Question 1

In the long-run

Accepted Answer

A)  the aggregate supply curve is upward sloping. 
B)  real GDP is equal to potential GDP. 
C)  aggregate supply depends on the price level. 
D)  All of the above answers are correct. 
A)  the aggregate supply curve is upward sloping. 
B)  real GDP is equal to potential GDP. 
C)  aggregate supply depends on the price level. 
D)  All of the above answers are correct.

Question 2

The country of Mu has continuous strong economic growth and a steady price level.This situation is most likely the result of aggregate demand growing ________ aggregate supply.

Accepted Answer

A)  at the same pace as long-run 
B)  slower than long-run 
C)  slower than short-run 
D)  faster than long-run 
A)  at the same pace as long-run 
B)  slower than long-run 
C)  slower than short-run 
D)  faster than long-run

Question 3

-In the above figure,the economy is at point A when changes occur.If the new equilibrium has a price level of 120 and real GDP of $12.0 trillion,then it must be the case that

Accepted Answer

A)  aggregate demand has increased. 
B)  aggregate demand has decreased. 
C)  aggregate supply has decreased. 
D)  aggregate supply has increased. 
A)  aggregate demand has increased. 
B)  aggregate demand has decreased. 
C)  aggregate supply has decreased. 
D)  aggregate supply has increased.

Question 4

If taxes are increased,the AD curve

Accepted Answer

A)  is not affected because a change in taxes is a nominal change not real change. 
B)  shifts rightward and aggregate demand decreases. 
C)  shifts leftward and aggregate demand decreases. 
D)  does not shift but there is a movement down along the curve. 
A)  is not affected because a change in taxes is a nominal change not real change. 
B)  shifts rightward and aggregate demand decreases. 
C)  shifts leftward and aggregate demand decreases. 
D)  does not shift but there is a movement down along the curve.

Question 5

If the economy is in long run equilibrium and then aggregate demand increases,in the long run the increase in aggregate demand means that the

Accepted Answer

A)  price level will be higher but real GDP will be unaffected. 
B)  real GDP will be larger but the price level will be unaffected. 
C)  the price level will be higher and real GDP will be larger. 
D)  neither the price level nor real GDP will be unaffected. 
A)  price level will be higher but real GDP will be unaffected. 
B)  real GDP will be larger but the price level will be unaffected. 
C)  the price level will be higher and real GDP will be larger. 
D)  neither the price level nor real GDP will be unaffected.

Question 6

Which of the following statements correctly describes the policy stance of a macroeconomist?

Accepted Answer

A)  A monetarist believes that the quantity of money should be constantly changed in order to offset changes in aggregate demand. 
B)  A new classical macroeconomist believes that fiscal and monetary policy are required to maintain full employment. 
C)  A Keynesian would believes that if taxes are always kept low and the quantity of money is kept on a steady growth path, no policy actions will be needed to maintain full employment. 
D)  A classical macroeconomist believes that maintaining consistently low taxes will allow the economy to expand at an appropriate and rapid pace. 
A)  A monetarist believes that the quantity of money should be constantly changed in order to offset changes in aggregate demand. 
B)  A new classical macroeconomist believes that fiscal and monetary policy are required to maintain full employment. 
C)  A Keynesian would believes that if taxes are always kept low and the quantity of money is kept on a steady growth path, no policy actions will be needed to maintain full employment. 
D)  A classical macroeconomist believes that maintaining consistently low taxes will allow the economy to expand at an appropriate and rapid pace.

Question 7

A decrease in government transfer payments

Accepted Answer

A)  increases aggregate demand. 
B)  increases the aggregate quantity demanded. 
C)  decreases the aggregate quantity demanded. 
D)  decreases aggregate demand. 
A)  increases aggregate demand. 
B)  increases the aggregate quantity demanded. 
C)  decreases the aggregate quantity demanded. 
D)  decreases aggregate demand.

Question 8

A decrease in the money wage rate increases ________ and an increase in the full employment quantity of labor increases ________.

Accepted Answer

A)  the SAS and the LAS; only the SAS 
B)  the SAS and the LAS; only the LAS 
C)  only the SAS; the SAS and the LAS 
D)  only the LAS; the SAS and the LAS 
A)  the SAS and the LAS; only the SAS 
B)  the SAS and the LAS; only the LAS 
C)  only the SAS; the SAS and the LAS 
D)  only the LAS; the SAS and the LAS

Question 9

Give examples of factors that decrease aggregate demand.Which way does the aggregate demand curve shift?

Accepted Answer

Anything that decreases aggregate spendi

Question 10

If the expected future inflation rate decreases,then

Accepted Answer

A)  aggregate demand increases. 
B)  short-run aggregate supply increases. 
C)  aggregate demand decreases. 
D)  long-run aggregate supply decreases. 
A)  aggregate demand increases. 
B)  short-run aggregate supply increases. 
C)  aggregate demand decreases. 
D)  long-run aggregate supply decreases.

Question 11

A Keynesian economist believes that

Accepted Answer

A)  if the economy was left alone, it would rarely operate at full employment. 
B)  the economy is self-regulating and always at full employment. 
C)  the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
D)  the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic. 
A)  if the economy was left alone, it would rarely operate at full employment. 
B)  the economy is self-regulating and always at full employment. 
C)  the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. 
D)  the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic.

Question 12

Which of the following shifts the aggregate demand curve rightward?

Accepted Answer

A)  a decrease in the price level 
B)  a decrease in government expenditures 
C)  an increase in the quantity of money 
D)  a decrease in transfer payments 
A)  a decrease in the price level 
B)  a decrease in government expenditures 
C)  an increase in the quantity of money 
D)  a decrease in transfer payments

Question 13

The long-run aggregate supply curve is ________ because along it,as prices rise,the money wage rate ________.

