Question 1

If wages increase 10 percent while worker productivity increases 20 percent,what would we expect the long-run aggregate supply curve to do?

Accepted Answer

A) shift left (an increase in aggregate supply) 
B) shift right (an increase in aggregate supply) 
C) shift right (a decrease in aggregate supply) 
D) shift left (a decrease in aggregate supply) 
A) shift left (an increase in aggregate supply) 
B) shift right (an increase in aggregate supply) 
C) shift right (a decrease in aggregate supply) 
D) shift left (a decrease in aggregate supply)

Question 2

How will a temporary adverse supply shock shift the SRAS and LRAS curves?

Accepted Answer

A) Only the SRAS curve will shift left; the LRAS curve will not change. 
B) Both the SRAS and LRAS curves will shift left. 
C) Only the SRAS curve will shift right; the LRAS curve will not change. 
D) Both the SRAS and LRAS curves will shift right. 
A) Only the SRAS curve will shift left; the LRAS curve will not change. 
B) Both the SRAS and LRAS curves will shift left. 
C) Only the SRAS curve will shift right; the LRAS curve will not change. 
D) Both the SRAS and LRAS curves will shift right.

Question 3

In the Keynesian AE model,if the autonomous components of consumption,investment,government spending,and net export spending total $200 billion,and the MPC is 0.8,what will unplanned changes in inventory be when output is $990 billion?

Accepted Answer

A) -$10 billion 
B) -$8 billion 
C) $8 billion 
D) $10 billion 
A) -$10 billion 
B) -$8 billion 
C) $8 billion 
D) $10 billion

Question 4

Which of the following statements about the long-run aggregate supply curve is the most accurate?

Accepted Answer

A) It is upward sloping. 
B) The level of real GDP supplied changes as input prices change. 
C) The level of real GDP supplied changes with the levels of capital, land, labour, and technology available to the economy. 
D) The LRAS shifts when the SRAS shifts. 
A) It is upward sloping. 
B) The level of real GDP supplied changes as input prices change. 
C) The level of real GDP supplied changes with the levels of capital, land, labour, and technology available to the economy. 
D) The LRAS shifts when the SRAS shifts.

Question 5

In a stagflation situation,what happens to real output and the price level?

Accepted Answer

A) Real output growth decreases and the price level decreases. 
B) Real output growth increases and the price level decreases. 
C) Real output growth decreases and the price level increases. 
D) Real output growth increases and the price level increases. 
A) Real output growth decreases and the price level decreases. 
B) Real output growth increases and the price level decreases. 
C) Real output growth decreases and the price level increases. 
D) Real output growth increases and the price level increases.

Question 6

What impact will an unexpected increase in aggregate demand have on real wages?

Accepted Answer

A) It will increase real wages in the short run but not the long run. 
B) It will decrease real wages in the short run but not the long run. 
C) It will decrease real wages in the short run and the long run. 
D) It will increase real wages in the short run and the long run. 
A) It will increase real wages in the short run but not the long run. 
B) It will decrease real wages in the short run but not the long run. 
C) It will decrease real wages in the short run and the long run. 
D) It will increase real wages in the short run and the long run.

Question 7

What happens to real wages and real output during the adjustment from an inflationary gap?

Accepted Answer

A) Real wages increase and real output increases. 
B) Real wages decrease and real output decreases. 
C) Real wages decrease and real output increases. 
D) Real wages increase and real output decreases. 
A) Real wages increase and real output increases. 
B) Real wages decrease and real output decreases. 
C) Real wages decrease and real output increases. 
D) Real wages increase and real output decreases.

Question 8

Both short-run and long-run aggregate supply curves can shift to the right if entrepreneurial activities lower costs of production and expand what can be produced.

Accepted Answer

A) True 
 B)False

Question 9

What effect explains why the short-run aggregate supply curve is positively sloped?

Accepted Answer

A) the income effect 
B) the misperception effect 
C) the substitution effect 
D) the market effect 
A) the income effect 
B) the misperception effect 
C) the substitution effect 
D) the market effect

Question 10

Brent,a brilliant inventor,found a way to grind up discarded newspapers and create a new,far lower-cost,effective plaster.What effect would this innovation have on aggregate supply?

