Question 1

If the price level rises,what will happen to the quantity of real GDP produced along the long-run aggregate supply curve?

Accepted Answer

A) It will increase. 
B) It will stay the same. 
C) It will usually increase, but not always. 
D) It will decrease. 
A) It will increase. 
B) It will stay the same. 
C) It will usually increase, but not always. 
D) It will decrease.

Question 2

When does cost-push inflation occur?

Accepted Answer

A) when the aggregate demand curve shifts rightward and aggregate supply is fixed 
B) when the short-run aggregate supply curve shifts leftward while aggregate demand is fixed 
C) when the short-run aggregate supply curve shifts rightward 
D) when the aggregate demand curve shifts leftward at a faster rate than short-run aggregate supply 
A) when the aggregate demand curve shifts rightward and aggregate supply is fixed 
B) when the short-run aggregate supply curve shifts leftward while aggregate demand is fixed 
C) when the short-run aggregate supply curve shifts rightward 
D) when the aggregate demand curve shifts leftward at a faster rate than short-run aggregate supply

Question 3

The quantity of real GDP supplied will decrease in both the short run and long run when the price level falls.

Accepted Answer

A) True 
 B)False

Question 4

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

Accepted Answer

A) True 
 B)False

Question 5

How can the long-run,or natural,level of real output be represented?

Accepted Answer

A) by a LRAS that is an upward-sloping line 
B) by a LRAS that is a downward-sloping line 
C) by a LRAS that is a horizontal line 
D) by a LRAS that is a vertical line 
A) by a LRAS that is an upward-sloping line 
B) by a LRAS that is a downward-sloping line 
C) by a LRAS that is a horizontal line 
D) by a LRAS that is a vertical line

Question 6

What impact will higher production costs have on short-run aggregate supply?

Accepted Answer

A) It will decrease, illustrated by a rightward shift in the SRAS curve. 
B) It will increase, illustrated by a leftward shift in the SRAS curve. 
C) It will decrease, illustrated by a leftward shift in the SRAS curve. 
D) It will increase, illustrated by a rightward shift in the SRAS curve. 
A) It will decrease, illustrated by a rightward shift in the SRAS curve. 
B) It will increase, illustrated by a leftward shift in the SRAS curve. 
C) It will decrease, illustrated by a leftward shift in the SRAS curve. 
D) It will increase, illustrated by a rightward shift in the SRAS curve.

Question 7

Suppose that personal income rises from $3000 to $4000 per month,and consumption rises from $2000 to $2600 per month.If taxes are 25 percent of income,what must marginal propensity to save be?

Accepted Answer

A) 0.10 
B) 0.20 
C) 0.30 
D) 0.40 
A) 0.10 
B) 0.20 
C) 0.30 
D) 0.40

Question 8

When there is an inflationary gap in the economy,what is occurring to real output in relation to the natural level of output?

Accepted Answer

A) Real output exceeds the natural level of output. 
B) Real output is equal to the natural level of output. 
C) Real output may exceed or may be less than the natural level of output. 
D) Real output is less than the natural level of output. 
A) Real output exceeds the natural level of output. 
B) Real output is equal to the natural level of output. 
C) Real output may exceed or may be less than the natural level of output. 
D) Real output is less than the natural level of output.

Question 9

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

Accepted Answer

A) It will not increase real output in either the short run or the long run. 
B) It will increase real output in both the short run and long run. 
C) It will increase real output only in the short run. 
D) It will increase real output only in the long run. 
A) It will not increase real output in either the short run or the long run. 
B) It will increase real output in both the short run and long run. 
C) It will increase real output only in the short run. 
D) It will increase real output only in the long run.

Question 10

The aggregate supply curves show how much a nation's businesses are willing and able to produce at each price level.

Accepted Answer

A) True 
 B)False

Question 11

What could a recession result from?

Accepted Answer

A) an increase in long-run aggregate supply 
B) a decrease in aggregate demand 
C) an increase in short-run aggregate supply 
D) an increase in aggregate demand 
A) an increase in long-run aggregate supply 
B) a decrease in aggregate demand 
C) an increase in short-run aggregate supply 
D) an increase in aggregate demand

Question 12

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

If the price level rises,what will happen to the quantity of real GDP produced along the long-run aggregate supply curve?

When does cost-push inflation occur?

The quantity of real GDP supplied will decrease in both the short run and long run when the price level falls.

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

How can the long-run,or natural,level of real output be represented?

What impact will higher production costs have on short-run aggregate supply?

Suppose that personal income rises from $3000 to $4000 per month,and consumption rises from $2000 to $2600 per month.If taxes are 25 percent of income,what must marginal propensity to save be?

When there is an inflationary gap in the economy,what is occurring to real output in relation to the natural level of output?

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

The aggregate supply curves show how much a nation's businesses are willing and able to produce at each price level.

What could a recession result from?

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

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 the price level rises,what will happen to the quantity of real GDP produced along the long-run aggregate supply curve?

When does cost-push inflation occur?

The quantity of real GDP supplied will decrease in both the short run and long run when the price level falls.

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

How can the long-run,or natural,level of real output be represented?

What impact will higher production costs have on short-run aggregate supply?

Suppose that personal income rises from $3000 to $4000 per month,and consumption rises from $2000 to $2600 per month.If taxes are 25 percent of income,what must marginal propensity to save be?

When there is an inflationary gap in the economy,what is occurring to real output in relation to the natural level of output?

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

The aggregate supply curves show how much a nation's businesses are willing and able to produce at each price level.

What could a recession result from?

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

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