Question 1

An increase in the money wage rate will cause the aggregate supply curve to shift

Accepted Answer

A)  outward,which means the quantity supplied at any price level decreases. 
B)  outward,which means the quantity supplied at any price level increases. 
C)  inward,which means the quantity supplied at any price level increases. 
D)  inward,which means the quantity supplied at any price level decreases. 
A)  outward,which means the quantity supplied at any price level decreases. 
B)  outward,which means the quantity supplied at any price level increases. 
C)  inward,which means the quantity supplied at any price level increases. 
D)  inward,which means the quantity supplied at any price level decreases.

Question 2

The case for government stabilization policy is made more compelling if the

Accepted Answer

A)  self-correcting mechanism works very slowly. 
B)  self-correcting mechanism works too fast. 
C)  value of the multiplier is very small. 
D)  aggregate supply curve is very flat. 
A)  self-correcting mechanism works very slowly. 
B)  self-correcting mechanism works too fast. 
C)  value of the multiplier is very small. 
D)  aggregate supply curve is very flat.

Question 3

From the mid-1980s until late 2007,the less world's less volatile economies were probably due,at least in part,to good luck.

Accepted Answer

A) True 
 B)False

Question 4

If the data show that periods of high economic growth rate accompanied by high inflation rates,then changes in aggregate demand are the primary source of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 5

The reason why inflation reduces the value of the multiplier is that part of the change in demand is

Accepted Answer

A)  absorbed by price changes. 
B)  saved rather than spent. 
C)  matched by changes in supply. 
D)  matched by changes in income. 
A)  absorbed by price changes. 
B)  saved rather than spent. 
C)  matched by changes in supply. 
D)  matched by changes in income.

Question 6

Decreasing profit margins indicate a need to increase production in an economy.

Accepted Answer

A) True 
 B)False

Question 7

Figure 10-1  
-In Figure 10-1,what is the equilibrium level of real GDP and equilibrium price?

Accepted Answer

A)  $6,000 billion real GDP and price level of 110 
B)  $5,000 billion real GDP and price level of 120 
C)  $5,000 billion real GDP and price level of 110 
D)  $7,500 billion real GDP and price level of 100 
A)  $6,000 billion real GDP and price level of 110 
B)  $5,000 billion real GDP and price level of 120 
C)  $5,000 billion real GDP and price level of 110 
D)  $7,500 billion real GDP and price level of 100

Question 8

The fact that severe fluctuations in inflation and unemployment are socially undesirable helps make the case for

Accepted Answer

A)  a "hands off" policy by the government. 
B)  fixed prices and wages. 
C)  active government stabilization policy. 
D)  restrictions on imports from low wage countries. 
A)  a "hands off" policy by the government. 
B)  fixed prices and wages. 
C)  active government stabilization policy. 
D)  restrictions on imports from low wage countries.

Question 9

An equilibrium point beyond a potential GDP is termed as

Accepted Answer

A)  deflationary gap. 
B)  recessionary gap. 
C)  inflationary gap. 
D)  acceleration gap 
A)  deflationary gap. 
B)  recessionary gap. 
C)  inflationary gap. 
D)  acceleration gap

Question 10

The aggregate supply curve is

Accepted Answer

A)  a schedule showing the relationship between the price level and the quantity of real GDP supplied. 
B)  usually upward sloping. 
C)  relatively flat at low levels of resource utilization. 
D)  All of the above are correct. 
A)  a schedule showing the relationship between the price level and the quantity of real GDP supplied. 
B)  usually upward sloping. 
C)  relatively flat at low levels of resource utilization. 
D)  All of the above are correct.

Question 11

Stabilization policy may be necessary to modify or counteract volatile changes in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 12

The reason that stagflation tends to follow an inflationary gap is that

Accepted Answer

A)  output tends to fall even as prices continue to rise as part of the self-correcting mechanism. 
B)  government officials tend to overact in controlling inflation. 
C)  businesses try to increase profits by raising prices and increasing output. 
D)  workers accept pay cuts to maintain employment. 
A)  output tends to fall even as prices continue to rise as part of the self-correcting mechanism. 
B)  government officials tend to overact in controlling inflation. 
C)  businesses try to increase profits by raising prices and increasing output. 
D)  workers accept pay cuts to maintain employment.

Question 13

Figure 10-4  
-In Figure 10-4,if full employment occurs at an output level of 4,000 and the economy is currently at an output level of 5,000 then we can expect a(n)

Accepted Answer

A)  increase in autonomous consumer spending that shifts the aggregate demand curve to the left. 
B)  increase in wages that will shift the aggregate supply curve to the left. 
C)  decrease in investment spending that shifts the aggregate demand curve to the left. 
D)  decrease in wages that will shift the aggregate supply curve to the left. 
A)  increase in autonomous consumer spending that shifts the aggregate demand curve to the left. 
B)  increase in wages that will shift the aggregate supply curve to the left. 
C)  decrease in investment spending that shifts the aggregate demand curve to the left. 
D)  decrease in wages that will shift the aggregate supply curve to the left.

