Question 1

Suppose the price level rises and the money wage remains constant. This set of changes leads to

Accepted Answer

A)  an upward movement along the LAS curve. 
B)  an upward movement along the SAS curve. 
C)  a leftward shift of the SAS curve. 
D)  a leftward shift of the SAS curve and the LAS curve. 
A)  an upward movement along the LAS curve. 
B)  an upward movement along the SAS curve. 
C)  a leftward shift of the SAS curve. 
D)  a leftward shift of the SAS curve and the LAS curve.

Question 2

-In the above figure, point B represents

Accepted Answer

A)  a recessionary gap. 
B)  a full-employment equilibrium. 
C)  an inflationary gap. 
D)  a decrease in aggregate demand. 
A)  a recessionary gap. 
B)  a full-employment equilibrium. 
C)  an inflationary gap. 
D)  a decrease in aggregate demand.

Question 3

According to the intertemporal substitution effect, when the price level rises and other things remain the same

Accepted Answer

A)  the interest rate falls. 
B)  the interest rate rises. 
C)  the quantity of money increases. 
D)  government taxes rise. 
A)  the interest rate falls. 
B)  the interest rate rises. 
C)  the quantity of money increases. 
D)  government taxes rise.

Question 4

-The data in the above table show that when the price level is 120

Accepted Answer

A)  the unemployment rate is below its natural rate. 
B)  the unemployment rate is above its natural rate. 
C)  money wages rates will rise in the future. 
D)  the long-run aggregate supply curve will shift leftward in the future. 
A)  the unemployment rate is below its natural rate. 
B)  the unemployment rate is above its natural rate. 
C)  money wages rates will rise in the future. 
D)  the long-run aggregate supply curve will shift leftward in the future.

Question 5

In the macroeconomic short run

Accepted Answer

A)  actual real GDP may be less than or more than potential GDP. 
B)  the unemployment rate is zero. 
C)  by definition, the economy is always moving away from full employment. 
D)  actual real GDP always equals potential GDP. 
A)  actual real GDP may be less than or more than potential GDP. 
B)  the unemployment rate is zero. 
C)  by definition, the economy is always moving away from full employment. 
D)  actual real GDP always equals potential GDP.

Question 6

There are several reasons why the aggregate demand curve is downward sloping. Which of the following CORRECTLY describes one of these explanations?

Accepted Answer

A)  A rise in the price level raises the purchasing power wealth and increases desired consumption. 
B)  A rise in the price level raises interest rates and increases investment spending. 
C)  A fall in the price level, holding foreign prices and the exchange rate constant, increases net exports. 
D)  A rise in the price level lowers the interest rate and increases investment spending. 
A)  A rise in the price level raises the purchasing power wealth and increases desired consumption. 
B)  A rise in the price level raises interest rates and increases investment spending. 
C)  A fall in the price level, holding foreign prices and the exchange rate constant, increases net exports. 
D)  A rise in the price level lowers the interest rate and increases investment spending.

Question 7

Fluctuations in aggregate demand and aggregate supply explain why real GDP fluctuates.

Accepted Answer

A) True 
 B)False

Question 8

An above-full-employment equilibrium is

Accepted Answer

A)  a theoretical possibility but cannot happen in reality. 
B)  the equilibrium in which the economy is in most of the time. 
C)  when real GDP exceeds potential GDP. 
D)  the period of time when prices are falling. 
A)  a theoretical possibility but cannot happen in reality. 
B)  the equilibrium in which the economy is in most of the time. 
C)  when real GDP exceeds potential GDP. 
D)  the period of time when prices are falling.

Question 9

-The data in the above table show that when the price level is 120, if aggregate demand does not change then the

Accepted Answer

A)  money wage rate will rise in the future. 
B)  money wage rate will fall in the future. 
C)  short-run aggregate supply curve will shift leftward. 
D)  long-run aggregate supply curve will shift leftward. 
A)  money wage rate will rise in the future. 
B)  money wage rate will fall in the future. 
C)  short-run aggregate supply curve will shift leftward. 
D)  long-run aggregate supply curve will shift leftward.

Question 10

What is the difference between a recessionary gap and an inflationary gap?

Accepted Answer

A recessionary gap exists when the econo

Question 11

Explain the reasons why the AD curve slopes downward.

Accepted Answer

There are two reasons why the AD curve s

Question 12

-In the above figure, curve A is the ________ curve, curve B is the ________ curve, and curve C is the ________ curve.

Accepted Answer

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

Question 13

-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 14

In 2008, the dollar appreciated relative to the euro. This appreciation caused ________ and a ________.

