Question 1

Because there is a ________ relationship between the price level and the quantity of real GDP supplied, the aggregate supply curve is ________ curve.

Accepted Answer

A)  negative; an upward-sloping 
B)  positive; a downward-sloping 
C)  positive; an upward-sloping 
D)  negative; a downward-sloping 
E)  positive; a vertical 
A)  negative; an upward-sloping 
B)  positive; a downward-sloping 
C)  positive; an upward-sloping 
D)  negative; a downward-sloping 
E)  positive; a vertical

Question 2

An increase in investment ________ aggregate demand, the aggregate demand curve shifts ________ and the economy is in the ________ phase of the business cycle.

Accepted Answer

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

Question 3

At the beginning of 2015, a country is at full-employment.During 2015, oil-producing countries decrease oil production leading to much higher oil prices.The higher oil prices can

Accepted Answer

A)  increase aggregate demand and lead to an expansion. 
B)  increase aggregate supply and lead to an expansion. 
C)  decrease aggregate demand and lead to a stagflation. 
D)  decrease aggregate supply and lead to a stagflation. 
E)  decrease aggregate demand and lead to a higher price level. 
A)  increase aggregate demand and lead to an expansion. 
B)  increase aggregate supply and lead to an expansion. 
C)  decrease aggregate demand and lead to a stagflation. 
D)  decrease aggregate supply and lead to a stagflation. 
E)  decrease aggregate demand and lead to a higher price level.

Question 4

Which of the following shifts the aggregate demand curve rightward?

Accepted Answer

A)  a decrease in expected future income 
B)  a decrease in the price level 
C)  a tax cut 
D)  a decrease in the quantity of money 
E)  a decrease in government expenditures on goods and services 
A)  a decrease in expected future income 
B)  a decrease in the price level 
C)  a tax cut 
D)  a decrease in the quantity of money 
E)  a decrease in government expenditures on goods and services

Question 5

If the equilibrium price level is 135 but the actual price level is 120, then

Accepted Answer

A)  firms decrease their production because they cannot sell the output they produce. 
B)  the quantity of real GDP demanded is less than the quantity of real GDP supplied. 
C)  the quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
D)  aggregate demand will increase to restore equilibrium. 
E)  aggregate demand will decrease to restore equilibrium. 
A)  firms decrease their production because they cannot sell the output they produce. 
B)  the quantity of real GDP demanded is less than the quantity of real GDP supplied. 
C)  the quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
D)  aggregate demand will increase to restore equilibrium. 
E)  aggregate demand will decrease to restore equilibrium.

Question 6

When the domestic price level increases, exports decrease and imports increase.Other things the same, this change is illustrated by a

Accepted Answer

A)  movement upward along the aggregate demand curve. 
B)  movement downward along the aggregate demand curve. 
C)  rightward shift of the aggregate demand curve. 
D)  leftward shift of the aggregate demand curve. 
E)  rightward shift of the aggregate supply curve. 
A)  movement upward along the aggregate demand curve. 
B)  movement downward along the aggregate demand curve. 
C)  rightward shift of the aggregate demand curve. 
D)  leftward shift of the aggregate demand curve. 
E)  rightward shift of the aggregate supply curve.

Question 7

If there is an increase in expected future income, then

Accepted Answer

A)  the aggregate demand curve shifts rightward. 
B)  the aggregate demand curve shifts leftward. 
C)  there is an upward movement along the aggregate demand curve. 
D)  there is a downward movement along the aggregate demand curve. 
E)  the aggregate demand curve becomes steeper. 
A)  the aggregate demand curve shifts rightward. 
B)  the aggregate demand curve shifts leftward. 
C)  there is an upward movement along the aggregate demand curve. 
D)  there is a downward movement along the aggregate demand curve. 
E)  the aggregate demand curve becomes steeper.

Question 8

-According to the figure above, which point or points correspond to full employment?

Accepted Answer

A)  only point a 
B)  only point b 
C)  only point c 
D)  points a and b 
E)  points a, b, and c 
A)  only point a 
B)  only point b 
C)  only point c 
D)  points a and b 
E)  points a, b, and c

Question 9

If the quantity of real GDP demanded is less than the quantity of real GDP supplied, then

Accepted Answer

A)  the economy must be producing at potential GDP. 
B)  the price level falls and firms decrease production. 
C)  the price level falls and firms increase production. 
D)  the price level rises to restore the macroeconomic equilibrium 
E)  aggregate demand changes to restore the equilibrium. 
A)  the economy must be producing at potential GDP. 
B)  the price level falls and firms decrease production. 
C)  the price level falls and firms increase production. 
D)  the price level rises to restore the macroeconomic equilibrium 
E)  aggregate demand changes to restore the equilibrium.

