Question 1

The intertemporal substitution effect refers to substitution of

Accepted Answer

A)  goods for services. 
B)  goods and services for less expensive goods and services. 
C)  goods and services today for goods and services in the future. 
D)  goods and services produced domestically for goods and services produced in another country. 
A)  goods for services. 
B)  goods and services for less expensive goods and services. 
C)  goods and services today for goods and services in the future. 
D)  goods and services produced domestically for goods and services produced in another country.

Question 2

In the United States, of the following decades inflation was highest during the ________.,

Accepted Answer

A)  1970s 
B)  1990s 
C)  1960s 
D)  2000s 
A)  1970s 
B)  1990s 
C)  1960s 
D)  2000s

Question 3

The wealth effect points out that consumption decreases when people's real wealth decreases.

Accepted Answer

A) True 
 B)False

Question 4

The business cycle occurs because aggregate demand and aggregate supply change at uneven rates.

Accepted Answer

A) True 
 B)False

Question 5

In the macroeconomic short run

Accepted Answer

A)  actual real GDP may be less than or more than potential GDP. 
B)  the unemployment rate is zero. 
C)  by definition, the economy is always moving away from full employment. 
D)  actual real GDP always equals potential GDP. 
A)  actual real GDP may be less than or more than potential GDP. 
B)  the unemployment rate is zero. 
C)  by definition, the economy is always moving away from full employment. 
D)  actual real GDP always equals potential GDP.

Question 6

-In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate?

Accepted Answer

A)  E to I 
B)  E to F 
C)  E to J 
D)  E to H 
A)  E to I 
B)  E to F 
C)  E to J 
D)  E to H

Question 7

Which of the following is TRUE about the long-run aggregate supply curve?

Accepted Answer

A)  It is vertical at the level of potential GDP. 
B)  It shows the relationship between the price level and real GDP when the economy is at full employment. 
C)  It does not shift in response to temporary changes in aggregate demand. 
D)  All of the above are true. 
A)  It is vertical at the level of potential GDP. 
B)  It shows the relationship between the price level and real GDP when the economy is at full employment. 
C)  It does not shift in response to temporary changes in aggregate demand. 
D)  All of the above are true.

Question 8

-In the above figure, the economy initially is at point B. Then price level rises by 10. The wealth effect will help

Accepted Answer

A)  move the economy to point A. 
B)  move the economy to point C. 
C)  move the economy to point D. 
D)  keep the economy to point B. 
A)  move the economy to point A. 
B)  move the economy to point C. 
C)  move the economy to point D. 
D)  keep the economy to point B.

Question 9

-In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 100 and real GDP of $15.0 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 10

The aggregate demand curve

Accepted Answer

A)  shifts rightward when the price level increases and leftward when the price level falls. 
B)  shifts rightward when taxes are decreased. 
C)  shifts rightward when foreign incomes decrease and shifts leftward when foreign incomes increase. 
D)  does not shift, unlike market demand curves. 
A)  shifts rightward when the price level increases and leftward when the price level falls. 
B)  shifts rightward when taxes are decreased. 
C)  shifts rightward when foreign incomes decrease and shifts leftward when foreign incomes increase. 
D)  does not shift, unlike market demand curves.

Question 11

Which of the following does NOT shift the aggregate demand curve?

Accepted Answer

A)  a decrease in the quantity of money 
B)  an increase in investment 
C)  an increase in the price level 
D)  a decrease in taxes 
A)  a decrease in the quantity of money 
B)  an increase in investment 
C)  an increase in the price level 
D)  a decrease in taxes

Question 12

If the money wage rate increases, the short-run aggregate supply curve shifts rightward.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following does NOT shift the short-run aggregate supply curve?

Accepted Answer

A)  a change in the money wage rate 
B)  technological progress 
C)  a reduction in the price of a raw material 
D)  a change in the price level 
A)  a change in the money wage rate 
B)  technological progress 
C)  a reduction in the price of a raw material 
D)  a change in the price level

Question 14

The short-run aggregate supply curve

Accepted Answer

A)  is vertical. 
B)  has a negative slope. 
C)  has a positive slope. 
D)  is horizontal. 
A)  is vertical. 
B)  has a negative slope. 
C)  has a positive slope. 
D)  is horizontal.

Question 15

-The above figure depicts an economy

Accepted Answer

A)  with an inflationary gap. 
B)  with a recessionary gap. 
C)  producing at full employment. 
D)  None of the above answers is correct. 
A)  with an inflationary gap. 
B)  with a recessionary gap. 
C)  producing at full employment. 
D)  None of the above answers is correct.

