Question 1

-In the above figure, the curve labeled A shifts rightward if

Accepted Answer

A)  expected future profits decrease. 
B)  the quantity of money decreases. 
C)  the substitution effect occurs. 
D)  taxes decrease. 
A)  expected future profits decrease. 
B)  the quantity of money decreases. 
C)  the substitution effect occurs. 
D)  taxes decrease.

Question 2

The level of output when there is full employment is called actual GDP.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is INCORRECT?

Accepted Answer

A)  A monetarist believes that recessions are the result of erratic monetary policy. 
B)  A new classical macroeconomist believes the business cycle is the efficient response to the uneven pace of technological change. 
C)  A Keynesian believes the business cycle is mainly influenced by changes in people's expectations. 
D)  A classical macroeconomist believes that the money wage rate adjusts slowly. 
A)  A monetarist believes that recessions are the result of erratic monetary policy. 
B)  A new classical macroeconomist believes the business cycle is the efficient response to the uneven pace of technological change. 
C)  A Keynesian believes the business cycle is mainly influenced by changes in people's expectations. 
D)  A classical macroeconomist believes that the money wage rate adjusts slowly.

Question 4

The long-run aggregate supply curve is vertical because

Accepted Answer

A)  at full employment, prices are stable. 
B)  there is no cyclical inflation. 
C)  potential GDP is independent of the price level. 
D)  the money wage rate increases faster than the price level. 
A)  at full employment, prices are stable. 
B)  there is no cyclical inflation. 
C)  potential GDP is independent of the price level. 
D)  the money wage rate increases faster than the price level.

Question 5

If you have $5,000 in wealth and the price level decreases by 20 percent, then

Accepted Answer

A)  the $5,000 will buy fewer goods and services. 
B)  the $5,000 will buy more goods and services. 
C)  the real value of the $5,000 decreases. 
D)  the real value of the $5,000 remains constant. 
A)  the $5,000 will buy fewer goods and services. 
B)  the $5,000 will buy more goods and services. 
C)  the real value of the $5,000 decreases. 
D)  the real value of the $5,000 remains constant.

Question 6

Which school of thought believes that recessions are the result of inappropriate monetary policy?

Accepted Answer

A)  only classical 
B)  only Keynesian 
C)  Monetarist 
D)  both Keynesian and classical 
A)  only classical 
B)  only Keynesian 
C)  Monetarist 
D)  both Keynesian and classical

Question 7

-In the above figure, which part corresponds to an increase in the money wage rate?

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 8

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

Accepted Answer

A) True 
 B)False

Question 9

An aggregate supply curve depicts the relationship between

Accepted Answer

A)  the price level and the quantity of nominal GDP supplied. 
B)  household expenditures and household income. 
C)  the price level and the quantity of real GDP supplied. 
D)  the money wage rate and the quantity of real GDP supplied. 
A)  the price level and the quantity of nominal GDP supplied. 
B)  household expenditures and household income. 
C)  the price level and the quantity of real GDP supplied. 
D)  the money wage rate and the quantity of real GDP supplied.

Question 10

The table below shows data for India's economy. Real GDP is measured in millions of rupees.
 
If potential GDP in India is ________ million rupees, India is experiencing ________.

Accepted Answer

A)  26,500; an inflationary gap 
B)  28,500; an above-full-employment gap 
C)  26,500; a recessionary gap 
D)  30,000; a potential GDP gap 
A)  26,500; an inflationary gap 
B)  28,500; an above-full-employment gap 
C)  26,500; a recessionary gap 
D)  30,000; a potential GDP gap

Question 11

Which of the following statements regarding aggregate supply are CORRECT?

