Question 1

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

Accepted Answer

A) True 
 B)False

Question 2

________ of unemployment during ________ make it easier for workers to ________ wages.

Accepted Answer

A) High levels; a recession; accept lower 
B) Low levels; an expansion; accept lower 
C) Low levels; a recession; negotiate higher 
D) High levels; an expansion; negotiate higher 
A) High levels; a recession; accept lower 
B) Low levels; an expansion; accept lower 
C) Low levels; a recession; negotiate higher 
D) High levels; an expansion; negotiate higher

Question 3

Refer to Figure 10.2 for the following questions.
Figure 10.2
  
-In Figure 10.2, given the economy is at point A in year 1 and point B in year 2, what is the rate of increase in the price level (the inflation rate)between those two years?

Accepted Answer

A) 1.8% 
B) 2.7% 
C) 3.0% 
D) 0.9% 
A) 1.8% 
B) 2.7% 
C) 3.0% 
D) 0.9%

Question 4

What does the short-run aggregate supply curve show?

Accepted Answer

A) the relationship between the price level and the quantity of real GDP supplied 
B) the relationship between the unemployment rate and real GDP 
C) the desired level of national expenditure at different price levels 
D) the relationship between labour supplied and the average wage rate 
A) the relationship between the price level and the quantity of real GDP supplied 
B) the relationship between the unemployment rate and real GDP 
C) the desired level of national expenditure at different price levels 
D) the relationship between labour supplied and the average wage rate

Question 5

Outline and explain the factors that shift the aggregate demand curve and the short-run and long-run aggregate supply curves.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The aggregate demand curve can shift due

Question 6

If Australia's economic growth rate is slower relative to other countries' economic growth rates, this will:

Accepted Answer

A) move the economy up along a stationary aggregate demand curve. 
B) move the economy down along a stationary aggregate demand curve. 
C) shift the aggregate demand curve to the left. 
D) shift the aggregate demand curve to the right. 
A) move the economy up along a stationary aggregate demand curve. 
B) move the economy down along a stationary aggregate demand curve. 
C) shift the aggregate demand curve to the left. 
D) shift the aggregate demand curve to the right.

Question 7

What is the result if the economy receives an influx of new workers from immigration?

Accepted Answer

A) The long-run aggregate supply curve will shift to the left. 
B) The long-run aggregate supply curve will shift to the right. 
C) The economy will move up along the long-run aggregate supply curve. 
D) The economy will move down along the long-run aggregate supply curve. 
A) The long-run aggregate supply curve will shift to the left. 
B) The long-run aggregate supply curve will shift to the right. 
C) The economy will move up along the long-run aggregate supply curve. 
D) The economy will move down along the long-run aggregate supply curve.

Question 8

Explain whether it is possible for a long-run aggregate supply curve to shift leftwards.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

It is not usual, but it is possible. If

Question 9

What is the result of an increase in the price level?

Accepted Answer

A) It will shift the short-run aggregate supply curve to the left. 
B) It will shift the short-run aggregate supply curve to the right. 
C) It will move the economy down along a stationary short-run aggregate supply curve. 
D) It will move the economy up along a stationary short-run aggregate supply curve. 
A) It will shift the short-run aggregate supply curve to the left. 
B) It will shift the short-run aggregate supply curve to the right. 
C) It will move the economy down along a stationary short-run aggregate supply curve. 
D) It will move the economy up along a stationary short-run aggregate supply curve.

Question 10

Why does the short-run aggregate supply curve shift to the left in the long run, following an increase in aggregate demand?

Accepted Answer

A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. 
B) Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. 
C) Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. 
D) Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices. 
A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. 
B) Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. 
C) Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. 
D) Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.

Question 11

In the dynamic aggregate demand and aggregate supply model, the rate of inflation will decrease if:

Accepted Answer

A) AD shifts faster than AS. 
B) AS shifts slower than AD. 
C) AS shifts faster than AD. 
D) the price level falls. 
A) AD shifts faster than AS. 
B) AS shifts slower than AD. 
C) AS shifts faster than AD. 
D) the price level falls.

Question 12

The model which focuses on how productivity shocks explain fluctuations in real GDP is the:

Accepted Answer

A) monetarist model. 
B) real business cycle model. 
C) new classical model. 
D) new Keynesian model. 
A) monetarist model. 
B) real business cycle model. 
C) new classical model. 
D) new Keynesian model.

Question 13

Which of the following is true of a long-run aggregate supply curve?

Accepted Answer

A) It is downward sloping when prices are falling and upward sloping when prices are rising. 
B) It is upward sloping due to the effects of changes in the price level on production. 
C) It is the same as the short-run aggregate supply curve at full-employment equilibrium. 
D) It is vertical at the full employment level of output. 
A) It is downward sloping when prices are falling and upward sloping when prices are rising. 
B) It is upward sloping due to the effects of changes in the price level on production. 
C) It is the same as the short-run aggregate supply curve at full-employment equilibrium. 
D) It is vertical at the full employment level of output.

Question 14

What effect does a change in expectations by households and firms have on the aggregate demand curve?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Changes in expectations by households an

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

of unemployment during make it easier for workers to wages.

Refer to Figure 10.2 for the following questions. Figure 10.2 -In Figure 10.2, given the economy is at point A in year 1 and point B in year 2, what is the rate of increase in the price level (the inflation rate)between those two years?

What does the short-run aggregate supply curve show?

Outline and explain the factors that shift the aggregate demand curve and the short-run and long-run aggregate supply curves. _ _

If Australia's economic growth rate is slower relative to other countries' economic growth rates, this will:

What is the result if the economy receives an influx of new workers from immigration?

Explain whether it is possible for a long-run aggregate supply curve to shift leftwards. _ _

What is the result of an increase in the price level?

Why does the short-run aggregate supply curve shift to the left in the long run, following an increase in aggregate demand?

In the dynamic aggregate demand and aggregate supply model, the rate of inflation will decrease if:

The model which focuses on how productivity shocks explain fluctuations in real GDP is the:

Which of the following is true of a long-run aggregate supply curve?

What effect does a change in expectations by households and firms have on the aggregate demand curve? _ _

Economics: Foundations and Models

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Economic Growth, the Financial System and Business Cycles

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 10: Aggregate Demand and Aggregate Supply Analysis

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

________ of unemployment during ________ make it easier for workers to ________ wages.

Refer to Figure 10.2 for the following questions. Figure 10.2 -In Figure 10.2, given the economy is at point A in year 1 and point B in year 2, what is the rate of increase in the price level (the inflation rate)between those two years?

What does the short-run aggregate supply curve show?

If Australia's economic growth rate is slower relative to other countries' economic growth rates, this will:

What is the result if the economy receives an influx of new workers from immigration?

Explain whether it is possible for a long-run aggregate supply curve to shift leftwards. _____________________________________________________________________________________________ _____________________________________________________________________________________________

What is the result of an increase in the price level?

Why does the short-run aggregate supply curve shift to the left in the long run, following an increase in aggregate demand?

In the dynamic aggregate demand and aggregate supply model, the rate of inflation will decrease if:

The model which focuses on how productivity shocks explain fluctuations in real GDP is the:

Which of the following is true of a long-run aggregate supply curve?

What effect does a change in expectations by households and firms have on the aggregate demand curve? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Economics: Foundations and Models

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Economic Growth, the Financial System and Business Cycles

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

of unemployment during make it easier for workers to wages.

Explain whether it is possible for a long-run aggregate supply curve to shift leftwards. _ _

What effect does a change in expectations by households and firms have on the aggregate demand curve? _ _