Question 1

Over time,aggregate demand and aggregate supply grow by the same amount.

Accepted Answer

A) True 
 B)False  False

Question 2

Suppose we observe an economy experience an economic expansion and high inflation.This means the expansion is attributed to

Accepted Answer

A)  growth in aggregate demand. 
B)  growth in aggregate supply. 
C)  a reduction in aggregate demand. 
D)  a reduction in aggregate supply. 
A)  growth in aggregate demand. 
B)  growth in aggregate supply. 
C)  a reduction in aggregate demand. 
D)  a reduction in aggregate supply. A

Question 3

If profit per unit equals (price - cost per unit)and costs are temporarily fixed,then the aggregate supply curve will have

Accepted Answer

A)  a basic "U" shape. 
B)  a negative slope. 
C)  a positive slope. 
D)  All of the above could be correct. 
A)  a basic "U" shape. 
B)  a negative slope. 
C)  a positive slope. 
D)  All of the above could be correct. C

Question 4

The existence of an inflationary gap would tend to benefit most

Accepted Answer

A)  bankers. 
B)  retired persons. 
C)  unemployed workers. 
D)  stock owners. 
A)  bankers. 
B)  retired persons. 
C)  unemployed workers. 
D)  stock owners.

Question 5

Economists do not agree on why wages are more rigid now than they were before World War II.

Accepted Answer

A) True 
 B)False

Question 6

Distinguish between a movement along the aggregate supply curve and a shift of the entire aggregate supply curve.What factors cause each to occur?

Accepted Answer

The aggregate supply curve is analogous

Question 7

Increases in the availability of natural resources will affect the aggregate supply curve such that it

Accepted Answer

A)  shifts inward and becomes flatter. 
B)  shifts inward. 
C)  shifts outward. 
D)  becomes flatter. 
E)  becomes steeper. 
A)  shifts inward and becomes flatter. 
B)  shifts inward. 
C)  shifts outward. 
D)  becomes flatter. 
E)  becomes steeper.

Question 8

The slope of the aggregate supply curve decreases as total output increases.

Accepted Answer

A) True 
 B)False

Question 9

The principal way in which an economy self-corrects from an inflationary gap is through

Accepted Answer

A)  deflation,which increases purchasing power. 
B)  inflation,which reduces purchasing power. 
C)  disinflation,which maintains purchasing power. 
D)  price level decreases,which stimulate production. 
A)  deflation,which increases purchasing power. 
B)  inflation,which reduces purchasing power. 
C)  disinflation,which maintains purchasing power. 
D)  price level decreases,which stimulate production.

Question 10

Part of the normal aftermath of a period of excessive aggregate demand is

Accepted Answer

A)  improvement in the quality of life. 
B)  reflation. 
C)  real GDP growth. 
D)  stagflation. 
E)  All of the above. 
A)  improvement in the quality of life. 
B)  reflation. 
C)  real GDP growth. 
D)  stagflation. 
E)  All of the above.

Question 11

The typical movement of the aggregate supply curve resulting from an increase in productivity is that it

Accepted Answer

A)  shifts inward and becomes flatter. 
B)  shifts inward. 
C)  shifts outward. 
D)  becomes flatter. 
E)  becomes steeper. 
A)  shifts inward and becomes flatter. 
B)  shifts inward. 
C)  shifts outward. 
D)  becomes flatter. 
E)  becomes steeper.

Question 12

A statement issued by the president's economic advisors stating that growth can continue without price increases indicates that they believe the relevant aggregate supply curve is

Accepted Answer

A)  vertical. 
B)  horizontal. 
C)  downward sloping. 
D)  upward sloping. 
A)  vertical. 
B)  horizontal. 
C)  downward sloping. 
D)  upward sloping.

Question 13

A price level lower than equilibrium will cause quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 14

Figure 10-6  
-In Figure 10-6,which graph best illustrates an autonomous increase in consumption spending?

Accepted Answer

A)  (1) 
B)  (2) 
C)  (3) 
D)  (4) 
A)  (1) 
B)  (2) 
C)  (3) 
D)  (4)

Question 15

Increases in the prices of imported energy in 2002-2008 caused the aggregate supply curve to shift inward.

Accepted Answer

A) True 
 B)False

Question 16

The only factor that can cause movement along the aggregate supply curve is the

Accepted Answer

A)  labor force. 
B)  capital stock. 
C)  availability of resources. 
D)  price level. 
E)  All of the above are correct. 
A)  labor force. 
B)  capital stock. 
C)  availability of resources. 
D)  price level. 
E)  All of the above are correct.

