Question 1

Which of the following statements is TRUE?

Accepted Answer

A) The long-run aggregate supply curve is upward sloping. 
B) The long-run aggregate demand curve is upward sloping. 
C) The short-run aggregate supply curve is vertical. 
D) The long-run aggregate supply curve is vertical. 
A) The long-run aggregate supply curve is upward sloping. 
B) The long-run aggregate demand curve is upward sloping. 
C) The short-run aggregate supply curve is vertical. 
D) The long-run aggregate supply curve is vertical.

Question 2

The long-run aggregate supply curve of an economy corresponds to

Accepted Answer

A) a point inside the production possibilities curve. 
B) a point outside the production possibilities curve. 
C) a point on the production possibilities curve. 
D) none of the above: there is no relationship between the long-run aggregate supply curve and the production possibilities curve. 
A) a point inside the production possibilities curve. 
B) a point outside the production possibilities curve. 
C) a point on the production possibilities curve. 
D) none of the above: there is no relationship between the long-run aggregate supply curve and the production possibilities curve.

Question 3

The total of all planned expenditures in the entire economy is the definition of

Accepted Answer

A) aggregate supply. 
B) production possibilities curve. 
C) aggregate demand. 
D) net domestic product. 
A) aggregate supply. 
B) production possibilities curve. 
C) aggregate demand. 
D) net domestic product.

Question 4

For supply-side inflation to occur in the long run

Accepted Answer

A) the aggregate demand curve has to shift to the left. 
B) the aggregate demand curve has to shift to the right. 
C) the long-run aggregate supply curve has to shift to the right. 
D) the long-run aggregate supply curve has to shift to the left. 
A) the aggregate demand curve has to shift to the left. 
B) the aggregate demand curve has to shift to the right. 
C) the long-run aggregate supply curve has to shift to the right. 
D) the long-run aggregate supply curve has to shift to the left.

Question 5

The U. S. has experienced inflation every year since 1959 due to

Accepted Answer

A) a sustained decrease in aggregate demand. 
B) a sustained increase in aggregate demand accompanied by an even larger decrease in LRAS. 
C) a sustained decrease in aggregate supply. 
D) a sustained increase in aggregate supply accompanied by an even larger increase in aggregate demand. 
A) a sustained decrease in aggregate demand. 
B) a sustained increase in aggregate demand accompanied by an even larger decrease in LRAS. 
C) a sustained decrease in aggregate supply. 
D) a sustained increase in aggregate supply accompanied by an even larger increase in aggregate demand.

Question 6

What is measured on the horizontal axis on the aggregate demand graph?

Accepted Answer

A) nominal income 
B) real GDP per year 
C) the price level 
D) unemployment 
A) nominal income 
B) real GDP per year 
C) the price level 
D) unemployment

Question 7

Supply side inflation can be caused by

Accepted Answer

A) a continual increase in aggregate supply while aggregate demand remains unchanged. 
B) a continual decrease in aggregate supply while aggregate demand remains unchanged. 
C) a continual decrease in aggregate supply while aggregate demand has significant decreases. 
D) a continual increase in aggregate demand while aggregate supply remains unchanged. 
A) a continual increase in aggregate supply while aggregate demand remains unchanged. 
B) a continual decrease in aggregate supply while aggregate demand remains unchanged. 
C) a continual decrease in aggregate supply while aggregate demand has significant decreases. 
D) a continual increase in aggregate demand while aggregate supply remains unchanged.

Question 8

Suppose total planned expenditures equal $20 trillion when the value of the price level is 100. If the price level drops to 90, total planned real expenditures will equal

Accepted Answer

A) $20 billion. 
B) less than $20 trillion. 
C) more than $20 trillion. 
D) None of the above: Cannot be determined without additional information. 
A) $20 billion. 
B) less than $20 trillion. 
C) more than $20 trillion. 
D) None of the above: Cannot be determined without additional information.

Question 9

Aggregate demand is

Accepted Answer

A) the horizontal summation of all demand curves for a product. 
B) the sum of all planned expenditures for the economy. 
C) the total quantity of all goods sold in an economy in a year. 
D) the horizontal summation of all demand curves for state, local, and federal governments and business firms. 
A) the horizontal summation of all demand curves for a product. 
B) the sum of all planned expenditures for the economy. 
C) the total quantity of all goods sold in an economy in a year. 
D) the horizontal summation of all demand curves for state, local, and federal governments and business firms.

Question 10

Long-run aggregate supply curve corresponds to

Accepted Answer

A) real GDP when the economy is above full employment. 
B) real GDP when the economy is at full employment. 
C) the economy outside its production possibilities curve. 
D) the economy inside its production possibilities curve. 
A) real GDP when the economy is above full employment. 
B) real GDP when the economy is at full employment. 
C) the economy outside its production possibilities curve. 
D) the economy inside its production possibilities curve.

Question 11

An increase in aggregate demand is shown by

Accepted Answer

A) a rightward shift in the aggregate demand curve. 
B) a leftward shift in the aggregate demand curve. 
C) a movement up along the aggregate demand curve. 
D) the movement down along the aggregate demand curve. 
A) a rightward shift in the aggregate demand curve. 
B) a leftward shift in the aggregate demand curve. 
C) a movement up along the aggregate demand curve. 
D) the movement down along the aggregate demand curve.

Question 12

The aggregate supply curve cannot tell us

Accepted Answer

A) anything about the quantity demanded of all commodities and the price level. 
B) what the effect of changes in interest rates will be on real GDP. 
C) how the total dollar values of spending will ultimately be divided between output and prices. 
D) how changes in the price level affect quantity demanded of all commodities. 
A) anything about the quantity demanded of all commodities and the price level. 
B) what the effect of changes in interest rates will be on real GDP. 
C) how the total dollar values of spending will ultimately be divided between output and prices. 
D) how changes in the price level affect quantity demanded of all commodities.

