Question 1

A decrease in investment leads to ________ in aggregate demand and ________ in real GDP.

Accepted Answer

A)  an increase; an increase 
B)  an increase; a decrease 
C)  a decrease; an increase 
D)  a decrease; a decrease 
E)  no change; a decrease 
A)  an increase; an increase 
B)  an increase; a decrease 
C)  a decrease; an increase 
D)  a decrease; a decrease 
E)  no change; a decrease

Question 2

The global economy enters a recession, thereby decreasing the level of U.S.exports.If the aggregate supply curve does not shift, then aggregate demand will ________, real GDP will ________, and the price level will ________.

Accepted Answer

A)  increase; remain the same; increase 
B)  remain the same; increase; increase 
C)  increase; increase; remain the same 
D)  decrease; increase; increase 
E)  decrease; decrease; decrease 
A)  increase; remain the same; increase 
B)  remain the same; increase; increase 
C)  increase; increase; remain the same 
D)  decrease; increase; increase 
E)  decrease; decrease; decrease

Question 3

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP more than potential GDP, there is

Accepted Answer

A)  a recessionary gap. 
B)  an inflationary gap. 
C)  a falling price level. 
D)  a rising real GDP. 
E)  a below-full employment equilibrium. 
A)  a recessionary gap. 
B)  an inflationary gap. 
C)  a falling price level. 
D)  a rising real GDP. 
E)  a below-full employment equilibrium.

Question 4

The aggregate supply curve shifts

Accepted Answer

A)  rightward if potential GDP decreases. 
B)  rightward if the money wage rate falls. 
C)  rightward if the money wage rate rises. 
D)  leftward if potential GDP increases. 
E)  leftward if the aggregate demand curve shifts leftward. 
A)  rightward if potential GDP decreases. 
B)  rightward if the money wage rate falls. 
C)  rightward if the money wage rate rises. 
D)  leftward if potential GDP increases. 
E)  leftward if the aggregate demand curve shifts leftward.

Question 5

13.4 Chapter Figures
   
The figure above shows the aggregate supply curve and potential GDP.
-If the money wage rate and the price level both rise by the same proportion, then in the figure above the potential GDP line ________ and the aggregate supply curve ________.

Accepted Answer

A)  shifts rightward; does not shift 
B)  does not shift; shifts rightward 
C)  shifts rightward; shifts rightward 
D)  shifts rightward; shifts leftward 
E)  does not shift; shifts leftward 
A)  shifts rightward; does not shift 
B)  does not shift; shifts rightward 
C)  shifts rightward; shifts rightward 
D)  shifts rightward; shifts leftward 
E)  does not shift; shifts leftward

Question 6

A decrease in foreign income ________ exports of U.S.-made goods, so aggregate demand ________ and the aggregate demand curve shifts ________.

Accepted Answer

A)  increases; increases; rightward 
B)  decreases; decreases; leftward 
C)  decreases; increases; rightward 
D)  increases; increases; leftward 
E)  decreases; decreases; rightward 
A)  increases; increases; rightward 
B)  decreases; decreases; leftward 
C)  decreases; increases; rightward 
D)  increases; increases; leftward 
E)  decreases; decreases; rightward

Question 7

A recession in the rest of the world means U.S.

Accepted Answer

A)  aggregate supply decreases. 
B)  aggregate demand decreases. 
C)  potential GDP decreases. 
D)  exports increase. 
E)  potential GDP increases. 
A)  aggregate supply decreases. 
B)  aggregate demand decreases. 
C)  potential GDP decreases. 
D)  exports increase. 
E)  potential GDP increases.

Question 8

The aggregate demand curve illustrates the relationship between

Accepted Answer

A)  the price level and the quantity of goods demanded by households, firms, government, and foreigners. 
B)  the real wage rate and the hours of labor demanded by firms. 
C)  the price level and the potential quantity demanded of real GDP. 
D)  the price level and the quantity of goods supplied by firms. 
E)  the price level and the potential demand for real GDP. 
A)  the price level and the quantity of goods demanded by households, firms, government, and foreigners. 
B)  the real wage rate and the hours of labor demanded by firms. 
C)  the price level and the potential quantity demanded of real GDP. 
D)  the price level and the quantity of goods supplied by firms. 
E)  the price level and the potential demand for real GDP.

Question 9

If real GDP is less than potential GDP, then the ________ and the price level ________.

Accepted Answer

A)  aggregate demand curve shifts leftward; rises 
B)  aggregate demand curve shifts rightward; falls 
C)  aggregate supply curve shifts leftward; rises 
D)  aggregate supply curve shifts rightward; falls 
E)  amount of potential GDP increases; falls 
A)  aggregate demand curve shifts leftward; rises 
B)  aggregate demand curve shifts rightward; falls 
C)  aggregate supply curve shifts leftward; rises 
D)  aggregate supply curve shifts rightward; falls 
E)  amount of potential GDP increases; falls

Question 10

The slope of the aggregate supply curve shows that the ________ the price level, the ________.

Accepted Answer

A)  higher; greater is the quantity of real GDP supplied 
B)  higher; smaller is the quantity of real GDP supplied 
C)  lower; greater is the quantity of real GDP supplied 
D)  higher; is the quantity of potential GDP supplied 
E)  lower; is the quantity of potential GDP supplied 
A)  higher; greater is the quantity of real GDP supplied 
B)  higher; smaller is the quantity of real GDP supplied 
C)  lower; greater is the quantity of real GDP supplied 
D)  higher; is the quantity of potential GDP supplied 
E)  lower; is the quantity of potential GDP supplied

Question 11

Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil.

Accepted Answer

A)  The AS curve shifts rightward. 
B)  There is no change to the AS curve. 
C)  The AS curve does not shift but there is an upward movement along it. 
D)  The AS curve does not shift but there is a downward movement along it. 
E)  The AS curve shifts leftward. 
A)  The AS curve shifts rightward. 
B)  There is no change to the AS curve. 
C)  The AS curve does not shift but there is an upward movement along it. 
D)  The AS curve does not shift but there is a downward movement along it. 
E)  The AS curve shifts leftward.

Question 12

A fall in the money wage rate ________ aggregate supply and ________.

Accepted Answer

A)  decreases; shifts the AS curve rightward 
B)  increases; shifts the AS curve leftward 
C)  increases; shifts the AS curve rightward 
D)  decreases; shifts the AS curve leftward 
E)  does not change; does not shift the AS curve 
A)  decreases; shifts the AS curve rightward 
B)  increases; shifts the AS curve leftward 
C)  increases; shifts the AS curve rightward 
D)  decreases; shifts the AS curve leftward 
E)  does not change; does not shift the AS curve

Question 13

The figure above shows the aggregate demand curve.
-The aggregate demand curve in the figure above shifts rightward if

Accepted Answer

A)  potential GDP increases. 
B)  the money wage rate falls. 
C)  taxes are cut. 
D)  government expenditure decreases. 
E)  the Federal Reserve raises the interest rate. 
A)  potential GDP increases. 
B)  the money wage rate falls. 
C)  taxes are cut. 
D)  government expenditure decreases. 
E)  the Federal Reserve raises the interest rate.

Question 14

Explain the difference between a movement along the aggregate demand curve and a shift of the aggregate demand curve.

Accepted Answer

There is a movement along the aggregate

Question 15

When the U.S.price level rises relative to other nations' price levels, then

Accepted Answer

A)  U.S.firms' profits increase and the aggregate demand curve shifts rightward. 
B)  U.S.exports increase and the aggregate demand curve shifts rightward. 
C)  U.S.exports decrease, U.S.imports increase, and the aggregate demand curve shifts leftward. 
D)  U.S.exports decrease, U.S.imports increase, and there is a movement upward along the aggregate demand curve. 
E)  U.S.exports decrease, U.S.imports increase, and the aggregate demand curve shifts rightward. 
A)  U.S.firms' profits increase and the aggregate demand curve shifts rightward. 
B)  U.S.exports increase and the aggregate demand curve shifts rightward. 
C)  U.S.exports decrease, U.S.imports increase, and the aggregate demand curve shifts leftward. 
D)  U.S.exports decrease, U.S.imports increase, and there is a movement upward along the aggregate demand curve. 
E)  U.S.exports decrease, U.S.imports increase, and the aggregate demand curve shifts rightward.

Question 16

Macroeconomic equilibrium occurs when

Accepted Answer

A)  there is no inflation. 
B)  real GDP is equal to potential GDP. 
C)  the aggregate quantity demanded is equal to the aggregate quantity supplied. 
D)  the economy is fully employed. 
E)  the price level equals the potential price level. 
A)  there is no inflation. 
B)  real GDP is equal to potential GDP. 
C)  the aggregate quantity demanded is equal to the aggregate quantity supplied. 
D)  the economy is fully employed. 
E)  the price level equals the potential price level.

Question 17

If the economy is above full employment, there is ________ gap and as the economy adjusts toward full employment the price level ________.

Accepted Answer

A)  an inflationary; rises 
B)  an inflationary; falls 
C)  a recessionary; rises 
D)  a recessionary; falls 
E)  an inflationary; does not change 
A)  an inflationary; rises 
B)  an inflationary; falls 
C)  a recessionary; rises 
D)  a recessionary; falls 
E)  an inflationary; does not change

Question 18

Explain how changes in foreign income can impact real GDP in a country.

