Question 1

How does a fall in the money wage rate affect the aggregate supply curve?

Accepted Answer

A fall in the money

Question 2

At a trough in the business cycle, the macroeconomic equilibrium is ________ the level of potential real GDP.

Accepted Answer

A)  greater than 
B)  rising above 
C)  equal to 
D)  less than 
E)  None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion. 
A)  greater than 
B)  rising above 
C)  equal to 
D)  less than 
E)  None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion.

Question 3

Give examples of factors that decrease aggregate demand.Which way does the aggregate demand curve shift?

Accepted Answer

Anything that decreases spending decreas

Question 4

An increase in potential GDP ________ 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)  has no effect on; 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)  has no effect on; does not shift the AS curve

Question 5

"An increase in Mexican income decreases aggregate demand in the United States." Is the preceding statement correct or incorrect?
 Briefly explain your answer.

Accepted Answer

The statement is incorrect.An increase i

Question 6

As the price level rises relative to costs and the real wage rate falls, profits ________ and the number of firms in business ________.

Accepted Answer

A)  increase; increases 
B)  increase; decreases 
C)  decrease; increases 
D)  decrease; decreases 
E)  do not change; do not change 
A)  increase; increases 
B)  increase; decreases 
C)  decrease; increases 
D)  decrease; decreases 
E)  do not change; do not change

Question 7

________ increases the quantity of real GDP supplied and is shown as a movement along the AS curve.

Accepted Answer

A)  A decrease in the quantity of money 
B)  A decrease in consumption expenditure 
C)  A fall in the expected rate of profit 
D)  A rise in the price level 
E)  An increase in potential GDP 
A)  A decrease in the quantity of money 
B)  A decrease in consumption expenditure 
C)  A fall in the expected rate of profit 
D)  A rise in the price level 
E)  An increase in potential GDP

Question 8

If the economy is at macroeconomic equilibrium, then real GDP

Accepted Answer

A)  must equal potential GDP. 
B)  must be less than potential GDP. 
C)  must be great than potential GDP. 
D)  might be equal to, greater than, or less than potential GDP 
E)  cannot be compared to potential GDP. 
A)  must equal potential GDP. 
B)  must be less than potential GDP. 
C)  must be great than potential GDP. 
D)  might be equal to, greater than, or less than potential GDP 
E)  cannot be compared to potential GDP.

Question 9

Aggregate demand ________ and shifts the AD curve ________ when ________.

Accepted Answer

A)  decreases; leftward; government expenditure increases 
B)  increases; rightward; taxes increase 
C)  decreases; leftward; foreign incomes decrease 
D)  decreases; rightward; government expenditure increases 
E)  increases; leftward; taxes decrease 
A)  decreases; leftward; government expenditure increases 
B)  increases; rightward; taxes increase 
C)  decreases; leftward; foreign incomes decrease 
D)  decreases; rightward; government expenditure increases 
E)  increases; leftward; taxes decrease

Question 10

During an inflationary gap,

Accepted Answer

A)  real GDP is less than potential GDP. 
B)  the aggregate demand curve and the aggregate supply curve intersect at potential GDP. 
C)  the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP that exceeds potential GDP. 
D)  the aggregate demand curve and the aggregate supply curve do not intersect. 
E)  the price level will fall to restore the long-run equilibrium. 
A)  real GDP is less than potential GDP. 
B)  the aggregate demand curve and the aggregate supply curve intersect at potential GDP. 
C)  the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP that exceeds potential GDP. 
D)  the aggregate demand curve and the aggregate supply curve do not intersect. 
E)  the price level will fall to restore the long-run equilibrium.

Question 11

During the late 1960s, U.S.defense spending increased as the United States fought in Vietnam.This increase in government expenditure on goods and services most likely created

Accepted Answer

A)  a recessionary gap. 
B)  an inflationary gap. 
C)  a decrease in aggregate supply. 
D)  a decrease in aggregate demand because consumers' expenditures decreased. 
E)  an increase in potential GDP. 
A)  a recessionary gap. 
B)  an inflationary gap. 
C)  a decrease in aggregate supply. 
D)  a decrease in aggregate demand because consumers' expenditures decreased. 
E)  an increase in potential GDP.

Question 12

Name the four factors of production that determine the quantity of real GDP supplied.Which one fluctuates the most over the course of the business cycle?

Accepted Answer

The factors are the quantity of labor em

How does a fall in the money wage rate affect the aggregate supply curve?

At a trough in the business cycle, the macroeconomic equilibrium is ________ the level of potential real GDP.

Give examples of factors that decrease aggregate demand.Which way does the aggregate demand curve shift?

An increase in potential GDP aggregate supply and .

"An increase in Mexican income decreases aggregate demand in the United States." Is the preceding statement correct or incorrect? Briefly explain your answer.

As the price level rises relative to costs and the real wage rate falls, profits and the number of firms in business .

________ increases the quantity of real GDP supplied and is shown as a movement along the AS curve.

If the economy is at macroeconomic equilibrium, then real GDP

Aggregate demand and shifts the AD curve when .

During an inflationary gap,

During the late 1960s, U.S.defense spending increased as the United States fought in Vietnam.This increase in government expenditure on goods and services most likely created

Name the four factors of production that determine the quantity of real GDP supplied.Which one fluctuates the most over the course of the business cycle?

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

How does a fall in the money wage rate affect the aggregate supply curve?

At a trough in the business cycle, the macroeconomic equilibrium is ________ the level of potential real GDP.

Give examples of factors that decrease aggregate demand.Which way does the aggregate demand curve shift?

An increase in potential GDP ________ aggregate supply and ________.

"An increase in Mexican income decreases aggregate demand in the United States." Is the preceding statement correct or incorrect? Briefly explain your answer.

As the price level rises relative to costs and the real wage rate falls, profits ________ and the number of firms in business ________.

________ increases the quantity of real GDP supplied and is shown as a movement along the AS curve.

If the economy is at macroeconomic equilibrium, then real GDP

Aggregate demand ________ and shifts the AD curve ________ when ________.

During an inflationary gap,

During the late 1960s, U.S.defense spending increased as the United States fought in Vietnam.This increase in government expenditure on goods and services most likely created

Name the four factors of production that determine the quantity of real GDP supplied.Which one fluctuates the most over the course of the business cycle?

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

An increase in potential GDP aggregate supply and .

As the price level rises relative to costs and the real wage rate falls, profits and the number of firms in business .

Aggregate demand and shifts the AD curve when .