Question 1

In the Keynesian model,when does equilibrium occur?

Accepted Answer

A) when aggregate demand equals income 
B) when aggregate expenditure equals aggregate supply 
C) when aggregate expenditure equals aggregate demand 
D) when aggregate expenditure equals income 
A) when aggregate demand equals income 
B) when aggregate expenditure equals aggregate supply 
C) when aggregate expenditure equals aggregate demand 
D) when aggregate expenditure equals income

Question 2

In the Keynesian model,what is the primary determinant of consumption spending?

Accepted Answer

A) personal income 
B) real wealth 
C) disposable income 
D) household debt 
A) personal income 
B) real wealth 
C) disposable income 
D) household debt

Question 3

Which of the following change in conditions could result in increased productivity?

Accepted Answer

A) a larger workforce 
B) new and improved technology 
C) higher wage rates 
D) fewer machines 
A) a larger workforce 
B) new and improved technology 
C) higher wage rates 
D) fewer machines

Question 4

Figure 9-3
  
-Refer to Figure 9-3.What might be one of the reasons that aggregate demand has shifted from AD₀ to AD₁?

Accepted Answer

A) Consumers have lost faith in the economy, and as a result have begun buying fewer goods. 
B) Governments have decreased tax rates. 
C) Consumers' belief in the economy has increased, and as a result they have begun buying more goods. 
D) Investors have become more optimistic about their profit prospects and therefore output and prices are higher. 
A) Consumers have lost faith in the economy, and as a result have begun buying fewer goods. 
B) Governments have decreased tax rates. 
C) Consumers' belief in the economy has increased, and as a result they have begun buying more goods. 
D) Investors have become more optimistic about their profit prospects and therefore output and prices are higher.

Question 5

When referring to the aggregate supply curve,what is the short run?

Accepted Answer

A) a time period in which output prices can change in response to supply and demand, but in which all input prices have not yet been able to completely adjust 
B) a time period in which neither the prices of output nor the prices of inputs are able to change 
C) any time period of less than a year 
D) a time period in which the prices of output cannot change, but in which the prices of inputs have time to adjust 
A) a time period in which output prices can change in response to supply and demand, but in which all input prices have not yet been able to completely adjust 
B) a time period in which neither the prices of output nor the prices of inputs are able to change 
C) any time period of less than a year 
D) a time period in which the prices of output cannot change, but in which the prices of inputs have time to adjust

Question 6

When the post-World War II "baby boom" babies grew to maturity and entered the labour force about 20 years after birth,what impact did this have on the SRAS curve?

Accepted Answer

A) It resulted in a movement downwards along the SRAS curve. 
B) It shifted the SRAS curve to the right. 
C) It shifted the SRAS curve to the left. 
D) It resulted in a movement upwards along the SRAS curve. 
A) It resulted in a movement downwards along the SRAS curve. 
B) It shifted the SRAS curve to the right. 
C) It shifted the SRAS curve to the left. 
D) It resulted in a movement upwards along the SRAS curve.

Question 7

Which of the following statements about stagflation is the most accurate?

Accepted Answer

A) It is believed to be caused by a leftward shift in the short-run aggregate supply curve. 
B) It is believed to be caused by a period of rising prices and higher economic growth. 
C) It is characterized by deflation and an expansionary gap. 
D) It is characterized by a period of higher economic growth and lower prices. 
A) It is believed to be caused by a leftward shift in the short-run aggregate supply curve. 
B) It is believed to be caused by a period of rising prices and higher economic growth. 
C) It is characterized by deflation and an expansionary gap. 
D) It is characterized by a period of higher economic growth and lower prices.

Question 8

A recent scientific study has concluded that the spotted owl is an endangered species,and it is protected by the Species at Risk Act.To protect the owl,logging operations throughout parts of southern British Columbia have been curtailed.What effect would this have on short-run aggregate supply in Canada?

Accepted Answer

A) It would shift right (an increase in short-run aggregate supply). 
B) It would shift left (a decrease in short-run aggregate supply). 
C) It would shift right (a decrease in short-run aggregate supply). 
D) It would shift left (an increase in short-run aggregate supply). 
A) It would shift right (an increase in short-run aggregate supply). 
B) It would shift left (a decrease in short-run aggregate supply). 
C) It would shift right (a decrease in short-run aggregate supply). 
D) It would shift left (an increase in short-run aggregate supply).

Question 9

When there is a temporary sharp reduction in the price of oil,which curves will shift right?

Accepted Answer

A) SRAS 
B) both SRAS and LRAS 
C) neither SRAS nor LRAS 
D) LRAS 
A) SRAS 
B) both SRAS and LRAS 
C) neither SRAS nor LRAS 
D) LRAS

Question 10

What could a reduction in LRAS due to a reduction in the working-age population in a country potentially be prevented or offset by?

Accepted Answer

A) decreasing capital investment 
B) increasing business taxes 
C) taking young workers out of school and putting them immediately to work 
D) increasing the training and education levels of the workforce 
A) decreasing capital investment 
B) increasing business taxes 
C) taking young workers out of school and putting them immediately to work 
D) increasing the training and education levels of the workforce

Question 11

What could a leftward shift of the short-run aggregate supply curve reflect?

Accepted Answer

A) an increase in the capital stock 
B) lower expected input prices 
C) a change in technology that increases output per unit of input 
D) higher expected input prices 
A) an increase in the capital stock 
B) lower expected input prices 
C) a change in technology that increases output per unit of input 
D) higher expected input prices

Question 12

How will firms react to rising output price levels? What reactions can they expect from their employees and suppliers over time?