Question 16

The Federal Reserve lowers interest rates. As a result, in the short run, real GDP ________ and the price level ________.

Accepted Answer

A)  increases; rises 
B)  increases; falls 
C)  decreases; rises 
D)  decreases; falls 
A)  increases; rises 
B)  increases; falls 
C)  decreases; rises 
D)  decreases; falls

Question 17

Which of the following increases aggregate demand?

Accepted Answer

A)  a decrease in taxes 
B)  a decrease in foreign income 
C)  a decrease in government expenditure 
D)  a rise in the interest rate 
A)  a decrease in taxes 
B)  a decrease in foreign income 
C)  a decrease in government expenditure 
D)  a rise in the interest rate

Question 18

Aggregate demand increases if the quantity of money ________.

Accepted Answer

A)  decreases or tax rates increase 
B)  or transfer payments decrease 
C)  remains constant or tax rates increase 
D)  increases or tax rates decrease 
A)  decreases or tax rates increase 
B)  or transfer payments decrease 
C)  remains constant or tax rates increase 
D)  increases or tax rates decrease

Question 19

A recessionary gap means that the level of real GDP at the short-run macroeconomic equilibrium

Accepted Answer

A)  is less than full-employment GDP. 
B)  equals full-employment GDP. 
C)  is more than full-employment GDP. 
D)  may be less than, more than, or the same as full-employment GDP depending on the level of potential GDP. 
A)  is less than full-employment GDP. 
B)  equals full-employment GDP. 
C)  is more than full-employment GDP. 
D)  may be less than, more than, or the same as full-employment GDP depending on the level of potential GDP.

Question 20

Full-employment equilibrium occurs when

Accepted Answer

A)  real GDP exceeds potential GDP. 
B)  real GDP equals potential GDP. 
C)  potential GDP exceeds real GDP. 
D)  None of the above answers are correct. 
A)  real GDP exceeds potential GDP. 
B)  real GDP equals potential GDP. 
C)  potential GDP exceeds real GDP. 
D)  None of the above answers are correct.

The intertemporal substitution effect refers to substitution of

In the United States, of the following decades inflation was highest during the ________.,

The wealth effect points out that consumption decreases when people's real wealth decreases.

The business cycle occurs because aggregate demand and aggregate supply change at uneven rates.

In the macroeconomic short run

-In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate?

Which of the following is TRUE about the long-run aggregate supply curve?

-In the above figure, the economy initially is at point B. Then price level rises by 10. The wealth effect will help

-In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 100 and real GDP of $15.0 trillion, then it must be the case that

The aggregate demand curve

Which of the following does NOT shift the aggregate demand curve?

If the money wage rate increases, the short-run aggregate supply curve shifts rightward.

Which of the following does NOT shift the short-run aggregate supply curve?

The short-run aggregate supply curve

-The above figure depicts an economy

The Federal Reserve lowers interest rates. As a result, in the short run, real GDP and the price level .

Which of the following increases aggregate demand?

Aggregate demand increases if the quantity of money ________.

A recessionary gap means that the level of real GDP at the short-run macroeconomic equilibrium

Full-employment equilibrium occurs when

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 10: Aggregate Supply and Aggregate Demand

The intertemporal substitution effect refers to substitution of

In the United States, of the following decades inflation was highest during the ________.,

The wealth effect points out that consumption decreases when people's real wealth decreases.

The business cycle occurs because aggregate demand and aggregate supply change at uneven rates.

In the macroeconomic short run

-In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate?

Which of the following is TRUE about the long-run aggregate supply curve?

-In the above figure, the economy initially is at point B. Then price level rises by 10. The wealth effect will help

-In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 100 and real GDP of $15.0 trillion, then it must be the case that

The aggregate demand curve

Which of the following does NOT shift the aggregate demand curve?

If the money wage rate increases, the short-run aggregate supply curve shifts rightward.

Which of the following does NOT shift the short-run aggregate supply curve?

The short-run aggregate supply curve

-The above figure depicts an economy

The Federal Reserve lowers interest rates. As a result, in the short run, real GDP ________ and the price level ________.

Which of the following increases aggregate demand?

Aggregate demand increases if the quantity of money ________.

A recessionary gap means that the level of real GDP at the short-run macroeconomic equilibrium

Full-employment equilibrium occurs when

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

The Federal Reserve lowers interest rates. As a result, in the short run, real GDP and the price level .