Question 1

Suppose the price level, the money wage, and the price of all other resources rise by 10 percent. This set of changes leads to

Accepted Answer

A)  an upward movement along the LAS curve. 
B)  a downward movement along the LAS curve. 
C)  an upward movement along the SAS curve. 
D)  a leftward shift of the LAS curve. 
A)  an upward movement along the LAS curve. 
B)  a downward movement along the LAS curve. 
C)  an upward movement along the SAS curve. 
D)  a leftward shift of the LAS curve.

Question 2

If you have $1,000 of money in the bank and the price level rises by 5 percent, your

Accepted Answer

A)  money is worth more in terms of what it can purchase. 
B)  money is worth less in terms of what it can purchase. 
C)  money is worth the same in terms of what it can purchase. 
D)  purchasing power has increased. 
A)  money is worth more in terms of what it can purchase. 
B)  money is worth less in terms of what it can purchase. 
C)  money is worth the same in terms of what it can purchase. 
D)  purchasing power has increased.

Question 3

Which of the following events shifts the aggregate demand curve leftward?

Accepted Answer

A)  an increase in consumption expenditures 
B)  a decrease in taxes 
C)  a decrease in government expenditures on goods and services 
D)  an increase in net exports of goods and services 
A)  an increase in consumption expenditures 
B)  a decrease in taxes 
C)  a decrease in government expenditures on goods and services 
D)  an increase in net exports of goods and services

Question 4

For movements along the short-run aggregate supply curve

Accepted Answer

A)  the money wage rate is constant. 
B)  the real wage rate changes. 
C)  potential GDP remains constant. 
D)  All of the above are correct. 
A)  the money wage rate is constant. 
B)  the real wage rate changes. 
C)  potential GDP remains constant. 
D)  All of the above are correct.

Question 5

People expect that the El Niño effect will cause drought in Australia in coming years. If most Australian firms expect their profits will fall during the next five years, Australia's ________ this year.

Accepted Answer

A)  aggregate demand will increase 
B)  long-run aggregate supply will increase 
C)  aggregate demand will decrease 
D)  short-run aggregate supply will increase 
A)  aggregate demand will increase 
B)  long-run aggregate supply will increase 
C)  aggregate demand will decrease 
D)  short-run aggregate supply will increase

Question 6

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward raises the price level and increases real GDP.

Accepted Answer

A) True 
 B)False

Question 7

What is the effect on the aggregate demand curve from an increase in the price level? In particular, does the aggregate demand curve shift leftward or rightward?

Accepted Answer

When the price level increases, there is

Question 8

Which of the following can be said about economic growth?
I.Economic growth is the result of increases in long-run aggregate supply.
II.Economic growth is the result of increases in aggregate demand.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  neither I or II 
A)  I only 
B)  II only 
C)  I and II 
D)  neither I or II

Question 9

The short-run aggregate supply curve is upward sloping because

Accepted Answer

A)  a lower price level creates a wealth effect. 
B)  lower taxes motivate people to work more. 
C)  money wage rates do not immediately change when the price level changes. 
D)  most business firms operate with long-term contracts for output but not labor. 
A)  a lower price level creates a wealth effect. 
B)  lower taxes motivate people to work more. 
C)  money wage rates do not immediately change when the price level changes. 
D)  most business firms operate with long-term contracts for output but not labor.

Question 10

-The above figure depicts an economy with a short-run equilibrium

Accepted Answer

A)  at full employment. 
B)  below full employment. 
C)  at higher than full employment. 
D)  at zero unemployment 
A)  at full employment. 
B)  below full employment. 
C)  at higher than full employment. 
D)  at zero unemployment

Question 11

Which of the following shifts both the short-run aggregate supply curve and the long-run aggregate supply curve?
I.changes in the size of the labor force
II.changes in the money wage rate
III.changes in the quantity of capital

Accepted Answer

A)  II only 
B)  both I and II 
C)  both I and III 
D)  I, II and III 
A)  II only 
B)  both I and II 
C)  both I and III 
D)  I, II and III

Question 12

The Great Depression, in which real GDP fell and unemployment rose, can be characterized as a ________.

Accepted Answer

A)  inflationary gap 
B)  long-run equilibrium 
C)  recessionary gap 
D)  full-employment equilibrium 
A)  inflationary gap 
B)  long-run equilibrium 
C)  recessionary gap 
D)  full-employment equilibrium

Question 13

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

Accepted Answer

A)  an increase in the price level 
B)  an increase in technology 
C)  an increase in the quantity of capital 
D)  an increase in the money wage rate 
A)  an increase in the price level 
B)  an increase in technology 
C)  an increase in the quantity of capital 
D)  an increase in the money wage rate

Question 14

-In the figure above, potential GDP equals

Accepted Answer

A)  $15.5 trillion. 
B)  $16.0 trillion. 
C)  $16.5 trillion. 
D)  None of the above answers is correct. 
A)  $15.5 trillion. 
B)  $16.0 trillion. 
C)  $16.5 trillion. 
D)  None of the above answers is correct.