Question 10

Which of the following statements is correct?

Accepted Answer

A)  An increase in the price level shifts the aggregate demand curve rightward. 
B)  An increase in the price level shifts the aggregate demand curve leftward. 
C)  An increase in the quantity of the money shifts the aggregate demand curve rightward. 
D)  An increase in the real interest rate shifts the aggregate demand curve rightward. 
E)  An increase in the money wage rate shifts the aggregate demand curve leftward. 
A)  An increase in the price level shifts the aggregate demand curve rightward. 
B)  An increase in the price level shifts the aggregate demand curve leftward. 
C)  An increase in the quantity of the money shifts the aggregate demand curve rightward. 
D)  An increase in the real interest rate shifts the aggregate demand curve rightward. 
E)  An increase in the money wage rate shifts the aggregate demand curve leftward.

Question 11

Which of the following could result in a recession?

Accepted Answer

A)  a rise in the price of oil 
B)  an increase in investment 
C)  a tax cut 
D)  an increase in the quantity of money 
E)  an increase in government expenditures on goods and services 
A)  a rise in the price of oil 
B)  an increase in investment 
C)  a tax cut 
D)  an increase in the quantity of money 
E)  an increase in government expenditures on goods and services

Question 12

Over the business cycle, factors such as the quantity of capital, human capital and technology

Accepted Answer

A)  grow but do not fluctuate as much as the quantity of labor employed. 
B)  change drastically, fluctuating more than the quantity of labor employed. 
C)  fluctuate about the same amount as the quantity of labor employed. 
D)  do not grow and are therefore not the source of economic growth. 
E)  change randomly, sometimes growing, sometimes falling. 
A)  grow but do not fluctuate as much as the quantity of labor employed. 
B)  change drastically, fluctuating more than the quantity of labor employed. 
C)  fluctuate about the same amount as the quantity of labor employed. 
D)  do not grow and are therefore not the source of economic growth. 
E)  change randomly, sometimes growing, sometimes falling.

Question 13

A macroeconomic equilibrium occurs when the

Accepted Answer

A)  quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
B)  quantity of real GDP demanded is less than the quantity of real GDP supplied. 
C)  quantity of real GDP demanded equals the quantity of real GDP supplied even if they are not equal to potential GDP. 
D)  quantity of real GDP demanded equals the quantity of real GDP supplied and both equal potential GDP. 
E)  None of the above answers is correct. 
A)  quantity of real GDP demanded is greater than the quantity of real GDP supplied. 
B)  quantity of real GDP demanded is less than the quantity of real GDP supplied. 
C)  quantity of real GDP demanded equals the quantity of real GDP supplied even if they are not equal to potential GDP. 
D)  quantity of real GDP demanded equals the quantity of real GDP supplied and both equal potential GDP. 
E)  None of the above answers is correct.

Question 14

It is profitable to hire more labor if the price level ________ and the money wage rate ________.

Accepted Answer

A)  rises; falls 
B)  falls; rises 
C)  falls; does not change 
D)  does not change; rises 
E)  rises; rises by the same percentage 
A)  rises; falls 
B)  falls; rises 
C)  falls; does not change 
D)  does not change; rises 
E)  rises; rises by the same percentage

Question 15

-In the figure above, the economy is at an equilibrium with real GDP of $13 trillion and a price level of 110.At this point there is

Accepted Answer

A)  an inflationary gap. 
B)  a recessionary gap. 
C)  price stability. 
D)  a full-employment equilibrium. 
E)  an above full-employment equilibrium. 
A)  an inflationary gap. 
B)  a recessionary gap. 
C)  price stability. 
D)  a full-employment equilibrium. 
E)  an above full-employment equilibrium.

Question 16

If profits are high because the price level rose,

Accepted Answer

A)  it is likely the result of an increase in the real wage rate. 
B)  new businesses open and the quantity of real GDP supplied increases. 
C)  business failures rise and the quantity of real GDP supplied increases. 
D)  potential GDP must be decreasing. 
E)  the AS curve shifts leftward. 
A)  it is likely the result of an increase in the real wage rate. 
B)  new businesses open and the quantity of real GDP supplied increases. 
C)  business failures rise and the quantity of real GDP supplied increases. 
D)  potential GDP must be decreasing. 
E)  the AS curve shifts leftward.

Question 17

If investment spending increases by $1 million, then the aggregate demand curve shifts

Accepted Answer

A)  rightward by $1 million. 
B)  rightward by more than $1 million. 
C)  rightward by less than $1 million. 
D)  leftward by more than $1 million. 
E)  leftward by less than $1 million. 
A)  rightward by $1 million. 
B)  rightward by more than $1 million. 
C)  rightward by less than $1 million. 
D)  leftward by more than $1 million. 
E)  leftward by less than $1 million.

Question 18

A rise in the price level

Accepted Answer

A)  raises the buying power of money. 
B)  decreases the prices of exports. 
C)  lowers the buying power of money. 
D)  increases aggregate demand. 
E)  makes the aggregate demand curve steeper. 
A)  raises the buying power of money. 
B)  decreases the prices of exports. 
C)  lowers the buying power of money. 
D)  increases aggregate demand. 
E)  makes the aggregate demand curve steeper.

Question 19

If the price level increases from 110.0 to 115.0, the quantity of

Accepted Answer

A)  real GDP supplied will increase. 
B)  real GDP supplied will decrease. 
C)  potential GDP will decrease. 
D)  real GDP demanded will increase. 
E)  potential GDP will increase. 
A)  real GDP supplied will increase. 
B)  real GDP supplied will decrease. 
C)  potential GDP will decrease. 
D)  real GDP demanded will increase. 
E)  potential GDP will increase.

Question 20

How does a rise in the foreign exchange rate affect aggregate demand in the United States?
 Explain your answer.

Accepted Answer

An increase in the foreign exchange rate

Because there is a relationship between the price level and the quantity of real GDP supplied, the aggregate supply curve is curve.

An increase in investment aggregate demand, the aggregate demand curve shifts and the economy is in the phase of the business cycle.

At the beginning of 2015, a country is at full-employment.During 2015, oil-producing countries decrease oil production leading to much higher oil prices.The higher oil prices can

Which of the following shifts the aggregate demand curve rightward?

If the equilibrium price level is 135 but the actual price level is 120, then

When the domestic price level increases, exports decrease and imports increase.Other things the same, this change is illustrated by a

If there is an increase in expected future income, then

-According to the figure above, which point or points correspond to full employment?

If the quantity of real GDP demanded is less than the quantity of real GDP supplied, then

Which of the following statements is correct?

Which of the following could result in a recession?

Over the business cycle, factors such as the quantity of capital, human capital and technology

A macroeconomic equilibrium occurs when the

It is profitable to hire more labor if the price level and the money wage rate .

-In the figure above, the economy is at an equilibrium with real GDP of $13 trillion and a price level of 110.At this point there is

If profits are high because the price level rose,

If investment spending increases by $1 million, then the aggregate demand curve shifts

A rise in the price level

If the price level increases from 110.0 to 115.0, the quantity of

How does a rise in the foreign exchange rate affect aggregate demand in the United States? Explain your answer.

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

Because there is a ________ relationship between the price level and the quantity of real GDP supplied, the aggregate supply curve is ________ curve.

An increase in investment ________ aggregate demand, the aggregate demand curve shifts ________ and the economy is in the ________ phase of the business cycle.

At the beginning of 2015, a country is at full-employment.During 2015, oil-producing countries decrease oil production leading to much higher oil prices.The higher oil prices can

Which of the following shifts the aggregate demand curve rightward?

If the equilibrium price level is 135 but the actual price level is 120, then

When the domestic price level increases, exports decrease and imports increase.Other things the same, this change is illustrated by a

If there is an increase in expected future income, then

-According to the figure above, which point or points correspond to full employment?

If the quantity of real GDP demanded is less than the quantity of real GDP supplied, then

Which of the following statements is correct?

Which of the following could result in a recession?

Over the business cycle, factors such as the quantity of capital, human capital and technology

A macroeconomic equilibrium occurs when the

It is profitable to hire more labor if the price level ________ and the money wage rate ________.

-In the figure above, the economy is at an equilibrium with real GDP of $13 trillion and a price level of 110.At this point there is

If profits are high because the price level rose,

If investment spending increases by $1 million, then the aggregate demand curve shifts

A rise in the price level

If the price level increases from 110.0 to 115.0, the quantity of

How does a rise in the foreign exchange rate affect aggregate demand in the United States? Explain your answer.

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

Because there is a relationship between the price level and the quantity of real GDP supplied, the aggregate supply curve is curve.

An increase in investment aggregate demand, the aggregate demand curve shifts and the economy is in the phase of the business cycle.

It is profitable to hire more labor if the price level and the money wage rate .