Accepted Answer

A) If it is able to replace existing products with its superior characteristics, it will shift SRAS to the right and LRAS to the right. 
B) If it is able to substantially lower the costs of home insulation products, it would shift SRAS to the right but not change the LRAS. 
C) By reducing the demand for existing plaster, it would have no net effect on the SRAS but shift LRAS left. 
D) By providing a readier market to use discarded papers, it would reduce disposal costs for many producers and thereby shift SRAS to the left, leaving LRAS unchanged. 
A) If it is able to replace existing products with its superior characteristics, it will shift SRAS to the right and LRAS to the right. 
B) If it is able to substantially lower the costs of home insulation products, it would shift SRAS to the right but not change the LRAS. 
C) By reducing the demand for existing plaster, it would have no net effect on the SRAS but shift LRAS left. 
D) By providing a readier market to use discarded papers, it would reduce disposal costs for many producers and thereby shift SRAS to the left, leaving LRAS unchanged.

Question 11

How is the aggregate supply curve drawn?

Accepted Answer

A) with the price level on the vertical axis and real GDP on the horizontal 
B) with nominal GDP on the vertical axis and real GDP on the horizontal 
C) with real GDP on the horizontal axis and the rate of unemployment on the vertical 
D) with the price level on the vertical axis and nominal GDP on the horizontal 
A) with the price level on the vertical axis and real GDP on the horizontal 
B) with nominal GDP on the vertical axis and real GDP on the horizontal 
C) with real GDP on the horizontal axis and the rate of unemployment on the vertical 
D) with the price level on the vertical axis and nominal GDP on the horizontal

Question 12

What effect will the combination of an increase in the capital stock and a decrease in the natural resources that are available for production have on LRAS?

Accepted Answer

A) It will leave LRAS unchanged. 
B) It will have an indeterminate effect on LRAS. 
C) It will shift LRAS to the left. 
D) It will shift LRAS to the right. 
A) It will leave LRAS unchanged. 
B) It will have an indeterminate effect on LRAS. 
C) It will shift LRAS to the left. 
D) It will shift LRAS to the right.

Question 13

When the price level rises as a result of a decrease in aggregate supply,it is called cost-push inflation.

Accepted Answer

A) True 
 B)False

Question 14

When SRAS and AD intersect at a real output level that is greater than the natural level of real output,is the economy in equilibrium?

Accepted Answer

A) It is in short-run equilibrium, and real output will tend to fall from its current level as it adjusts to long-run equilibrium. 
B) It is in short-run disequilibrium, and real output will tend to rise from its current level as it adjusts to long-run equilibrium. 
C) It is in short-run equilibrium, and real output will tend to rise from its current level as it adjusts to long-run equilibrium. 
D) It is in short-run disequilibrium, and real output will tend to fall from its current level as it adjusts to long-run equilibrium. 
A) It is in short-run equilibrium, and real output will tend to fall from its current level as it adjusts to long-run equilibrium. 
B) It is in short-run disequilibrium, and real output will tend to rise from its current level as it adjusts to long-run equilibrium. 
C) It is in short-run equilibrium, and real output will tend to rise from its current level as it adjusts to long-run equilibrium. 
D) It is in short-run disequilibrium, and real output will tend to fall from its current level as it adjusts to long-run equilibrium.

Question 15

What impact will a temporary decrease in the supply of a major input have on real output?

Accepted Answer

A) It will increase real output in both the short run and the long run. 
B) It will increase real output in the short run but not in the long run. 
C) It will decrease real output in both the short run and the long run. 
D) It will decrease real output in the short run but not the long run. 
A) It will increase real output in both the short run and the long run. 
B) It will increase real output in the short run but not in the long run. 
C) It will decrease real output in both the short run and the long run. 
D) It will decrease real output in the short run but not the long run.

Question 16

If the price level rises,what happens to the level of real GDP supplied?

Accepted Answer

A) It will decrease in both the short run and the long run. 
B) It will decrease in the short run but not in the long run. 
C) It will increase in both the short run and the long run. 
D) It will increase in the short run but not in the long run. 
A) It will decrease in both the short run and the long run. 
B) It will decrease in the short run but not in the long run. 
C) It will increase in both the short run and the long run. 
D) It will increase in the short run but not in the long run.

Question 17

Which of the following could be expected to shift the short-run aggregate supply curve leftward?

Accepted Answer

A) a new technology for creating cold fusion 
B) a discovery of new oil reserves 
C) a rise in the price of oil 
D) an increase in labour productivity 
A) a new technology for creating cold fusion 
B) a discovery of new oil reserves 
C) a rise in the price of oil 
D) an increase in labour productivity

Question 18

Which of the following would shift the SRAS curve but NOT the LRAS curve?