Question 15

The aggregate demand curve

Accepted Answer

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

Question 16

The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

Accepted Answer

A)  greater the quantity of real GDP demanded. 
B)  smaller the quantity of real GDP demanded. 
C)  larger consumption expenditure. 
D)  None of the above answers is correct. 
A)  greater the quantity of real GDP demanded. 
B)  smaller the quantity of real GDP demanded. 
C)  larger consumption expenditure. 
D)  None of the above answers is correct.

Question 17

-In the above figure, point B represents

Accepted Answer

A)  a recessionary gap. 
B)  a full-employment equilibrium. 
C)  an inflationary gap. 
D)  a decrease in aggregate demand. 
A)  a recessionary gap. 
B)  a full-employment equilibrium. 
C)  an inflationary gap. 
D)  a decrease in aggregate demand.

Question 18

-From the data in the above table, when the economy is in short-run equilibrium, if aggregate demand does not change, then as time passes the

Accepted Answer

A)  short-run aggregate supply curve shifts rightward. 
B)  short-run aggregate supply curve shifts leftward. 
C)  long-run aggregate supply curve shifts rightward. 
D)  long-run aggregate supply curve shifts leftward. 
A)  short-run aggregate supply curve shifts rightward. 
B)  short-run aggregate supply curve shifts leftward. 
C)  long-run aggregate supply curve shifts rightward. 
D)  long-run aggregate supply curve shifts leftward.

Question 19

What happens if the economy is at its long-run equilibrium and aggregate demand increases?

Accepted Answer

The increase in aggregate demand means t

Question 20

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward ________ real GDP and ________ the price level.

Accepted Answer

A)  increases; raises 
B)  decreases; raises 
C)  increases; lowers 
D)  decreases; lowers 
A)  increases; raises 
B)  decreases; raises 
C)  increases; lowers 
D)  decreases; lowers

Suppose the price level, the money wage, and the price of all other resources rise by 10 percent. This set of changes leads to

If you have $1,000 of money in the bank and the price level rises by 5 percent, your

Which of the following events shifts the aggregate demand curve leftward?

For movements along the short-run aggregate supply curve

People expect that the El Niño effect will cause drought in Australia in coming years. If most Australian firms expect their profits will fall during the next five years, Australia's ________ this year.

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward raises the price level and increases real GDP.

What is the effect on the aggregate demand curve from an increase in the price level? In particular, does the aggregate demand curve shift leftward or rightward?

Which of the following can be said about economic growth? I.Economic growth is the result of increases in long-run aggregate supply. II.Economic growth is the result of increases in aggregate demand.

The short-run aggregate supply curve is upward sloping because

-The above figure depicts an economy with a short-run equilibrium

Which of the following shifts both the short-run aggregate supply curve and the long-run aggregate supply curve? I.changes in the size of the labor force II.changes in the money wage rate III.changes in the quantity of capital

The Great Depression, in which real GDP fell and unemployment rose, can be characterized as a ________.

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

-In the figure above, potential GDP equals

The aggregate demand curve

The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

-In the above figure, point B represents

-From the data in the above table, when the economy is in short-run equilibrium, if aggregate demand does not change, then as time passes the

What happens if the economy is at its long-run equilibrium and aggregate demand increases?

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward real GDP and the price level.

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

Suppose the price level, the money wage, and the price of all other resources rise by 10 percent. This set of changes leads to

If you have $1,000 of money in the bank and the price level rises by 5 percent, your

Which of the following events shifts the aggregate demand curve leftward?

For movements along the short-run aggregate supply curve

People expect that the El Niño effect will cause drought in Australia in coming years. If most Australian firms expect their profits will fall during the next five years, Australia's ________ this year.

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward raises the price level and increases real GDP.

What is the effect on the aggregate demand curve from an increase in the price level? In particular, does the aggregate demand curve shift leftward or rightward?

Which of the following can be said about economic growth? I.Economic growth is the result of increases in long-run aggregate supply. II.Economic growth is the result of increases in aggregate demand.

The short-run aggregate supply curve is upward sloping because

-The above figure depicts an economy with a short-run equilibrium

Which of the following shifts both the short-run aggregate supply curve and the long-run aggregate supply curve? I.changes in the size of the labor force II.changes in the money wage rate III.changes in the quantity of capital

The Great Depression, in which real GDP fell and unemployment rose, can be characterized as a ________.

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

-In the figure above, potential GDP equals

The aggregate demand curve

The aggregate demand curve shows that, if other factors are held constant, the higher the price level, the

-In the above figure, point B represents

-From the data in the above table, when the economy is in short-run equilibrium, if aggregate demand does not change, then as time passes the

What happens if the economy is at its long-run equilibrium and aggregate demand increases?

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward ________ real GDP and ________ the price level.

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

In the short run, a supply shock that shifts the short-run aggregate supply curve leftward real GDP and the price level.