Accepted Answer

A)  vertical; falls 
B)  vertical; rises 
C)  upward sloping; falls 
D)  upward sloping; stays constant 
A)  vertical; falls 
B)  vertical; rises 
C)  upward sloping; falls 
D)  upward sloping; stays constant

Question 14

The AS/AD model studies the relationship between

Accepted Answer

A)  the price level and unemployment. 
B)  the price level and real GDP. 
C)  unemployment and real GDP. 
D)  nominal GDP and inflation. 
A)  the price level and unemployment. 
B)  the price level and real GDP. 
C)  unemployment and real GDP. 
D)  nominal GDP and inflation.

Question 15

All of the following shift the LAS curve EXCEPT

Accepted Answer

A)  a change in the capital stock. 
B)  an increase in the money wage rate. 
C)  an increase in the stock of human capital. 
D)  technological progress. 
A)  a change in the capital stock. 
B)  an increase in the money wage rate. 
C)  an increase in the stock of human capital. 
D)  technological progress.

Question 16

Which of the following issues prominent in the presidential election of 2012 shifts the aggregate demand curve rightward?

Accepted Answer

A)  raising taxes on the rich 
B)  increasing Medicare, Medicaid, and Social Security payments 
C)  loosening immigration policies 
D)  allowing more oil drilling on Federal lands 
A)  raising taxes on the rich 
B)  increasing Medicare, Medicaid, and Social Security payments 
C)  loosening immigration policies 
D)  allowing more oil drilling on Federal lands

Question 17

The SAS curve shifts if there is a change in the price level.

Accepted Answer

A) True 
 B)False

Question 18

-In the above figure,which movement illustrates the impact of the price level and money wage rate falling at the same rate?

Accepted Answer

A)  E to H 
B)  E to K 
C)  E to J 
D)  E to G 
A)  E to H 
B)  E to K 
C)  E to J 
D)  E to G

Question 19

-In the above figure,the economy will be at full employment if the price level

Accepted Answer

A)  is 110. 
B)  is above 110. 
C)  is below 100. 
D)  All of the above are possible because the economy will be at full employment at any price level at, above, or below 110. 
A)  is 110. 
B)  is above 110. 
C)  is below 100. 
D)  All of the above are possible because the economy will be at full employment at any price level at, above, or below 110.

Question 20

-In the above figure,B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve.Technological advances mean the long-run aggregate supply curve and short-run aggregate supply curve

Accepted Answer

A)  remain B and E. 
B)  shift to A and D, respectively. 
C)  shift to C and F, respectively. 
D)  shift to C and remain E, respectively. 
A)  remain B and E. 
B)  shift to A and D, respectively. 
C)  shift to C and F, respectively. 
D)  shift to C and remain E, respectively.

In the long-run

The country of Mu has continuous strong economic growth and a steady price level.This situation is most likely the result of aggregate demand growing ________ aggregate supply.

-In the above figure,the economy is at point A when changes occur.If the new equilibrium has a price level of 120 and real GDP of $12.0 trillion,then it must be the case that

If taxes are increased,the AD curve

If the economy is in long run equilibrium and then aggregate demand increases,in the long run the increase in aggregate demand means that the

Which of the following statements correctly describes the policy stance of a macroeconomist?

A decrease in government transfer payments

A decrease in the money wage rate increases and an increase in the full employment quantity of labor increases .

Give examples of factors that decrease aggregate demand.Which way does the aggregate demand curve shift?

If the expected future inflation rate decreases,then

A Keynesian economist believes that

Which of the following shifts the aggregate demand curve rightward?

The long-run aggregate supply curve is because along it,as prices rise,the money wage rate .

The AS/AD model studies the relationship between

All of the following shift the LAS curve EXCEPT

Which of the following issues prominent in the presidential election of 2012 shifts the aggregate demand curve rightward?

The SAS curve shifts if there is a change in the price level.

-In the above figure,which movement illustrates the impact of the price level and money wage rate falling at the same rate?

-In the above figure,the economy will be at full employment if the price level

-In the above figure,B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve.Technological advances mean the long-run aggregate supply curve and short-run aggregate supply curve

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 10: Aggregate Supply and Aggregate Demand

In the long-run

The country of Mu has continuous strong economic growth and a steady price level.This situation is most likely the result of aggregate demand growing ________ aggregate supply.

-In the above figure,the economy is at point A when changes occur.If the new equilibrium has a price level of 120 and real GDP of $12.0 trillion,then it must be the case that

If taxes are increased,the AD curve

If the economy is in long run equilibrium and then aggregate demand increases,in the long run the increase in aggregate demand means that the

Which of the following statements correctly describes the policy stance of a macroeconomist?

A decrease in government transfer payments

A decrease in the money wage rate increases ________ and an increase in the full employment quantity of labor increases ________.

Give examples of factors that decrease aggregate demand.Which way does the aggregate demand curve shift?

If the expected future inflation rate decreases,then

A Keynesian economist believes that

Which of the following shifts the aggregate demand curve rightward?

The long-run aggregate supply curve is ________ because along it,as prices rise,the money wage rate ________.

The AS/AD model studies the relationship between

All of the following shift the LAS curve EXCEPT

Which of the following issues prominent in the presidential election of 2012 shifts the aggregate demand curve rightward?

The SAS curve shifts if there is a change in the price level.

-In the above figure,which movement illustrates the impact of the price level and money wage rate falling at the same rate?

-In the above figure,the economy will be at full employment if the price level

-In the above figure,B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve.Technological advances mean the long-run aggregate supply curve and short-run aggregate supply curve

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

A decrease in the money wage rate increases and an increase in the full employment quantity of labor increases .

The long-run aggregate supply curve is because along it,as prices rise,the money wage rate .