Accepted Answer

A)  a movement up along the U.S. aggregate demand curve; decrease in U.S. exports to Europe 
B)  a decrease in U.S. exports to Europe; leftward shift in the U.S. aggregate demand curve 
C)  an increase in U.S. exports to Europe; movement up along the U.S. aggregate demand curve 
D)  a decrease in U.S. exports to Europe; a movement up along the U.S. aggregate demand curve 
A)  a movement up along the U.S. aggregate demand curve; decrease in U.S. exports to Europe 
B)  a decrease in U.S. exports to Europe; leftward shift in the U.S. aggregate demand curve 
C)  an increase in U.S. exports to Europe; movement up along the U.S. aggregate demand curve 
D)  a decrease in U.S. exports to Europe; a movement up along the U.S. aggregate demand curve

Question 15

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

Accepted Answer

A)  aggregate supply did not change. 
B)  potential GDP decreased. 
C)  there was a movement up along the aggregate demand curve in 2008. 
D)  potential GDP increased, but at a slower rate than aggregate demand. 
A)  aggregate supply did not change. 
B)  potential GDP decreased. 
C)  there was a movement up along the aggregate demand curve in 2008. 
D)  potential GDP increased, but at a slower rate than aggregate demand.

Question 16

Short-run equilibrium occurs at the intersection of

Accepted Answer

A)  the SAS and AD curves. 
B)  the SAS, LAS, and AD curves. 
C)  the SAS and LAS curves. 
D)  the LAS and AD curves. 
A)  the SAS and AD curves. 
B)  the SAS, LAS, and AD curves. 
C)  the SAS and LAS curves. 
D)  the LAS and AD curves.

Question 17

The short-run aggregate supply curve shows a positive relationship between the price level and real GDP.

Accepted Answer

A) True 
 B)False

Question 18

What are fiscal and monetary policies? Do they have an immediate effect on the AD curve or the SAS curve?

Accepted Answer

Fiscal policy is defined as changes in g

Question 19

If the economy is in short run equilibrium then

Accepted Answer

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

Question 20

-In the above figure, the economy is initially at point B. Then the price level falls by 10. The wealth effect will help

Accepted Answer

A)  move the economy to point A. 
B)  move the economy to point C. 
C)  move the economy to point D. 
D)  keep the economy at point B. 
A)  move the economy to point A. 
B)  move the economy to point C. 
C)  move the economy to point D. 
D)  keep the economy at point B.

Suppose the price level rises and the money wage remains constant. This set of changes leads to

-In the above figure, point B represents

According to the intertemporal substitution effect, when the price level rises and other things remain the same

-The data in the above table show that when the price level is 120

In the macroeconomic short run

There are several reasons why the aggregate demand curve is downward sloping. Which of the following CORRECTLY describes one of these explanations?

Fluctuations in aggregate demand and aggregate supply explain why real GDP fluctuates.

An above-full-employment equilibrium is

-The data in the above table show that when the price level is 120, if aggregate demand does not change then the

What is the difference between a recessionary gap and an inflationary gap?

Explain the reasons why the AD curve slopes downward.

-In the above figure, curve A is the curve, curve B is the curve, and curve C is the curve.

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

In 2008, the dollar appreciated relative to the euro. This appreciation caused and a .

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

Short-run equilibrium occurs at the intersection of

The short-run aggregate supply curve shows a positive relationship between the price level and real GDP.

What are fiscal and monetary policies? Do they have an immediate effect on the AD curve or the SAS curve?

If the economy is in short run equilibrium then

-In the above figure, the economy is initially at point B. Then the price level falls by 10. The wealth effect will help

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

Suppose the price level rises and the money wage remains constant. This set of changes leads to

-In the above figure, point B represents

According to the intertemporal substitution effect, when the price level rises and other things remain the same

-The data in the above table show that when the price level is 120

In the macroeconomic short run

There are several reasons why the aggregate demand curve is downward sloping. Which of the following CORRECTLY describes one of these explanations?

Fluctuations in aggregate demand and aggregate supply explain why real GDP fluctuates.

An above-full-employment equilibrium is

-The data in the above table show that when the price level is 120, if aggregate demand does not change then the

What is the difference between a recessionary gap and an inflationary gap?

Explain the reasons why the AD curve slopes downward.

-In the above figure, curve A is the ________ curve, curve B is the ________ curve, and curve C is the ________ curve.

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

In 2008, the dollar appreciated relative to the euro. This appreciation caused ________ and a ________.

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

Short-run equilibrium occurs at the intersection of

The short-run aggregate supply curve shows a positive relationship between the price level and real GDP.

What are fiscal and monetary policies? Do they have an immediate effect on the AD curve or the SAS curve?

If the economy is in short run equilibrium then

-In the above figure, the economy is initially at point B. Then the price level falls by 10. The wealth effect will help

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

-In the above figure, curve A is the curve, curve B is the curve, and curve C is the curve.

In 2008, the dollar appreciated relative to the euro. This appreciation caused and a .