Question 1

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 2

A fall in the real wage rate ________ firms' profits and leads to ________ in the quantity supplied.

Accepted Answer

A) raises; an increase 
B) raises; a decrease 
C) lowers; an increase 
D) lowers; a decrease 
E) does not change; no change 
A) raises; an increase 
B) raises; a decrease 
C) lowers; an increase 
D) lowers; a decrease 
E) does not change; no change

Question 3

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from ________, and the government policy to eliminate this gap will ________ real GDP to ________ the price level.

Accepted Answer

A) a recessionary gap; decrease; decrease 
B) an inflationary gap; increase; decrease 
C) a recessionary gap; increase; increase 
D) an inflationary gap; decrease; increase 
E) a recessionary gap; decrease; increase 
A) a recessionary gap; decrease; decrease 
B) an inflationary gap; increase; decrease 
C) a recessionary gap; increase; increase 
D) an inflationary gap; decrease; increase 
E) a recessionary gap; decrease; increase

Question 4

Which of the following statements is true?

Accepted Answer

A) An increase in potential GDP increases aggregate supply and shifts the AS curve leftward. 
B) A decrease in potential GDP decreases aggregate supply and shifts the AS curve leftward. 
C) An increase in the money wage rate shifts the AS curve rightward. 
D) A fall in the price level shifts the AS curve leftward. 
E) An increase in the money wage rate increases potential GDP. 
A) An increase in potential GDP increases aggregate supply and shifts the AS curve leftward. 
B) A decrease in potential GDP decreases aggregate supply and shifts the AS curve leftward. 
C) An increase in the money wage rate shifts the AS curve rightward. 
D) A fall in the price level shifts the AS curve leftward. 
E) An increase in the money wage rate increases potential GDP.

Question 5

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 6

A rise in the price level brings a ________ in the buying power of money that ________ consumption expenditures and causes the quantity of real GDP demanded to ________.

Accepted Answer

A) rise; decreases; decrease 
B) fall; decreases; decrease 
C) fall; increases; increase 
D) rise; increases; increase 
E) fall; decreases; increase 
A) rise; decreases; decrease 
B) fall; decreases; decrease 
C) fall; increases; increase 
D) rise; increases; increase 
E) fall; decreases; increase

Question 7

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Price level } \
\text { (GDP deflator) }
\end{array} & \begin{array} { c } 
\text { Real GDP demanded } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP supplied } \
\text { (trillions of 2005 } \
\text { dollars) }
\end{array} \
\hline 80 & 10 & 2 \
90 & 9 & 4 \
100 & 8 & 6 \
110 & 7 & 7 \
120 & 6 & 8 \
130 & 4 & 9 \
\hline
\end{array}$$ 
The table gives the aggregate demand and aggregate supply schedules for a nation.
-If the price level is 120 then the aggregate quantity demanded is ________ than the aggregate quantity supplied and the price level ________.

Accepted Answer

A) greater; rises 
B) greater; falls 
C) less; rises 
D) less; falls 
E) less; might fall, rise or not change depending on whether real GDP is more than, less than, or equal to potential GDP. 
A) greater; rises 
B) greater; falls 
C) less; rises 
D) less; falls 
E) less; might fall, rise or not change depending on whether real GDP is more than, less than, or equal to potential GDP.

Question 8

An increase in government expenditure on goods and services leads to the

Accepted Answer

A) aggregate supply curve shifting rightward. 
B) aggregate supply curve shifting leftward. 
C) aggregate demand curve shifting rightward. 
D) aggregate demand curve shifting leftward. 
E) potential GDP increasing. 
A) aggregate supply curve shifting rightward. 
B) aggregate supply curve shifting leftward. 
C) aggregate demand curve shifting rightward. 
D) aggregate demand curve shifting leftward. 
E) potential GDP increasing.

Question 9

A rise in the price level produces a ________ the aggregate supply curve.

Accepted Answer

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

Question 10

If there is a rise in the price level, there is ________ in the quantity of real GDP supplied and a movement ________ along the AS curve.

Accepted Answer

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

Question 11

By itself, a supply shock such as a hike in the price of oil, can

Accepted Answer

A) cause real GDP to permanently decrease year after year. 
B) not result in persisting inflation. 
C) be inflationary as long as there is no policy response. 
D) result in persisting inflation if aggregate supply persistently increases. 
E) result in a persisting wage-price spiral. 
A) cause real GDP to permanently decrease year after year. 
B) not result in persisting inflation. 
C) be inflationary as long as there is no policy response. 
D) result in persisting inflation if aggregate supply persistently increases. 
E) result in a persisting wage-price spiral.

Question 12

-In the figure above, the shift in the aggregate demand curve from AD₁ to AD₂ could be result of

Accepted Answer

A) a fall in the price level. 
B) a decrease in the quantity of money. 
C) an increase in government expenditures on goods and services. 
D) an increase in taxes. 
E) a rise in the price level. 
A) a fall in the price level. 
B) a decrease in the quantity of money. 
C) an increase in government expenditures on goods and services. 
D) an increase in taxes. 
E) a rise in the price level.