Accepted Answer

A) increasing the available quantity of available natural resources 
B) increasing the level of usable technology 
C) increasing the wage rate paid to labour 
D) increasing the capital stock 
A) increasing the available quantity of available natural resources 
B) increasing the level of usable technology 
C) increasing the wage rate paid to labour 
D) increasing the capital stock

Question 19

How precise is the aggregate supply and demand model?

Accepted Answer

The AD/AS model is a crude too

Question 20

What impact would a year of unusually bad weather for agriculture have on the SRAS and LRAS curves?

Accepted Answer

A) It would increase SRAS but not LRAS. 
B) It would decrease SRAS but not LRAS. 
C) It would increase SRAS and LRAS. 
D) It would decrease SRAS and LRAS. 
A) It would increase SRAS but not LRAS. 
B) It would decrease SRAS but not LRAS. 
C) It would increase SRAS and LRAS. 
D) It would decrease SRAS and LRAS.

If wages increase 10 percent while worker productivity increases 20 percent,what would we expect the long-run aggregate supply curve to do?

How will a temporary adverse supply shock shift the SRAS and LRAS curves?

In the Keynesian AE model,if the autonomous components of consumption,investment,government spending,and net export spending total $200 billion,and the MPC is 0.8,what will unplanned changes in inventory be when output is $990 billion?

Which of the following statements about the long-run aggregate supply curve is the most accurate?

In a stagflation situation,what happens to real output and the price level?

What impact will an unexpected increase in aggregate demand have on real wages?

What happens to real wages and real output during the adjustment from an inflationary gap?

Both short-run and long-run aggregate supply curves can shift to the right if entrepreneurial activities lower costs of production and expand what can be produced.

What effect explains why the short-run aggregate supply curve is positively sloped?

Brent,a brilliant inventor,found a way to grind up discarded newspapers and create a new,far lower-cost,effective plaster.What effect would this innovation have on aggregate supply?

How is the aggregate supply curve drawn?

What effect will the combination of an increase in the capital stock and a decrease in the natural resources that are available for production have on LRAS?

When the price level rises as a result of a decrease in aggregate supply,it is called cost-push inflation.

When SRAS and AD intersect at a real output level that is greater than the natural level of real output,is the economy in equilibrium?

What impact will a temporary decrease in the supply of a major input have on real output?

If the price level rises,what happens to the level of real GDP supplied?

Which of the following could be expected to shift the short-run aggregate supply curve leftward?

Which of the following would shift the SRAS curve but NOT the LRAS curve?

How precise is the aggregate supply and demand model?

What impact would a year of unusually bad weather for agriculture have on the SRAS and LRAS curves?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters

Exam 9: Aggregate Supply and Macroeconomic Equilibrium

If wages increase 10 percent while worker productivity increases 20 percent,what would we expect the long-run aggregate supply curve to do?

How will a temporary adverse supply shock shift the SRAS and LRAS curves?

In the Keynesian AE model,if the autonomous components of consumption,investment,government spending,and net export spending total $200 billion,and the MPC is 0.8,what will unplanned changes in inventory be when output is $990 billion?

Which of the following statements about the long-run aggregate supply curve is the most accurate?

In a stagflation situation,what happens to real output and the price level?

What impact will an unexpected increase in aggregate demand have on real wages?

What happens to real wages and real output during the adjustment from an inflationary gap?

Both short-run and long-run aggregate supply curves can shift to the right if entrepreneurial activities lower costs of production and expand what can be produced.

What effect explains why the short-run aggregate supply curve is positively sloped?

Brent,a brilliant inventor,found a way to grind up discarded newspapers and create a new,far lower-cost,effective plaster.What effect would this innovation have on aggregate supply?

How is the aggregate supply curve drawn?

What effect will the combination of an increase in the capital stock and a decrease in the natural resources that are available for production have on LRAS?

When the price level rises as a result of a decrease in aggregate supply,it is called cost-push inflation.

When SRAS and AD intersect at a real output level that is greater than the natural level of real output,is the economy in equilibrium?

What impact will a temporary decrease in the supply of a major input have on real output?

If the price level rises,what happens to the level of real GDP supplied?

Which of the following could be expected to shift the short-run aggregate supply curve leftward?

Which of the following would shift the SRAS curve but NOT the LRAS curve?

How precise is the aggregate supply and demand model?

What impact would a year of unusually bad weather for agriculture have on the SRAS and LRAS curves?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters