Question 1

Stagflation could be caused solely by a shift in the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 2

How will a permanent 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) The SRAS and LRAS curves will both shift left. 
C) Only the SRAS curve will shift right; the LRAS curve will not change. 
D) The SRAS and LRAS curves will both shift right. 
A) Only the SRAS curve will shift left; the LRAS curve will not change. 
B) The SRAS and LRAS curves will both shift left. 
C) Only the SRAS curve will shift right; the LRAS curve will not change. 
D) The SRAS and LRAS curves will both shift right.

Question 3

Greater and more extensive government regulations of safety standards and environmental controls will have what effect on short-run and long-run aggregate supply?

Accepted Answer

Increased government regulation,limits,o

Question 4

Which of the following best describes the result of an increase in the price level in the long run?

Accepted Answer

A) Output prices could either rise or fall relative to input prices. 
B) Output prices will rise relative to input prices. 
C) Output prices will fall relative to input prices. 
D) Output prices will not change relative to input prices. 
A) Output prices could either rise or fall relative to input prices. 
B) Output prices will rise relative to input prices. 
C) Output prices will fall relative to input prices. 
D) Output prices will not change relative to input prices.

Question 5

What effect will the combination of a decrease in the capital stock and increasingly costly government regulations have on LRAS?

Accepted Answer

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

Question 6

What happens to the price level and real output during the self-correction process after a fall in aggregate demand?

Accepted Answer

A) The price level increases and real output decreases. 
B) The price level decreases and real output decreases. 
C) The price level decreases and real output increases. 
D) The price level increases and real output increases. 
A) The price level increases and real output decreases. 
B) The price level decreases and real output decreases. 
C) The price level decreases and real output increases. 
D) The price level increases and real output increases.

Question 7

What will a sudden increase in the wages demanded by workers cause?

Accepted Answer

A) an equilibrium gap 
B) an expansionary gap 
C) a recessionary gap 
D) an inflationary gap 
A) an equilibrium gap 
B) an expansionary gap 
C) a recessionary gap 
D) an inflationary gap

Question 8

Which of the following would decrease SRAS?

Accepted Answer

A) A reduction in the amount of capital employed by businesses. 
B) Investments in education and vocational programs make workers better prepared. 
C) On-the-job training causes worker productivity to rise. 
D) Firms adopt more powerful computers and more advanced machine tools for their workers. 
A) A reduction in the amount of capital employed by businesses. 
B) Investments in education and vocational programs make workers better prepared. 
C) On-the-job training causes worker productivity to rise. 
D) Firms adopt more powerful computers and more advanced machine tools for their workers.

Question 9

The SRAS curve is vertical at the natural level of real output.

Accepted Answer

A) True 
 B)False

Question 10

When the price level rises,what happens to real output in the short run and long run as a result?

Accepted Answer

A) Real output tends to increase in the short run but not in the long run. 
B) Real output tends to increase in the long run but not in the short run. 
C) Real output tends to decrease in the short run but not in the long run. 
D) Real output tends to increase in both the short run and the long run. 
A) Real output tends to increase in the short run but not in the long run. 
B) Real output tends to increase in the long run but not in the short run. 
C) Real output tends to decrease in the short run but not in the long run. 
D) Real output tends to increase in both the short run and the long run.

Question 11

How is the LRAS curve drawn?

Accepted Answer

A) as a vertical line 
B) as a downward sloping curve 
C) as a horizontal line 
D) as an upward sloping curve 
A) as a vertical line 
B) as a downward sloping curve 
C) as a horizontal line 
D) as an upward sloping curve

Question 12

What impact does cost-push inflation have on the price level and real output?

Accepted Answer

A) It decreases the price level and decreases real output. 
B) It increases the price level and decreases real output. 
C) It decreases the price level and increases real output. 
D) It increases the price level and increases real output. 
A) It decreases the price level and decreases real output. 
B) It increases the price level and decreases real output. 
C) It decreases the price level and increases real output. 
D) It increases the price level and increases real output.

Question 13

What is the natural level of output?

Accepted Answer

It is the level of output in the long ru

Question 14

What is the term for inflation that occurs due to an increase in aggregate demand?

Accepted Answer

A) demand-pull inflation 
B) stagflation 
C) cost-push inflation 
D) inflationary push 
A) demand-pull inflation 
B) stagflation 
C) cost-push inflation 
D) inflationary push

Question 15

In the Keynesian model,what impact will an increase in interest rates have on consumption?

Accepted Answer

A) It will increase current consumption and reduce current savings. 
B) It will reduce current consumption due to higher monthly payments on debt. 
C) It will increase current autonomous consumption as interest income rises. 
D) It will reduce future consumption due to higher interest payments. 
A) It will increase current consumption and reduce current savings. 
B) It will reduce current consumption due to higher monthly payments on debt. 
C) It will increase current autonomous consumption as interest income rises. 
D) It will reduce future consumption due to higher interest payments.

