Question 1

An increase in the money supply will cause which of the following to occur?

Accepted Answer

A) a rightward shift of the aggregate supply curve 
B) a leftward shift of the aggregate demand curve 
C) a leftward shift of the aggregate supply curve 
D) a rightward shift of the aggregate demand curve 
A) a rightward shift of the aggregate supply curve 
B) a leftward shift of the aggregate demand curve 
C) a leftward shift of the aggregate supply curve 
D) a rightward shift of the aggregate demand curve

Question 2

What will be the result in a growing economy if increases in aggregate demand outpace rightward shifts of the long-run aggregate supply curve?

Accepted Answer

A) secular deflation 
B) inflation accompanied by declines in real GDP 
C) inflation accompanied by increases in real GDP 
D) a decline in consumption spending 
A) secular deflation 
B) inflation accompanied by declines in real GDP 
C) inflation accompanied by increases in real GDP 
D) a decline in consumption spending

Question 3

Which one of the following is NOT a component of aggregate demand?

Accepted Answer

A) merchandise inventories 
B) consumption spending 
C) investment expenditures 
D) government purchases 
A) merchandise inventories 
B) consumption spending 
C) investment expenditures 
D) government purchases

Question 4

-Refer to the above figures. Which panel(s)represent economic growth?

Accepted Answer

A) Panel A only 
B) Panels A and C only 
C) Panel D only 
D) Panels B and D only 
A) Panel A only 
B) Panels A and C only 
C) Panel D only 
D) Panels B and D only

Question 5

The position of the long-run aggregate supply curve is determined by

Accepted Answer

A) the long-run aggregate demand curve. 
B) the production possibilities curve. 
C) the open economy effect. 
D) the interest rate effect. 
A) the long-run aggregate demand curve. 
B) the production possibilities curve. 
C) the open economy effect. 
D) the interest rate effect.

Question 6

Long-run aggregate supply is

Accepted Answer

A) the possible combinations of real GDP and inputs after full adjustments have been made. 
B) the extraction of natural resources. 
C) the real production of goods and services after full adjustments have been made. 
D) all of the physical and human resources in the economy. 
A) the possible combinations of real GDP and inputs after full adjustments have been made. 
B) the extraction of natural resources. 
C) the real production of goods and services after full adjustments have been made. 
D) all of the physical and human resources in the economy.

Question 7

Which of the following factors could cause the economy to experience supply-side inflation?

Accepted Answer

A) increased security about jobs and future income 
B) government laws which say that the average work week must be reduced by one hour every year 
C) Increase the number of immigrants allowed into the country. 
D) Develop new technology to increase productivity. 
A) increased security about jobs and future income 
B) government laws which say that the average work week must be reduced by one hour every year 
C) Increase the number of immigrants allowed into the country. 
D) Develop new technology to increase productivity.

Question 8

The aggregate demand curve differs from an individual demand curve in that

Accepted Answer

A) the aggregate demand curve may not slope down while an individual demand curve must always slope down. 
B) the aggregate demand curve looks at the entire circular flow of income and product, while an individual demand curve looks at one good, holding everything else constant. 
C) prices change along an individual demand curve but prices are held constant along an aggregate demand curve. 
D) the aggregate demand curve slopes up while an individual demand curve slopes down. 
A) the aggregate demand curve may not slope down while an individual demand curve must always slope down. 
B) the aggregate demand curve looks at the entire circular flow of income and product, while an individual demand curve looks at one good, holding everything else constant. 
C) prices change along an individual demand curve but prices are held constant along an aggregate demand curve. 
D) the aggregate demand curve slopes up while an individual demand curve slopes down.

Question 9

What would happen in an economy if total planned production exceeded total planned real expenditures?

Accepted Answer

A) Inventories would be depleted, and firms would tend to lower prices. 
B) Inventories would accumulate, and firms would tend to lower prices. 
C) Inventories would be depleted, and firms would tend to raise prices. 
D) Inventories would accumulate, and firms would tend to raise prices. 
A) Inventories would be depleted, and firms would tend to lower prices. 
B) Inventories would accumulate, and firms would tend to lower prices. 
C) Inventories would be depleted, and firms would tend to raise prices. 
D) Inventories would accumulate, and firms would tend to raise prices.

Question 10

Which of the following does NOT affect the long-run aggregate supply curve?

Accepted Answer

A) technology 
B) production possibilities curve 
C) endowments of resources 
D) price level 
A) technology 
B) production possibilities curve 
C) endowments of resources 
D) price level

Question 11

The slope of the long-run aggregate supply curve is

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) undefined. 
A) positive. 
B) negative. 
C) zero. 
D) undefined.

Question 12

We draw the long-run aggregate supply curve as a vertical line to reflect the fact that

Accepted Answer

A) the productive capacity of the economy never changes after full adjustment has occurred. 
B) changes in the price level do not alter the level of long-run real GDP after full adjustment has occurred. 
C) technology and resource endowments do not affect long-run real GDP after full adjustment has occurred. 
D) an accurate depiction of the production possibilities curve is vertical after full adjustment has occurred. 
A) the productive capacity of the economy never changes after full adjustment has occurred. 
B) changes in the price level do not alter the level of long-run real GDP after full adjustment has occurred. 
C) technology and resource endowments do not affect long-run real GDP after full adjustment has occurred. 
D) an accurate depiction of the production possibilities curve is vertical after full adjustment has occurred.

Question 13

A reduction the amount of oil (a resource)will tend to cause which of the following?