Question 13

The long-run aggregate supply curve will shift to the left when

Accepted Answer

A) population decreases. 
B) the price level increases. 
C) technology improves. 
D) new sources of oil are discovered. 
A) population decreases. 
B) the price level increases. 
C) technology improves. 
D) new sources of oil are discovered.

Question 14

When talking about aggregate supply, it is necessary to

Accepted Answer

A) focus on the short run. 
B) focus on the long run. 
C) distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve. 
D) distinguish between the long-run aggregate supply curve and the long run aggregate demand curve when all adjustments to price level changes have been made. 
A) focus on the short run. 
B) focus on the long run. 
C) distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve. 
D) distinguish between the long-run aggregate supply curve and the long run aggregate demand curve when all adjustments to price level changes have been made.

Question 15

Aggregate supply

Accepted Answer

A) is the total amount of raw materials available in an economy. 
B) is the overall wealth within an economy. 
C) is the total amount of money circulating in an economy. 
D) is the total of all planned production in an economy. 
A) is the total amount of raw materials available in an economy. 
B) is the overall wealth within an economy. 
C) is the total amount of money circulating in an economy. 
D) is the total of all planned production in an economy.

Question 16

An assumption on the LRAS curve is

Accepted Answer

A) technology remains unchanged. 
B) an increase in the average price level occurs. 
C) the economy is operating to the right of the production possibilities curve. 
D) labor productivity is increasing. 
A) technology remains unchanged. 
B) an increase in the average price level occurs. 
C) the economy is operating to the right of the production possibilities curve. 
D) labor productivity is increasing.

Question 17

The long-run aggregate supply curve can be thought of as the

Accepted Answer

A) level of output that the nation is currently producing. 
B) full-employment level of real GDP. 
C) level of real GDP associated with a constant price level. 
D) level of output for which real GDP equals nominal GDP. 
A) level of output that the nation is currently producing. 
B) full-employment level of real GDP. 
C) level of real GDP associated with a constant price level. 
D) level of output for which real GDP equals nominal GDP.

Question 18

When total planned real expenditures change due to the changes in net exports, this is known as the

Accepted Answer

A) interest rate effect. 
B) real-balance effect. 
C) open economy effect. 
D) aggregate balances effect. 
A) interest rate effect. 
B) real-balance effect. 
C) open economy effect. 
D) aggregate balances effect.

Question 19

An indirect effect of an increase in the price level works through

Accepted Answer

A) people substituting out of domestic goods and into foreign goods as exchange rates rise. 
B) changes in trade balances as domestic goods become more expensive, causing interest rates to move in the opposite direction from the change in the exchange rate. 
C) interest rates as people save more as the higher prices make their money balances less attractive. 
D) interest rates as people borrow to maintain their money balances, bidding up interest rates and reducing total planned real expenditures. 
A) people substituting out of domestic goods and into foreign goods as exchange rates rise. 
B) changes in trade balances as domestic goods become more expensive, causing interest rates to move in the opposite direction from the change in the exchange rate. 
C) interest rates as people save more as the higher prices make their money balances less attractive. 
D) interest rates as people borrow to maintain their money balances, bidding up interest rates and reducing total planned real expenditures.

Question 20

The real-balance effect refers to

Accepted Answer

A) the economy's response to interest rate changes. 
B) the change in the value of cash balances due to price level changes. 
C) the change in net exports. 
D) the economy's ability to balance recession and expansion. 
A) the economy's response to interest rate changes. 
B) the change in the value of cash balances due to price level changes. 
C) the change in net exports. 
D) the economy's ability to balance recession and expansion.

Which of the following statements is TRUE?

The long-run aggregate supply curve of an economy corresponds to

The total of all planned expenditures in the entire economy is the definition of

For supply-side inflation to occur in the long run

The U. S. has experienced inflation every year since 1959 due to

What is measured on the horizontal axis on the aggregate demand graph?

Supply side inflation can be caused by

Suppose total planned expenditures equal $20 trillion when the value of the price level is 100. If the price level drops to 90, total planned real expenditures will equal

Aggregate demand is

Long-run aggregate supply curve corresponds to

An increase in aggregate demand is shown by

The aggregate supply curve cannot tell us

The long-run aggregate supply curve will shift to the left when

When talking about aggregate supply, it is necessary to

Aggregate supply

An assumption on the LRAS curve is

The long-run aggregate supply curve can be thought of as the

When total planned real expenditures change due to the changes in net exports, this is known as the

An indirect effect of an increase in the price level works through

The real-balance effect refers to

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 9: Real GDP and the Price Level in the Long Run

Which of the following statements is TRUE?

The long-run aggregate supply curve of an economy corresponds to

The total of all planned expenditures in the entire economy is the definition of

For supply-side inflation to occur in the long run

The U. S. has experienced inflation every year since 1959 due to

What is measured on the horizontal axis on the aggregate demand graph?

Supply side inflation can be caused by

Suppose total planned expenditures equal $20 trillion when the value of the price level is 100. If the price level drops to 90, total planned real expenditures will equal

Aggregate demand is

Long-run aggregate supply curve corresponds to

An increase in aggregate demand is shown by

The aggregate supply curve cannot tell us

The long-run aggregate supply curve will shift to the left when

When talking about aggregate supply, it is necessary to

Aggregate supply

An assumption on the LRAS curve is

The long-run aggregate supply curve can be thought of as the

When total planned real expenditures change due to the changes in net exports, this is known as the

An indirect effect of an increase in the price level works through

The real-balance effect refers to

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters