Question 1

A monetarist 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 2

One result of a decrease in aggregate demand and no change in aggregate supply is

Accepted Answer

A)  a recession. 
B)  an increase in employment levels. 
C)  an economic expansion. 
D)  a rise in the price level. 
A)  a recession. 
B)  an increase in employment levels. 
C)  an economic expansion. 
D)  a rise in the price level.

Question 3

Your real wealth is measured as the

Accepted Answer

A)  amount of assets you have in dollar terms. 
B)  amount of money you have. 
C)  amount of goods and services your wealth will buy. 
D)  amount of goods you have divided by the price level. 
A)  amount of assets you have in dollar terms. 
B)  amount of money you have. 
C)  amount of goods and services your wealth will buy. 
D)  amount of goods you have divided by the price level.

Question 4

According to the wealth effect, if real wealth decreases then people

Accepted Answer

A)  decrease their consumption expenditure. 
B)  increase their consumption expenditure. 
C)  do not respond if their nominal wealth does not change. 
D)  decrease their consumption expenditure only if their nominal wealth also decreases. 
A)  decrease their consumption expenditure. 
B)  increase their consumption expenditure. 
C)  do not respond if their nominal wealth does not change. 
D)  decrease their consumption expenditure only if their nominal wealth also decreases.

Question 5

A technological advance ________ the long-run aggregate supply curve and ________ the short-run aggregate supply curve.

Accepted Answer

A)  shifts; shifts 
B)  shifts; does not shift 
C)  does not shift; shifts 
D)  does not shift; does not shift 
A)  shifts; shifts 
B)  shifts; does not shift 
C)  does not shift; shifts 
D)  does not shift; does not shift

Question 6

Suppose there is a temporary increase in the price of oil. This is represented by

Accepted Answer

A)  a leftward shift of the SAS and the LAS curve. 
B)  a leftward shift of the LAS curve. 
C)  a rightward shift of the SAS curve. 
D)  a leftward shift of the SAS curve. 
A)  a leftward shift of the SAS and the LAS curve. 
B)  a leftward shift of the LAS curve. 
C)  a rightward shift of the SAS curve. 
D)  a leftward shift of the SAS curve.

Question 7

The AD curve slopes

Accepted Answer

A)  downward due to the wealth and price effects. 
B)  downward due to the wealth and substitution effects. 
C)  upward due to the price and substitution effects. 
D)  upward due to the wealth and substitution effects. 
A)  downward due to the wealth and price effects. 
B)  downward due to the wealth and substitution effects. 
C)  upward due to the price and substitution effects. 
D)  upward due to the wealth and substitution effects.

Question 8

Moving along a short-run aggregate supply curve, resource prices ________, the money rate wage ________, and potential GDP ________.

Accepted Answer

A)  do not change; changes; does not change 
B)  do not change; does not change; changes 
C)  change; does not change; does not change 
D)  do not change; does not change; does not change 
A)  do not change; changes; does not change 
B)  do not change; does not change; changes 
C)  change; does not change; does not change 
D)  do not change; does not change; does not change

Question 9

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

Accepted Answer

A)  aggregate supply did not change. 
B)  potential GDP decreased. 
C)  there was a movement up along the aggregate demand curve in 2008. 
D)  potential GDP increased, but at a slower rate than aggregate demand. 
A)  aggregate supply did not change. 
B)  potential GDP decreased. 
C)  there was a movement up along the aggregate demand curve in 2008. 
D)  potential GDP increased, but at a slower rate than aggregate demand.

Question 10

-The data in the above table show that when the price level is 120, the economy

Accepted Answer

A)  is in a long-run macroeconomic equilibrium. 
B)  has an inflationary gap. 
C)  has a recessionary gap. 
D)  will have falling money wage rates sometime in the future. 
A)  is in a long-run macroeconomic equilibrium. 
B)  has an inflationary gap. 
C)  has a recessionary gap. 
D)  will have falling money wage rates sometime in the future.

Question 11

-Based on the figure above, short-run equilibrium occurs at the price level of

Accepted Answer

A)  120 and real GDP of $5 trillion. 
B)  130 and real GDP of $10 trillion. 
C)  140 and real GDP of $15 trillion. 
D)  130 and real GDP of $15 trillion. 
A)  120 and real GDP of $5 trillion. 
B)  130 and real GDP of $10 trillion. 
C)  140 and real GDP of $15 trillion. 
D)  130 and real GDP of $15 trillion.

Question 12

As the price level falls and other things remain the same, real wealth ________ and ________.

