supplied. 
E) increases long- run aggregate supply.

Question 15

A change in wealth induced by a change in the price level is shown as a

Accepted Answer

A) movement along the aggregate demand curve. 
B) movement along the aggregate demand curve due to substitution effects. 
C) shift of the aggregate demand curve due to substitution effects. 
D) shift of the aggregate demand curve due to the wealth effect. 
E) movement along the aggregate supply curve. 
A) movement along the aggregate demand curve. 
B) movement along the aggregate demand curve due to substitution effects. 
C) shift of the aggregate demand curve due to substitution effects. 
D) shift of the aggregate demand curve due to the wealth effect. 
E) movement along the aggregate supply curve.

Question 16

A _______ macroeconomist believes that the economy is self- regulating and always at full employment.A _______ macroeconomist believes the economy requires active help from fiscal policy and monetary policy to maintain full employment.

Accepted Answer

A) new classical; monetarist 
B) Keynesian; new Keynesian 
C) monetarist; classical 
D) classical; Keynesian 
E) classical; monetarist 
A) new classical; monetarist 
B) Keynesian; new Keynesian 
C) monetarist; classical 
D) classical; Keynesian 
E) classical; monetarist

Question 17

Use the figure below to answer the following questions.
   Figure 10.3.3
-Refer to Figure 10.3.3a.You might expect the government to

Accepted Answer

A) cut government expenditure. 
B) increase government expenditure. 
C) raise taxes. 
D) do nothing except maintain the current equilibrium. 
E) pursue trade policies that reduce exports. 
A) cut government expenditure. 
B) increase government expenditure. 
C) raise taxes. 
D) do nothing except maintain the current equilibrium. 
E) pursue trade policies that reduce exports.

Question 18

The short- run aggregate supply curve is the relationship between the quantity of real GDP supplied and

Accepted Answer

A) the price level. 
B) the real interest rate. 
C) real income. 
D) the inflation rate. 
E) the quantity of real GDP demanded. 
A) the price level. 
B) the real interest rate. 
C) real income. 
D) the inflation rate. 
E) the quantity of real GDP demanded.

Question 19

Use the figure below to answer the following questions.
   Figure 10.3.2
-Refer to Figure 10.3.2.When the economy is in short- run macroeconomic equilibrium, the price level is

Accepted Answer

A) 80. 
B) 75. 
C) 95. 
D) 70. 
E) 65. 
A) 80. 
B) 75. 
C) 95. 
D) 70. 
E) 65.

Question 20

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

Accepted Answer

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

The short- run aggregate supply curve indicates

Which of the following news quotes best describes a Keynesian view of a recession?

Canadian businesses expect future profits to rise.Starting from a position of long- run equilibrium, what effect does this event have on Canada's economy in the short run?

An increase in oil prices to a country that is a net importer of oil shifts

Use the figure below to answer the following questions. Figure 10.3.3 -Refer to Figure 10.3.3.Which of the graphs illustrates an above full- employment equilibrium?

Use the figure below to answer the following question. Figure 10.3.4 -Refer to Figure 10.3.4.The shifts of the SAS and AD curves

Everything else remaining the same, which one of the following increases aggregate demand?

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

Which one of the following shifts the aggregate demand curve leftward?

The Canadian government increases its expenditure on goods and services in a time of war or increased international tension.Starting from a position of long- run equilibrium, what effect does this event have on Canada's economy in the short run?

Everything else remaining the same, the short- run aggregate supply curve shifts rightward if

Everything else remaining the same, an increase in the interest rate increases saving and

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

The Canadian price level rises.This event

A change in wealth induced by a change in the price level is shown as a

A _ macroeconomist believes that the economy is self- regulating and always at full employment.A _ macroeconomist believes the economy requires active help from fiscal policy and monetary policy to maintain full employment.

Use the figure below to answer the following questions. Figure 10.3.3 -Refer to Figure 10.3.3a.You might expect the government to

The short- run aggregate supply curve is the relationship between the quantity of real GDP supplied and

Use the figure below to answer the following questions. Figure 10.3.2 -Refer to Figure 10.3.2.When the economy is in short- run macroeconomic equilibrium, the price level is

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

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 10: Aggregate Supply and Aggregate Demand

The short- run aggregate supply curve indicates

Which of the following news quotes best describes a Keynesian view of a recession?

Canadian businesses expect future profits to rise.Starting from a position of long- run equilibrium, what effect does this event have on Canada's economy in the short run?

An increase in oil prices to a country that is a net importer of oil shifts

Use the figure below to answer the following questions. Figure 10.3.3 -Refer to Figure 10.3.3.Which of the graphs illustrates an above full- employment equilibrium?

Use the figure below to answer the following question. Figure 10.3.4 -Refer to Figure 10.3.4.The shifts of the SAS and AD curves

Everything else remaining the same, which one of the following increases aggregate demand?

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

Which one of the following shifts the aggregate demand curve leftward?

The Canadian government increases its expenditure on goods and services in a time of war or increased international tension.Starting from a position of long- run equilibrium, what effect does this event have on Canada's economy in the short run?

Everything else remaining the same, the short- run aggregate supply curve shifts rightward if

Everything else remaining the same, an increase in the interest rate increases saving and

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

The Canadian price level rises.This event

A change in wealth induced by a change in the price level is shown as a

A _______ macroeconomist believes that the economy is self- regulating and always at full employment.A _______ macroeconomist believes the economy requires active help from fiscal policy and monetary policy to maintain full employment.

Use the figure below to answer the following questions. Figure 10.3.3 -Refer to Figure 10.3.3a.You might expect the government to

The short- run aggregate supply curve is the relationship between the quantity of real GDP supplied and

Use the figure below to answer the following questions. Figure 10.3.2 -Refer to Figure 10.3.2.When the economy is in short- run macroeconomic equilibrium, the price level is

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

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

A _ macroeconomist believes that the economy is self- regulating and always at full employment.A _ macroeconomist believes the economy requires active help from fiscal policy and monetary policy to maintain full employment.