Accepted Answer

A) a reduction in output and a reduction in the price level 
B) a reduction in output with no change in the price level 
C) a reduction in output and an increase in the price level 
D) an increase in the price level and no change in output if accompanied by an increase in the money supply 
A) a reduction in output and a reduction in the price level 
B) a reduction in output with no change in the price level 
C) a reduction in output and an increase in the price level 
D) an increase in the price level and no change in output if accompanied by an increase in the money supply

Question 14

The total of all planned production for the economy is

Accepted Answer

A) aggregate supply. 
B) aggregate demand. 
C) endowments. 
D) real-balance effect. 
A) aggregate supply. 
B) aggregate demand. 
C) endowments. 
D) real-balance effect.

Question 15

The aggregate demand curve is

Accepted Answer

A) downward sloping. 
B) vertical. 
C) horizontal. 
D) U shaped. 
A) downward sloping. 
B) vertical. 
C) horizontal. 
D) U shaped.

Question 16

Economic growth will be associated with a constant price level when

Accepted Answer

A) the increase in aggregate demand exactly equals the increase in long-run aggregate supply. 
B) the increase in aggregate demand is more than the increase in long-run aggregate supply. 
C) the increase in aggregate demand is less than the increase in long-run aggregate supply. 
D) the increase in aggregate demand is accompanied by a reduction in short-run aggregate supply. 
A) the increase in aggregate demand exactly equals the increase in long-run aggregate supply. 
B) the increase in aggregate demand is more than the increase in long-run aggregate supply. 
C) the increase in aggregate demand is less than the increase in long-run aggregate supply. 
D) the increase in aggregate demand is accompanied by a reduction in short-run aggregate supply.

Question 17

An aggregate demand curve

Accepted Answer

A) shifts to the right when a non-price level change increases total planned real expenditures. 
B) shifts to the right when a non-price level change decreases total planned real expenditures. 
C) shifts to the right when the price level falls. 
D) does not shift to the right or to the left. 
A) shifts to the right when a non-price level change increases total planned real expenditures. 
B) shifts to the right when a non-price level change decreases total planned real expenditures. 
C) shifts to the right when the price level falls. 
D) does not shift to the right or to the left.

Question 18

When prices increase, the real interest rate

Accepted Answer

A) will increase and total planned spending on goods and services will increase. 
B) will increase and total planned spending on goods and services will decrease. 
C) will decrease and total planned spending on goods and services will decrease. 
D) will not be affected. 
A) will increase and total planned spending on goods and services will increase. 
B) will increase and total planned spending on goods and services will decrease. 
C) will decrease and total planned spending on goods and services will decrease. 
D) will not be affected.

Question 19

Total planned expenditures for domestically produced goods and services consist of

Accepted Answer

A) government spending, business spending, and import spending only. 
B) consumer spending, business spending, and net export spending only 
C) consumer spending, business spending, government spending, and net export spending. 
D) consumer spending, business spending, government spending, and import spending. 
A) government spending, business spending, and import spending only. 
B) consumer spending, business spending, and net export spending only 
C) consumer spending, business spending, government spending, and net export spending. 
D) consumer spending, business spending, government spending, and import spending.

Question 20

The aggregate demand curve is

Accepted Answer

A) horizontal if full employment exists in the economy. 
B) vertical if full employment exists in the economy. 
C) downward sloping because of the real-balance, interest rate, and open economy effects. 
D) downward sloping because more goods are produced as per unit cost of producing each item falls. 
A) horizontal if full employment exists in the economy. 
B) vertical if full employment exists in the economy. 
C) downward sloping because of the real-balance, interest rate, and open economy effects. 
D) downward sloping because more goods are produced as per unit cost of producing each item falls.

An increase in the money supply will cause which of the following to occur?

What will be the result in a growing economy if increases in aggregate demand outpace rightward shifts of the long-run aggregate supply curve?

Which one of the following is NOT a component of aggregate demand?

-Refer to the above figures. Which panel(s)represent economic growth?

The position of the long-run aggregate supply curve is determined by

Long-run aggregate supply is

Which of the following factors could cause the economy to experience supply-side inflation?

The aggregate demand curve differs from an individual demand curve in that

What would happen in an economy if total planned production exceeded total planned real expenditures?

Which of the following does NOT affect the long-run aggregate supply curve?

The slope of the long-run aggregate supply curve is

We draw the long-run aggregate supply curve as a vertical line to reflect the fact that

A reduction the amount of oil (a resource)will tend to cause which of the following?

The total of all planned production for the economy is

The aggregate demand curve is

Economic growth will be associated with a constant price level when

An aggregate demand curve

When prices increase, the real interest rate

Total planned expenditures for domestically produced goods and services consist of

The aggregate demand curve is

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

An increase in the money supply will cause which of the following to occur?

What will be the result in a growing economy if increases in aggregate demand outpace rightward shifts of the long-run aggregate supply curve?

Which one of the following is NOT a component of aggregate demand?

-Refer to the above figures. Which panel(s)represent economic growth?

The position of the long-run aggregate supply curve is determined by

Long-run aggregate supply is

Which of the following factors could cause the economy to experience supply-side inflation?

The aggregate demand curve differs from an individual demand curve in that

What would happen in an economy if total planned production exceeded total planned real expenditures?

Which of the following does NOT affect the long-run aggregate supply curve?

The slope of the long-run aggregate supply curve is

We draw the long-run aggregate supply curve as a vertical line to reflect the fact that

A reduction the amount of oil (a resource)will tend to cause which of the following?

The total of all planned production for the economy is

The aggregate demand curve is

Economic growth will be associated with a constant price level when

An aggregate demand curve

When prices increase, the real interest rate

Total planned expenditures for domestically produced goods and services consist of

The aggregate demand curve is

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