Accepted Answer

A)  decreases; the short-run aggregate supply decreases 
B)  decreases; the quantity of real GDP demanded decreases 
C)  increases; aggregate demand increases 
D)  increases; the quantity of real GDP demanded increases 
A)  decreases; the short-run aggregate supply decreases 
B)  decreases; the quantity of real GDP demanded decreases 
C)  increases; aggregate demand increases 
D)  increases; the quantity of real GDP demanded increases

Question 13

-In the above figure, the economy is at point A and the money wage rate falls by 10 percent. If the price level is constant, firms will be willing to supply output equal to

Accepted Answer

A)  less than $16.0 trillion. 
B)  $16.0 trillion. 
C)  more than $16.0 trillion. 
D)  Without more information, it is impossible to determine which of the above answers is correct. 
A)  less than $16.0 trillion. 
B)  $16.0 trillion. 
C)  more than $16.0 trillion. 
D)  Without more information, it is impossible to determine which of the above answers is correct.

Question 14

All of the following shift the short-run aggregate supply curve EXCEPT

Accepted Answer

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

Question 15

The country of Epsilon 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 16

-The data in the above table indicate that when the price level is 100

Accepted Answer

A)  inventories fall and the price level rises. 
B)  the economy is in a long-run macroeconomic equilibrium. 
C)  inventories rise and the price level falls. 
D)  the unemployment rate is at its equilibrium level. 
A)  inventories fall and the price level rises. 
B)  the economy is in a long-run macroeconomic equilibrium. 
C)  inventories rise and the price level falls. 
D)  the unemployment rate is at its equilibrium level.

Question 17

Which of the following helps determine the growth rate of potential GDP?
I.capital accumulation
II.technology advances
III.growth in the quantity of money

Accepted Answer

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

Question 18

-In the above figure, point A represents

Accepted Answer

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

Question 19

-In the above figure, which part corresponds to a destruction of part of the nation's capital stock?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 20

-In the above figure, the economy is initially at point B. If taxes increase, there is

Accepted Answer

A)  a movement to point C. 
B)  a movement to point A. 
C)  a shift to AD2. 
D)  a shift to AD1. 
A)  a movement to point C. 
B)  a movement to point A. 
C)  a shift to AD2. 
D)  a shift to AD1.

A monetarist economist believes that

One result of a decrease in aggregate demand and no change in aggregate supply is

Your real wealth is measured as the

According to the wealth effect, if real wealth decreases then people

A technological advance the long-run aggregate supply curve and the short-run aggregate supply curve.

Suppose there is a temporary increase in the price of oil. This is represented by

The AD curve slopes

Moving along a short-run aggregate supply curve, resource prices , the money rate wage , and potential GDP .

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

-The data in the above table show that when the price level is 120, the economy

-Based on the figure above, short-run equilibrium occurs at the price level of

As the price level falls and other things remain the same, real wealth and .

-In the above figure, the economy is at point A and the money wage rate falls by 10 percent. If the price level is constant, firms will be willing to supply output equal to

All of the following shift the short-run aggregate supply curve EXCEPT

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

-The data in the above table indicate that when the price level is 100

Which of the following helps determine the growth rate of potential GDP? I.capital accumulation II.technology advances III.growth in the quantity of money

-In the above figure, point A represents

-In the above figure, which part corresponds to a destruction of part of the nation's capital stock?

-In the above figure, the economy is initially at point B. If taxes increase, there is

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

A monetarist economist believes that

One result of a decrease in aggregate demand and no change in aggregate supply is

Your real wealth is measured as the

According to the wealth effect, if real wealth decreases then people

A technological advance ________ the long-run aggregate supply curve and ________ the short-run aggregate supply curve.

Suppose there is a temporary increase in the price of oil. This is represented by

The AD curve slopes

Moving along a short-run aggregate supply curve, resource prices ________, the money rate wage ________, and potential GDP ________.

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

-The data in the above table show that when the price level is 120, the economy

-Based on the figure above, short-run equilibrium occurs at the price level of

As the price level falls and other things remain the same, real wealth ________ and ________.

-In the above figure, the economy is at point A and the money wage rate falls by 10 percent. If the price level is constant, firms will be willing to supply output equal to

All of the following shift the short-run aggregate supply curve EXCEPT

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

-The data in the above table indicate that when the price level is 100

Which of the following helps determine the growth rate of potential GDP? I.capital accumulation II.technology advances III.growth in the quantity of money

-In the above figure, point A represents

-In the above figure, which part corresponds to a destruction of part of the nation's capital stock?

-In the above figure, the economy is initially at point B. If taxes increase, there is

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

A technological advance the long-run aggregate supply curve and the short-run aggregate supply curve.

Moving along a short-run aggregate supply curve, resource prices , the money rate wage , and potential GDP .

As the price level falls and other things remain the same, real wealth and .