Question 13

Unemployment increases when

Accepted Answer

A) an inflationary gap is created. 
B) potential GDP increases. 
C) the government decreases its expenditure on goods and services. 
D) aggregate demand increases. 
E) aggregate supply increases. 
A) an inflationary gap is created. 
B) potential GDP increases. 
C) the government decreases its expenditure on goods and services. 
D) aggregate demand increases. 
E) aggregate supply increases.

Question 14

When cost-push inflation starts, real GDP ________ and the unemployment rate ________.

Accepted Answer

A) decreases; falls 
B) does not change; falls 
C) decreases; rises 
D) does not change; does not change 
E) increases; falls 
A) decreases; falls 
B) does not change; falls 
C) decreases; rises 
D) does not change; does not change 
E) increases; falls

Question 15

What factor changes the quantity of real GDP supplied and results in a movement along the AS curve?

Accepted Answer

Changes in the price level cha

Question 16

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 17

Moving along the AS curve, when the price level increases, the

Accepted Answer

A) real wage rate falls, and there is an increase in the quantity of real GDP supplied. 
B) real wage rate rises, and there is an increase in the quantity of real GDP supplied. 
C) nominal wage rate falls, and there is an increase in the quantity of real GDP supplied. 
D) nominal wage rate rises, and there is a decrease in the quantity of real GDP supplied. 
E) real wage rate rises, and there is a decrease in the quantity of real GDP supplied. 
A) real wage rate falls, and there is an increase in the quantity of real GDP supplied. 
B) real wage rate rises, and there is an increase in the quantity of real GDP supplied. 
C) nominal wage rate falls, and there is an increase in the quantity of real GDP supplied. 
D) nominal wage rate rises, and there is a decrease in the quantity of real GDP supplied. 
E) real wage rate rises, and there is a decrease in the quantity of real GDP supplied.

Question 18

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

Question 19

If the money wage rate increases, then the

Accepted Answer

A) aggregate supply curve shifts rightward. 
B) potential GDP increases. 
C) potential GDP decreases. 
D) aggregate supply curve shifts leftward. 
E) aggregate demand curve shifts leftward. 
A) aggregate supply curve shifts rightward. 
B) potential GDP increases. 
C) potential GDP decreases. 
D) aggregate supply curve shifts leftward. 
E) aggregate demand curve shifts leftward.

Question 20

The ________, the ________ is the quantity of real GDP supplied and the ________ is the quantity of real GDP demanded.

Accepted Answer

A) lower the price level; greater; smaller 
B) higher the price level; greater; smaller 
C) greater the demand for labor; smaller 
D) lower the supply of labor; greater; smaller 
E) lower aggregate demand; greater; smaller 
A) lower the price level; greater; smaller 
B) higher the price level; greater; smaller 
C) greater the demand for labor; smaller 
D) lower the supply of labor; greater; smaller 
E) lower aggregate demand; greater; smaller

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

A fall in the real wage rate firms' profits and leads to in the quantity supplied.

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from , and the government policy to eliminate this gap will real GDP to the price level.

Which of the following statements is true?

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

A rise in the price level brings a in the buying power of money that consumption expenditures and causes the quantity of real GDP demanded to .

An increase in government expenditure on goods and services leads to the

A rise in the price level produces a ________ the aggregate supply curve.

If there is a rise in the price level, there is in the quantity of real GDP supplied and a movement along the AS curve.

By itself, a supply shock such as a hike in the price of oil, can

-In the figure above, the shift in the aggregate demand curve from AD₁ to AD₂ could be result of

Unemployment increases when

When cost-push inflation starts, real GDP and the unemployment rate .

What factor changes the quantity of real GDP supplied and results in a movement along the AS curve?

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

Moving along the AS curve, when the price level increases, the

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?

If the money wage rate increases, then the

The , the is the quantity of real GDP supplied and the is the quantity of real GDP demanded.

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

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

A fall in the real wage rate ________ firms' profits and leads to ________ in the quantity supplied.

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from ________, and the government policy to eliminate this gap will ________ real GDP to ________ the price level.

Which of the following statements is true?

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

A rise in the price level brings a ________ in the buying power of money that ________ consumption expenditures and causes the quantity of real GDP demanded to ________.

An increase in government expenditure on goods and services leads to the

A rise in the price level produces a ________ the aggregate supply curve.

If there is a rise in the price level, there is ________ in the quantity of real GDP supplied and a movement ________ along the AS curve.

By itself, a supply shock such as a hike in the price of oil, can

-In the figure above, the shift in the aggregate demand curve from AD₁ to AD₂ could be result of

Unemployment increases when

When cost-push inflation starts, real GDP ________ and the unemployment rate ________.

What factor changes the quantity of real GDP supplied and results in a movement along the AS curve?

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

Moving along the AS curve, when the price level increases, the

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?

If the money wage rate increases, then the

The ________, the ________ is the quantity of real GDP supplied and the ________ is the quantity of real GDP demanded.

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

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

A fall in the real wage rate firms' profits and leads to in the quantity supplied.

When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from , and the government policy to eliminate this gap will real GDP to the price level.

A rise in the price level brings a in the buying power of money that consumption expenditures and causes the quantity of real GDP demanded to .

If there is a rise in the price level, there is in the quantity of real GDP supplied and a movement along the AS curve.

When cost-push inflation starts, real GDP and the unemployment rate .

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

The , the is the quantity of real GDP supplied and the is the quantity of real GDP demanded.