Question 14

From 2005 to 2006 the U.S.economy experienced significant inflation because the aggregate demand curve shifted outward more than the aggregate supply curve shifted outward.

Accepted Answer

A) True 
 B)False

Question 15

The slope of the aggregate supply curve is

Accepted Answer

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

Question 16

A shift outward of the aggregate supply curve could be caused by

Accepted Answer

A)  higher import prices. 
B)  lower import prices. 
C)  energy shortages. 
D)  rising wage rates. 
A)  higher import prices. 
B)  lower import prices. 
C)  energy shortages. 
D)  rising wage rates.

Question 17

Figure 10-1  
-If the price level in Figure 10-1 were 110,

Accepted Answer

A)  inventories would be accumulating. 
B)  firms would have to lower their prices. 
C)  aggregate quantity demanded would equal aggregate quantity supplied. 
D)  shortages of goods would exist. 
A)  inventories would be accumulating. 
B)  firms would have to lower their prices. 
C)  aggregate quantity demanded would equal aggregate quantity supplied. 
D)  shortages of goods would exist.

Question 18

The aggregate supply curve is a fixed point representing potential GDP.

Accepted Answer

A) True 
 B)False

Question 19

Wage decreases lead to a decrease in aggregate quantity supplied.

Accepted Answer

A) True 
 B)False

Question 20

Aggregate supply grows over time because of growing consumer and government spending.

Accepted Answer

A) True 
 B)False

An increase in the money wage rate will cause the aggregate supply curve to shift

The case for government stabilization policy is made more compelling if the

From the mid-1980s until late 2007,the less world's less volatile economies were probably due,at least in part,to good luck.

If the data show that periods of high economic growth rate accompanied by high inflation rates,then changes in aggregate demand are the primary source of economic fluctuations.

The reason why inflation reduces the value of the multiplier is that part of the change in demand is

Decreasing profit margins indicate a need to increase production in an economy.

Figure 10-1 -In Figure 10-1,what is the equilibrium level of real GDP and equilibrium price?

The fact that severe fluctuations in inflation and unemployment are socially undesirable helps make the case for

An equilibrium point beyond a potential GDP is termed as

The aggregate supply curve is

Stabilization policy may be necessary to modify or counteract volatile changes in aggregate demand.

The reason that stagflation tends to follow an inflationary gap is that

Figure 10-4 -In Figure 10-4,if full employment occurs at an output level of 4,000 and the economy is currently at an output level of 5,000 then we can expect a(n)

From 2005 to 2006 the U.S.economy experienced significant inflation because the aggregate demand curve shifted outward more than the aggregate supply curve shifted outward.

The slope of the aggregate supply curve is

A shift outward of the aggregate supply curve could be caused by

Figure 10-1 -If the price level in Figure 10-1 were 110,

The aggregate supply curve is a fixed point representing potential GDP.

Wage decreases lead to a decrease in aggregate quantity supplied.

Aggregate supply grows over time because of growing consumer and government spending.

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

An increase in the money wage rate will cause the aggregate supply curve to shift

The case for government stabilization policy is made more compelling if the

From the mid-1980s until late 2007,the less world's less volatile economies were probably due,at least in part,to good luck.

If the data show that periods of high economic growth rate accompanied by high inflation rates,then changes in aggregate demand are the primary source of economic fluctuations.

The reason why inflation reduces the value of the multiplier is that part of the change in demand is

Decreasing profit margins indicate a need to increase production in an economy.

Figure 10-1 -In Figure 10-1,what is the equilibrium level of real GDP and equilibrium price?

The fact that severe fluctuations in inflation and unemployment are socially undesirable helps make the case for

An equilibrium point beyond a potential GDP is termed as

The aggregate supply curve is

Stabilization policy may be necessary to modify or counteract volatile changes in aggregate demand.

The reason that stagflation tends to follow an inflationary gap is that

Figure 10-4 -In Figure 10-4,if full employment occurs at an output level of 4,000 and the economy is currently at an output level of 5,000 then we can expect a(n)

From 2005 to 2006 the U.S.economy experienced significant inflation because the aggregate demand curve shifted outward more than the aggregate supply curve shifted outward.

The slope of the aggregate supply curve is

A shift outward of the aggregate supply curve could be caused by

Figure 10-1 -If the price level in Figure 10-1 were 110,

The aggregate supply curve is a fixed point representing potential GDP.

Wage decreases lead to a decrease in aggregate quantity supplied.

Aggregate supply grows over time because of growing consumer and government spending.

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