Accepted Answer

Changes in the income of any nation impa

Question 19

Does a rise in the price level bring a movement along the aggregate supply curve or does it shift the aggregate supply curve?

Accepted Answer

A rise in the price level resu

Question 20

When potential GDP increases,

Accepted Answer

A)  the AS curve shifts rightward. 
B)  there is a movement up along the AS curve. 
C)  the AS curve shifts leftward. 
D)  there is a movement down along the AS curve. 
E)  there is neither a movement along nor a shift in the AS curve. 
A)  the AS curve shifts rightward. 
B)  there is a movement up along the AS curve. 
C)  the AS curve shifts leftward. 
D)  there is a movement down along the AS curve. 
E)  there is neither a movement along nor a shift in the AS curve.

A decrease in investment leads to in aggregate demand and in real GDP.

The global economy enters a recession, thereby decreasing the level of U.S.exports.If the aggregate supply curve does not shift, then aggregate demand will , real GDP will , and the price level will .

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP more than potential GDP, there is

The aggregate supply curve shifts

13.4 Chapter Figures The figure above shows the aggregate supply curve and potential GDP. -If the money wage rate and the price level both rise by the same proportion, then in the figure above the potential GDP line and the aggregate supply curve .

A decrease in foreign income exports of U.S.-made goods, so aggregate demand and the aggregate demand curve shifts .

A recession in the rest of the world means U.S.

The aggregate demand curve illustrates the relationship between

If real GDP is less than potential GDP, then the and the price level .

The slope of the aggregate supply curve shows that the the price level, the .

Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil.

A fall in the money wage rate aggregate supply and .

The figure above shows the aggregate demand curve. -The aggregate demand curve in the figure above shifts rightward if

Explain the difference between a movement along the aggregate demand curve and a shift of the aggregate demand curve.

When the U.S.price level rises relative to other nations' price levels, then

Macroeconomic equilibrium occurs when

If the economy is above full employment, there is gap and as the economy adjusts toward full employment the price level .

Explain how changes in foreign income can impact real GDP in a country.

Does a rise in the price level bring a movement along the aggregate supply curve or does it shift the aggregate supply curve?

When potential GDP increases,

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 13: Aggregate Supply and Aggregate Demand

A decrease in investment leads to ________ in aggregate demand and ________ in real GDP.

The global economy enters a recession, thereby decreasing the level of U.S.exports.If the aggregate supply curve does not shift, then aggregate demand will ________, real GDP will ________, and the price level will ________.

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP more than potential GDP, there is

The aggregate supply curve shifts

13.4 Chapter Figures The figure above shows the aggregate supply curve and potential GDP. -If the money wage rate and the price level both rise by the same proportion, then in the figure above the potential GDP line ________ and the aggregate supply curve ________.

A decrease in foreign income ________ exports of U.S.-made goods, so aggregate demand ________ and the aggregate demand curve shifts ________.

A recession in the rest of the world means U.S.

The aggregate demand curve illustrates the relationship between

If real GDP is less than potential GDP, then the ________ and the price level ________.

The slope of the aggregate supply curve shows that the ________ the price level, the ________.

Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil.

A fall in the money wage rate ________ aggregate supply and ________.

The figure above shows the aggregate demand curve. -The aggregate demand curve in the figure above shifts rightward if

Explain the difference between a movement along the aggregate demand curve and a shift of the aggregate demand curve.

When the U.S.price level rises relative to other nations' price levels, then

Macroeconomic equilibrium occurs when

If the economy is above full employment, there is ________ gap and as the economy adjusts toward full employment the price level ________.

Explain how changes in foreign income can impact real GDP in a country.

Does a rise in the price level bring a movement along the aggregate supply curve or does it shift the aggregate supply curve?

When potential GDP increases,

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

A decrease in investment leads to in aggregate demand and in real GDP.

The global economy enters a recession, thereby decreasing the level of U.S.exports.If the aggregate supply curve does not shift, then aggregate demand will , real GDP will , and the price level will .

13.4 Chapter Figures The figure above shows the aggregate supply curve and potential GDP. -If the money wage rate and the price level both rise by the same proportion, then in the figure above the potential GDP line and the aggregate supply curve .

A decrease in foreign income exports of U.S.-made goods, so aggregate demand and the aggregate demand curve shifts .

If real GDP is less than potential GDP, then the and the price level .

The slope of the aggregate supply curve shows that the the price level, the .

A fall in the money wage rate aggregate supply and .

If the economy is above full employment, there is gap and as the economy adjusts toward full employment the price level .