Question 1

If the costs of production decrease, there is

Accepted Answer

A) an increase in aggregate supply and the AS curve shifts rightward. 
B) a decrease in aggregate supply and the AS curve shifts leftward. 
C) an increase in the quantity of real GDP supplied and a movement up along the AS curve. 
D) a decrease in the quantity of real GDP supplied and a movement down along the AS curve. 
E) an increase in aggregate supply and the AS curve shifts leftward. 
A) an increase in aggregate supply and the AS curve shifts rightward. 
B) a decrease in aggregate supply and the AS curve shifts leftward. 
C) an increase in the quantity of real GDP supplied and a movement up along the AS curve. 
D) a decrease in the quantity of real GDP supplied and a movement down along the AS curve. 
E) an increase in aggregate supply and the AS curve shifts leftward.

Question 2

Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve?

Accepted Answer

A) a change in foreign incomes 
B) a change in the price level 
C) a change in monetary policy 
D) a change in expectations about the future 
E) a change in government expenditures on goods and services 
A) a change in foreign incomes 
B) a change in the price level 
C) a change in monetary policy 
D) a change in expectations about the future 
E) a change in government expenditures on goods and services

Question 3

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 4

As a result of OPEC ________ oil prices in 1973 and 1980, real GDP in United States ________.

Accepted Answer

A) increasing; increased 
B) increasing; decreased 
C) decreasing; increased 
D) decreasing; decreased 
E) increasing; did not change 
A) increasing; increased 
B) increasing; decreased 
C) decreasing; increased 
D) decreasing; decreased 
E) increasing; did not change

Question 5

Demand-pull inflation persists because of

Accepted Answer

A) continuing increases in government expenditures. 
B) continuing increases in the quantity of money. 
C) continuing increases in the real wage rate. 
D) continuing decreases in the money wage rate. 
E) continuing increases in aggregate supply. 
A) continuing increases in government expenditures. 
B) continuing increases in the quantity of money. 
C) continuing increases in the real wage rate. 
D) continuing decreases in the money wage rate. 
E) continuing increases in aggregate supply.

Question 6

The AD curve is a graph depicting the

Accepted Answer

A) relationship between the price level and the quantity of real GDP supplied. 
B) business cycle during expansions and recessions. 
C) relationship between the price level and the quantity of real GDP demanded. 
D) relationship between the price level and potential GDP. 
E) relationship between the aggregate quantity of real GDP demanded and the aggregate quantity of real GDP supplied. 
A) relationship between the price level and the quantity of real GDP supplied. 
B) business cycle during expansions and recessions. 
C) relationship between the price level and the quantity of real GDP demanded. 
D) relationship between the price level and potential GDP. 
E) relationship between the aggregate quantity of real GDP demanded and the aggregate quantity of real GDP supplied.

Question 7

A change in any component of aggregate demand creates a larger change in overall aggregate demand. This is the ________ effect, and it means , for example, that a ________ in consumption will cause an even larger ________ in AD.

Accepted Answer

A) multiplier; increase; decrease 
B) liquidity; decrease; decrease 
C) growth; increase; decrease 
D) multiplier; decrease; decrease 
E) liquidity; increase; decrease 
A) multiplier; increase; decrease 
B) liquidity; decrease; decrease 
C) growth; increase; decrease 
D) multiplier; decrease; decrease 
E) liquidity; increase; decrease

Question 8

At the start of a cost-push inflation,

Accepted Answer

A) the price level remains constant and real GDP decreases. 
B) the price level and real GDP both increase. 
C) the price level remains constant and real GDP increases. 
D) the price level rises and real GDP decreases. 
E) the price level rises and real GDP does not change. 
A) the price level remains constant and real GDP decreases. 
B) the price level and real GDP both increase. 
C) the price level remains constant and real GDP increases. 
D) the price level rises and real GDP decreases. 
E) the price level rises and real GDP does not change.

Question 9

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 10

-What can lead to the shift illustrated in the figure above?

Accepted Answer

A decrease in the money wage r

Question 11

The economy is at full employment. If aggregate demand increases,

Accepted Answer

A) an inflationary gap is created and the AS curve shifts leftward as the money wage rate rises. 
B) an inflationary gap is created and the AD curve shifts leftward. 
C) an inflationary gap is created and potential GDP increases to close the gap. 
D) a recessionary gap is created and the AS curve shifts leftward as the money wage rate falls. 
E) a recessionary gap is created and the AS curve shifts leftward as the money wage rate rises. 
A) an inflationary gap is created and the AS curve shifts leftward as the money wage rate rises. 
B) an inflationary gap is created and the AD curve shifts leftward. 
C) an inflationary gap is created and potential GDP increases to close the gap. 
D) a recessionary gap is created and the AS curve shifts leftward as the money wage rate falls. 
E) a recessionary gap is created and the AS curve shifts leftward as the money wage rate rises.

Question 12

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 13

Which of the following shifts the aggregate supply curve rightward?

Accepted Answer

A) increase in potential GDP 
B) increase in the money wage rate 
C) increase in real GDP 
D) increase in the money price of oil 
E) increase in consumers' incomes 
A) increase in potential GDP 
B) increase in the money wage rate 
C) increase in real GDP 
D) increase in the money price of oil 
E) increase in consumers' incomes

Question 14

The government increases the level of government expenditure. If there is no change in the aggregate supply curve, 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; increase 
D) decrease; increase; increase 
E) decrease; remain the same; decrease 
A) increase; remain the same; increase 
B) remain the same; increase; increase 
C) increase; increase; increase 
D) decrease; increase; increase 
E) decrease; remain the same; decrease

Question 15

If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the

Accepted Answer

A) AS curve shifts rightward. 
B) potential GDP line shifts rightward. 
C) AS curve shifts leftward. 
D) potential GDP line shifts leftward. 
E) None of the above are correct because demand-pull inflation shifts only the aggregate demand curve. 
A) AS curve shifts rightward. 
B) potential GDP line shifts rightward. 
C) AS curve shifts leftward. 
D) potential GDP line shifts leftward. 
E) None of the above are correct because demand-pull inflation shifts only the aggregate demand curve.