Accepted Answer

Firms have an incentive to increase real

Question 13

If labour productivity increases by 15 percent,under which of the following circumstances will a change in wages lead to a decrease in short-run aggregate supply?

Accepted Answer

A) if wages increase by 20 percent 
B) if wages increase by 15 percent 
C) if wages increase by 10 percent 
D) if wages are stable 
A) if wages increase by 20 percent 
B) if wages increase by 15 percent 
C) if wages increase by 10 percent 
D) if wages are stable

Question 14

Starting from long-run equilibrium,what impact will a decrease in aggregate demand have?

Accepted Answer

A) It will shift the LRAS curve to the right. 
B) It will result in a higher price level. 
C) It will decrease unemployment. 
D) It will cause a recessionary gap. 
A) It will shift the LRAS curve to the right. 
B) It will result in a higher price level. 
C) It will decrease unemployment. 
D) It will cause a recessionary gap.

Question 15

In the short run,what will an increase in the price level result in?

Accepted Answer

A) an increase in the natural rate of output 
B) an increase in the profit margins of many producers 
C) an increase in output prices relative to input prices 
D) an increase in unemployment rates 
A) an increase in the natural rate of output 
B) an increase in the profit margins of many producers 
C) an increase in output prices relative to input prices 
D) an increase in unemployment rates

Question 16

What would happen to the short-run and long-run aggregate supply curves if the capital stock grew and available supplies of natural resources expanded over the same period of time?

Accepted Answer

Both short-run and long-run ag

Question 17

If input prices adjusted just as quickly as output prices,the profit effect leading to an increase in real GDP supplied would disappear.

Accepted Answer

A) True 
 B)False

Question 18

Any permanent change in the quantity of any factor of production available-capital,technology,land,or labour-can cause a shift in both the long-run and short-run aggregate supply curves.

Accepted Answer

A) True 
 B)False

Question 19

What happens to the price level and real output during the market adjustment from an inflationary gap?

Accepted Answer

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

Question 20

If the prices of inputs rise,what happens to short-run aggregate supply?

Accepted Answer

A) It shifts right. 
B) It doesn't shift, but the economy moves down along the SRAS curve. 
C) It doesn't shift, but the economy moves up along the SRAS curve. 
D) It shifts left. 
A) It shifts right. 
B) It doesn't shift, but the economy moves down along the SRAS curve. 
C) It doesn't shift, but the economy moves up along the SRAS curve. 
D) It shifts left.

In the Keynesian model,when does equilibrium occur?

In the Keynesian model,what is the primary determinant of consumption spending?

Which of the following change in conditions could result in increased productivity?

Figure 9-3 -Refer to Figure 9-3.What might be one of the reasons that aggregate demand has shifted from AD₀ to AD₁?

When referring to the aggregate supply curve,what is the short run?

When the post-World War II "baby boom" babies grew to maturity and entered the labour force about 20 years after birth,what impact did this have on the SRAS curve?

Which of the following statements about stagflation is the most accurate?

When there is a temporary sharp reduction in the price of oil,which curves will shift right?

What could a reduction in LRAS due to a reduction in the working-age population in a country potentially be prevented or offset by?

What could a leftward shift of the short-run aggregate supply curve reflect?

How will firms react to rising output price levels? What reactions can they expect from their employees and suppliers over time?

If labour productivity increases by 15 percent,under which of the following circumstances will a change in wages lead to a decrease in short-run aggregate supply?

Starting from long-run equilibrium,what impact will a decrease in aggregate demand have?

In the short run,what will an increase in the price level result in?

What would happen to the short-run and long-run aggregate supply curves if the capital stock grew and available supplies of natural resources expanded over the same period of time?

If input prices adjusted just as quickly as output prices,the profit effect leading to an increase in real GDP supplied would disappear.

Any permanent change in the quantity of any factor of production available-capital,technology,land,or labour-can cause a shift in both the long-run and short-run aggregate supply curves.

What happens to the price level and real output during the market adjustment from an inflationary gap?

If the prices of inputs rise,what happens to short-run aggregate supply?

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

In the Keynesian model,when does equilibrium occur?

In the Keynesian model,what is the primary determinant of consumption spending?

Which of the following change in conditions could result in increased productivity?

Figure 9-3 -Refer to Figure 9-3.What might be one of the reasons that aggregate demand has shifted from AD₀ to AD₁?

When referring to the aggregate supply curve,what is the short run?

When the post-World War II "baby boom" babies grew to maturity and entered the labour force about 20 years after birth,what impact did this have on the SRAS curve?

Which of the following statements about stagflation is the most accurate?

When there is a temporary sharp reduction in the price of oil,which curves will shift right?

What could a reduction in LRAS due to a reduction in the working-age population in a country potentially be prevented or offset by?

What could a leftward shift of the short-run aggregate supply curve reflect?

How will firms react to rising output price levels? What reactions can they expect from their employees and suppliers over time?

If labour productivity increases by 15 percent,under which of the following circumstances will a change in wages lead to a decrease in short-run aggregate supply?

Starting from long-run equilibrium,what impact will a decrease in aggregate demand have?

In the short run,what will an increase in the price level result in?

What would happen to the short-run and long-run aggregate supply curves if the capital stock grew and available supplies of natural resources expanded over the same period of time?

If input prices adjusted just as quickly as output prices,the profit effect leading to an increase in real GDP supplied would disappear.

Any permanent change in the quantity of any factor of production available-capital,technology,land,or labour-can cause a shift in both the long-run and short-run aggregate supply curves.

What happens to the price level and real output during the market adjustment from an inflationary gap?

If the prices of inputs rise,what happens to short-run aggregate supply?

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