Question 17

A decrease in the price of resources will cause the aggregate supply curve to

Accepted Answer

A)  shift outward. 
B)  shift inward. 
C)  become flatter. 
D)  become steeper. 
A)  shift outward. 
B)  shift inward. 
C)  become flatter. 
D)  become steeper.

Question 18

When the inflationary gap is finally eliminated,a long-run equilibrium is established with a ____ price level and with GDP ____ potential GDP.

Accepted Answer

A)  higher; equal to 
B)  higher; greater than 
C)  lower; equal to 
D)  lower; greater than 
A)  higher; equal to 
B)  higher; greater than 
C)  lower; equal to 
D)  lower; greater than

Question 19

A change in the aggregate price level moves the economy along a given aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 20

Resource prices are fixed for some period of time because

Accepted Answer

A)  some workers enter into long-term contracts. 
B)  firms purchase raw materials on set-price contracts. 
C)  many workers get pay increases only once a year. 
D)  All of the above are correct. 
A)  some workers enter into long-term contracts. 
B)  firms purchase raw materials on set-price contracts. 
C)  many workers get pay increases only once a year. 
D)  All of the above are correct.

Over time,aggregate demand and aggregate supply grow by the same amount.

Suppose we observe an economy experience an economic expansion and high inflation.This means the expansion is attributed to

If profit per unit equals (price - cost per unit)and costs are temporarily fixed,then the aggregate supply curve will have

The existence of an inflationary gap would tend to benefit most

Economists do not agree on why wages are more rigid now than they were before World War II.

Distinguish between a movement along the aggregate supply curve and a shift of the entire aggregate supply curve.What factors cause each to occur?

Increases in the availability of natural resources will affect the aggregate supply curve such that it

The slope of the aggregate supply curve decreases as total output increases.

The principal way in which an economy self-corrects from an inflationary gap is through

Part of the normal aftermath of a period of excessive aggregate demand is

The typical movement of the aggregate supply curve resulting from an increase in productivity is that it

A statement issued by the president's economic advisors stating that growth can continue without price increases indicates that they believe the relevant aggregate supply curve is

A price level lower than equilibrium will cause quantity supplied to exceed quantity demanded.

Figure 10-6 -In Figure 10-6,which graph best illustrates an autonomous increase in consumption spending?

Increases in the prices of imported energy in 2002-2008 caused the aggregate supply curve to shift inward.

The only factor that can cause movement along the aggregate supply curve is the

A decrease in the price of resources will cause the aggregate supply curve to

When the inflationary gap is finally eliminated,a long-run equilibrium is established with a price level and with GDP potential GDP.

A change in the aggregate price level moves the economy along a given aggregate supply curve.

Resource prices are fixed for some period of time because

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 10: Bringing In The Supply Side Unemployment and Inflation

Over time,aggregate demand and aggregate supply grow by the same amount.

Suppose we observe an economy experience an economic expansion and high inflation.This means the expansion is attributed to

If profit per unit equals (price - cost per unit)and costs are temporarily fixed,then the aggregate supply curve will have

The existence of an inflationary gap would tend to benefit most

Economists do not agree on why wages are more rigid now than they were before World War II.

Distinguish between a movement along the aggregate supply curve and a shift of the entire aggregate supply curve.What factors cause each to occur?

Increases in the availability of natural resources will affect the aggregate supply curve such that it

The slope of the aggregate supply curve decreases as total output increases.

The principal way in which an economy self-corrects from an inflationary gap is through

Part of the normal aftermath of a period of excessive aggregate demand is

The typical movement of the aggregate supply curve resulting from an increase in productivity is that it

A statement issued by the president's economic advisors stating that growth can continue without price increases indicates that they believe the relevant aggregate supply curve is

A price level lower than equilibrium will cause quantity supplied to exceed quantity demanded.

Figure 10-6 -In Figure 10-6,which graph best illustrates an autonomous increase in consumption spending?

Increases in the prices of imported energy in 2002-2008 caused the aggregate supply curve to shift inward.

The only factor that can cause movement along the aggregate supply curve is the

A decrease in the price of resources will cause the aggregate supply curve to

When the inflationary gap is finally eliminated,a long-run equilibrium is established with a ____ price level and with GDP ____ potential GDP.

A change in the aggregate price level moves the economy along a given aggregate supply curve.

Resource prices are fixed for some period of time because

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

When the inflationary gap is finally eliminated,a long-run equilibrium is established with a price level and with GDP potential GDP.