Accepted Answer

A)  Moving along the long-run aggregate supply curve, both the price level and the money wage rate change by the same percentage. 
B)  Moving along the short-run aggregate supply curve, both the price level and the money wage rate change by the same percentage. 
C)  Moving along the long-run aggregate supply curve, the money wage rate changes but the price level is constant. 
D)  Moving along the short-run aggregate supply curve, the money wage rate changes but the price level is constant. 
A)  Moving along the long-run aggregate supply curve, both the price level and the money wage rate change by the same percentage. 
B)  Moving along the short-run aggregate supply curve, both the price level and the money wage rate change by the same percentage. 
C)  Moving along the long-run aggregate supply curve, the money wage rate changes but the price level is constant. 
D)  Moving along the short-run aggregate supply curve, the money wage rate changes but the price level is constant.

Question 12

In the short-run, a rise in the money wage rate leads to

Accepted Answer

A)  an increase in the price level and an increase in real GDP. 
B)  an increase in the price level and a decrease in real GDP. 
C)  an increase in the price level, but no change in real GDP. 
D)  no change in the price level, but an increase in real GDP. 
A)  an increase in the price level and an increase in real GDP. 
B)  an increase in the price level and a decrease in real GDP. 
C)  an increase in the price level, but no change in real GDP. 
D)  no change in the price level, but an increase in real GDP.

Question 13

-The figure above illustrates aggregate demand and aggregate supply in Sparta. Sparta's price level will rise above 100 if ________.

Accepted Answer

A)  government expenditure decreases 
B)  the quantity of money increases 
C)  the quantity of capital increases 
D)  taxes increase 
A)  government expenditure decreases 
B)  the quantity of money increases 
C)  the quantity of capital increases 
D)  taxes increase

Question 14

The short-run aggregate supply curve

Accepted Answer

A)  shows what each producer is willing and able to produce at each level of income holding constant potential GDP and all resource prices. 
B)  shows the relationship between aggregate production and the price level holding constant potential GDP and all resource prices. 
C)  becomes vertical if there is excess production capacity within the economy. 
D)  shows a negative relationship between the price level and real national income holding constant potential GDP and all resource prices. 
A)  shows what each producer is willing and able to produce at each level of income holding constant potential GDP and all resource prices. 
B)  shows the relationship between aggregate production and the price level holding constant potential GDP and all resource prices. 
C)  becomes vertical if there is excess production capacity within the economy. 
D)  shows a negative relationship between the price level and real national income holding constant potential GDP and all resource prices.

Question 15

-In the above figure, point B depicts

Accepted Answer

A)  an inflationary gap with real GDP in excess of potential GDP. 
B)  an inflationary gap with real GDP less than potential GDP. 
C)  a recessionary gap with real GDP in excess of potential GDP. 
D)  a recessionary gap with real GDP less than potential GDP. 
A)  an inflationary gap with real GDP in excess of potential GDP. 
B)  an inflationary gap with real GDP less than potential GDP. 
C)  a recessionary gap with real GDP in excess of potential GDP. 
D)  a recessionary gap with real GDP less than potential GDP.

Question 16

If higher inflation is expected in the future, then the

Accepted Answer

A)  SAS curve shifts rightward. 
B)  AD curve shifts rightward. 
C)  LAS curve shifts rightward. 
D)  None of the above answers is correct. 
A)  SAS curve shifts rightward. 
B)  AD curve shifts rightward. 
C)  LAS curve shifts rightward. 
D)  None of the above answers is correct.

Question 17

-In the above figure, suppose the economy had been at point A and now is at B. What could have led to the movement to B?

Accepted Answer

A)  a tax hike 
B)  an increase in government expenditures on goods and services 
C)  Winter storms cause factories in the north to be shut down for several weeks. 
D)  an increase in the money wage rates 
A)  a tax hike 
B)  an increase in government expenditures on goods and services 
C)  Winter storms cause factories in the north to be shut down for several weeks. 
D)  an increase in the money wage rates

Question 18

If the money prices of resources changes, the SAS curve shifts.

Accepted Answer

A) True 
 B)False

Question 19

-In the above figure, curve A is the ________ curve, curve B is the ________ curve, and curve C is the ________ curve.