Question 16

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

Accepted Answer

A) Unemployment decreases and the price level increases. 
B) Unemployment increases and the price level increases. 
C) Unemployment increases and the price level decreases. 
D) Unemployment decreases and the price level decreases. 
A) Unemployment decreases and the price level increases. 
B) Unemployment increases and the price level increases. 
C) Unemployment increases and the price level decreases. 
D) Unemployment decreases and the price level decreases.

Question 17

If there is currently a contractionary gap,a fall in aggregate demand would make the contractionary gap larger.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that the saving rate in Canada increases,and firms use the increased saving to invest.What will happen to long-run aggregate supply?

Accepted Answer

A) The LRAS will not shift, but the economy moves along the LRAS curve to a lower price level. 
B) It will increase. 
C) It will decrease. 
D) The LRAS will not shift, but the economy moves along the LRAS curve to a higher price level. 
A) The LRAS will not shift, but the economy moves along the LRAS curve to a lower price level. 
B) It will increase. 
C) It will decrease. 
D) The LRAS will not shift, but the economy moves along the LRAS curve to a higher price level.

Question 19

An unusual series of rainstorms wash out the grain crop in the Prairies,severely curtailing the availability of corn,wheat,and soybeans.What effect would this have on aggregate supply?

Accepted Answer

A) It would shift the SRAS right, but not the LRAS. 
B) It would shift both the SRAS and the LRAS right. 
C) It would shift the SRAS left, but not the LRAS. 
D) It would shift both the SRAS and the LRAS left. 
A) It would shift the SRAS right, but not the LRAS. 
B) It would shift both the SRAS and the LRAS right. 
C) It would shift the SRAS left, but not the LRAS. 
D) It would shift both the SRAS and the LRAS left.

Question 20

The long-run aggregate supply curve is the relationship between the price level and the quantity of real GDP that is supplied once input prices have had time to fully adjust to that price level.

Accepted Answer

A) True 
 B)False

Stagflation could be caused solely by a shift in the aggregate demand curve.

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

Greater and more extensive government regulations of safety standards and environmental controls will have what effect on short-run and long-run aggregate supply?

Which of the following best describes the result of an increase in the price level in the long run?

What effect will the combination of a decrease in the capital stock and increasingly costly government regulations have on LRAS?

What happens to the price level and real output during the self-correction process after a fall in aggregate demand?

What will a sudden increase in the wages demanded by workers cause?

Which of the following would decrease SRAS?

The SRAS curve is vertical at the natural level of real output.

When the price level rises,what happens to real output in the short run and long run as a result?

How is the LRAS curve drawn?

What impact does cost-push inflation have on the price level and real output?

What is the natural level of output?

What is the term for inflation that occurs due to an increase in aggregate demand?

In the Keynesian model,what impact will an increase in interest rates have on consumption?

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

If there is currently a contractionary gap,a fall in aggregate demand would make the contractionary gap larger.

Suppose that the saving rate in Canada increases,and firms use the increased saving to invest.What will happen to long-run aggregate supply?

An unusual series of rainstorms wash out the grain crop in the Prairies,severely curtailing the availability of corn,wheat,and soybeans.What effect would this have on aggregate supply?

The long-run aggregate supply curve is the relationship between the price level and the quantity of real GDP that is supplied once input prices have had time to fully adjust to that price level.

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

Stagflation could be caused solely by a shift in the aggregate demand curve.

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

Greater and more extensive government regulations of safety standards and environmental controls will have what effect on short-run and long-run aggregate supply?

Which of the following best describes the result of an increase in the price level in the long run?

What effect will the combination of a decrease in the capital stock and increasingly costly government regulations have on LRAS?

What happens to the price level and real output during the self-correction process after a fall in aggregate demand?

What will a sudden increase in the wages demanded by workers cause?

Which of the following would decrease SRAS?

The SRAS curve is vertical at the natural level of real output.

When the price level rises,what happens to real output in the short run and long run as a result?

How is the LRAS curve drawn?

What impact does cost-push inflation have on the price level and real output?

What is the natural level of output?

What is the term for inflation that occurs due to an increase in aggregate demand?

In the Keynesian model,what impact will an increase in interest rates have on consumption?

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

If there is currently a contractionary gap,a fall in aggregate demand would make the contractionary gap larger.

Suppose that the saving rate in Canada increases,and firms use the increased saving to invest.What will happen to long-run aggregate supply?

An unusual series of rainstorms wash out the grain crop in the Prairies,severely curtailing the availability of corn,wheat,and soybeans.What effect would this have on aggregate supply?

The long-run aggregate supply curve is the relationship between the price level and the quantity of real GDP that is supplied once input prices have had time to fully adjust to that price level.

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