Question 16

The figure above shows aggregate demand curves.
-Based on the figure above, the aggregate demand curve will shift from AD₀ to AD₂ when

Accepted Answer

A) potential GDP increases. 
B) the price level falls. 
C) the price level rises. 
D) government expenditure decreases. 
E) taxes are lowered. 
A) potential GDP increases. 
B) the price level falls. 
C) the price level rises. 
D) government expenditure decreases. 
E) taxes are lowered.

Question 17

19.4 Chapter Figures
   
The figure above shows the aggregate supply curve and potential GDP.
-If potential GDP increases, 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; does not shift 
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; does not shift

Question 18

-The change reflected in the above figure might be a result of

Accepted Answer

A) a decrease in the money wage rate. 
B) a decrease in the real wage rate. 
C) an increase in the money wage rate. 
D) an increase in the real wage rate. 
E) a rise in the price level. 
A) a decrease in the money wage rate. 
B) a decrease in the real wage rate. 
C) an increase in the money wage rate. 
D) an increase in the real wage rate. 
E) a rise in the price level.

Question 19

A technological advance ________ potential GDP, ________ aggregate supply, and shifts the aggregate supply curve ________.

Accepted Answer

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

Question 20

The slope of the aggregate supply curve shows that, all else the same, the

Accepted Answer

A) quantity of real GDP supplied increases as the price level increases. 
B) quantity of real GDP supplied decreases as the price level increases. 
C) quantity of real GDP supplied remains constant as the price level increases. 
D) price level remains constant as real GDP increases. 
E) price level remains constant as potential GDP increases. 
A) quantity of real GDP supplied increases as the price level increases. 
B) quantity of real GDP supplied decreases as the price level increases. 
C) quantity of real GDP supplied remains constant as the price level increases. 
D) price level remains constant as real GDP increases. 
E) price level remains constant as potential GDP increases.

If the costs of production decrease, there is

Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve?

If profits are high because the price level rose,

As a result of OPEC oil prices in 1973 and 1980, real GDP in United States .

Demand-pull inflation persists because of

The AD curve is a graph depicting the

A change in any component of aggregate demand creates a larger change in overall aggregate demand. This is the effect, and it means , for example, that a in consumption will cause an even larger in AD.

At the start of a cost-push inflation,

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

-What can lead to the shift illustrated in the figure above?

The economy is at full employment. If aggregate demand increases,

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

Which of the following shifts the aggregate supply curve rightward?

The government increases the level of government expenditure. If there is no change in the aggregate supply curve, then aggregate demand will , real GDP will , and the price level will .

If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the

The figure above shows aggregate demand curves. -Based on the figure above, the aggregate demand curve will shift from AD₀ to AD₂ when

19.4 Chapter Figures The figure above shows the aggregate supply curve and potential GDP. -If potential GDP increases, then in the figure above the potential GDP line , and the aggregate supply curve .

-The change reflected in the above figure might be a result of

A technological advance potential GDP, aggregate supply, and shifts the aggregate supply curve .

The slope of the aggregate supply curve shows that, all else the same, the

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Fiscal Policy and Monetary Policy

Filters

Exam 19: Aggregate Supply and Aggregate Demand

If the costs of production decrease, there is

Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve?

If profits are high because the price level rose,

As a result of OPEC ________ oil prices in 1973 and 1980, real GDP in United States ________.

Demand-pull inflation persists because of

The AD curve is a graph depicting the

A change in any component of aggregate demand creates a larger change in overall aggregate demand. This is the ________ effect, and it means , for example, that a ________ in consumption will cause an even larger ________ in AD.

At the start of a cost-push inflation,

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

-What can lead to the shift illustrated in the figure above?

The economy is at full employment. If aggregate demand increases,

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

Which of the following shifts the aggregate supply curve rightward?

The government increases the level of government expenditure. If there is no change in the aggregate supply curve, then aggregate demand will ________, real GDP will ________, and the price level will ________.

If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the

The figure above shows aggregate demand curves. -Based on the figure above, the aggregate demand curve will shift from AD₀ to AD₂ when

19.4 Chapter Figures The figure above shows the aggregate supply curve and potential GDP. -If potential GDP increases, then in the figure above the potential GDP line ________, and the aggregate supply curve ________.

-The change reflected in the above figure might be a result of

A technological advance ________ potential GDP, ________ aggregate supply, and shifts the aggregate supply curve ________.

The slope of the aggregate supply curve shows that, all else the same, the

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Fiscal Policy and Monetary Policy

Filters

As a result of OPEC oil prices in 1973 and 1980, real GDP in United States .

A change in any component of aggregate demand creates a larger change in overall aggregate demand. This is the effect, and it means , for example, that a in consumption will cause an even larger in AD.

The government increases the level of government expenditure. If there is no change in the aggregate supply curve, then aggregate demand will , real GDP will , and the price level will .

19.4 Chapter Figures The figure above shows the aggregate supply curve and potential GDP. -If potential GDP increases, then in the figure above the potential GDP line , and the aggregate supply curve .

A technological advance potential GDP, aggregate supply, and shifts the aggregate supply curve .