Accepted Answer

A)  long-run aggregate supply; short-run aggregate supply; aggregate demand 
B)  aggregate demand; short-run aggregate supply; long-run aggregate supply 
C)  short-run aggregate supply; long-run aggregate supply; aggregate demand 
D)  long-run aggregate supply; aggregate demand; short-run aggregate supply 
A)  long-run aggregate supply; short-run aggregate supply; aggregate demand 
B)  aggregate demand; short-run aggregate supply; long-run aggregate supply 
C)  short-run aggregate supply; long-run aggregate supply; aggregate demand 
D)  long-run aggregate supply; aggregate demand; short-run aggregate supply

Question 20

Suppose consumers decrease their consumption expenditure because they worry about what their income will be in the future. There is

Accepted Answer

A)  a rightward shift of the aggregate demand curve. 
B)  an upward movement along the aggregate demand curve. 
C)  a downward movement along the aggregate demand curve. 
D)  a leftward shift of the aggregate demand curve. 
A)  a rightward shift of the aggregate demand curve. 
B)  an upward movement along the aggregate demand curve. 
C)  a downward movement along the aggregate demand curve. 
D)  a leftward shift of the aggregate demand curve.

-In the above figure, the curve labeled A shifts rightward if

The level of output when there is full employment is called actual GDP.

Which of the following statements is INCORRECT?

The long-run aggregate supply curve is vertical because

If you have $5,000 in wealth and the price level decreases by 20 percent, then

Which school of thought believes that recessions are the result of inappropriate monetary policy?

-In the above figure, which part corresponds to an increase in the money wage rate?

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

An aggregate supply curve depicts the relationship between

The table below shows data for India's economy. Real GDP is measured in millions of rupees. If potential GDP in India is million rupees, India is experiencing .

Which of the following statements regarding aggregate supply are CORRECT?

In the short-run, a rise in the money wage rate leads to

-The figure above illustrates aggregate demand and aggregate supply in Sparta. Sparta's price level will rise above 100 if ________.

The short-run aggregate supply curve

-In the above figure, point B depicts

If higher inflation is expected in the future, then the

-In the above figure, suppose the economy had been at point A and now is at B. What could have led to the movement to B?

If the money prices of resources changes, the SAS curve shifts.

-In the above figure, curve A is the curve, curve B is the curve, and curve C is the curve.

Suppose consumers decrease their consumption expenditure because they worry about what their income will be in the future. 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

-In the above figure, the curve labeled A shifts rightward if

The level of output when there is full employment is called actual GDP.

Which of the following statements is INCORRECT?

The long-run aggregate supply curve is vertical because

If you have $5,000 in wealth and the price level decreases by 20 percent, then

Which school of thought believes that recessions are the result of inappropriate monetary policy?

-In the above figure, which part corresponds to an increase in the money wage rate?

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

An aggregate supply curve depicts the relationship between

The table below shows data for India's economy. Real GDP is measured in millions of rupees. If potential GDP in India is ________ million rupees, India is experiencing ________.

Which of the following statements regarding aggregate supply are CORRECT?

In the short-run, a rise in the money wage rate leads to

-The figure above illustrates aggregate demand and aggregate supply in Sparta. Sparta's price level will rise above 100 if ________.

The short-run aggregate supply curve

-In the above figure, point B depicts

If higher inflation is expected in the future, then the

-In the above figure, suppose the economy had been at point A and now is at B. What could have led to the movement to B?

If the money prices of resources changes, the SAS curve shifts.

-In the above figure, curve A is the ________ curve, curve B is the ________ curve, and curve C is the ________ curve.

Suppose consumers decrease their consumption expenditure because they worry about what their income will be in the future. 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

The table below shows data for India's economy. Real GDP is measured in millions of rupees. If potential GDP in India is million rupees, India is experiencing .

-In the above figure, curve A is the curve, curve B is the curve, and curve C is the curve.