Question 1

What is the cornerstone of Keynes' theory?

Accepted Answer

Keynes asserted that the priva

Question 2

Which of the following is likely to occur if a terrorist attack stops air travel in a country for some time,ceteris paribus?

Accepted Answer

A)  Aggregate supply will decrease or shift to the left 
B)  Aggregate supply will increase or shift to the right 
C)  Aggregate demand will increase or shift to the right 
D)  Aggregate demand will decrease or shift to the left 
A)  Aggregate supply will decrease or shift to the left 
B)  Aggregate supply will increase or shift to the right 
C)  Aggregate demand will increase or shift to the right 
D)  Aggregate demand will decrease or shift to the left

Question 3

Inflation and unemployment are macroeconomic failures.

Accepted Answer

A) True 
 B)False

Question 4

Table 11.1-Aggregate supply and demand  
-In Table 11.1,according to Keynes,which of the following policy options would be most appropriate for the economy if full-employment output occurred at 1600?

Accepted Answer

A)  A decrease in the money supply to control inflation. 
B)  An increase in tax incentives to train workers. 
C)  An increase in the level of government spending. 
D)  A laissez faire approach. 
A)  A decrease in the money supply to control inflation. 
B)  An increase in tax incentives to train workers. 
C)  An increase in the level of government spending. 
D)  A laissez faire approach.

Question 5

The total amount of output producers are willing and able to produce at alternative price levels in a given time period is known as:

Accepted Answer

A)  Aggregate demand. 
B)  Aggregate supply. 
C)  Real GDP. 
D)  Macro equilibrium. 
A)  Aggregate demand. 
B)  Aggregate supply. 
C)  Real GDP. 
D)  Macro equilibrium.

Question 6

The intersection of the aggregate demand and supply curves definitely establishes:

Accepted Answer

A)  Full-employment GDP. 
B)  Macro equilibrium. 
C)  An inflation rate of zero. 
D)  An unemployment rate of zero. 
A)  Full-employment GDP. 
B)  Macro equilibrium. 
C)  An inflation rate of zero. 
D)  An unemployment rate of zero.

Question 7

Ceteris paribus,a leftward shift of the aggregate demand curve will cause the equilibrium price level to _______ and equilibrium real output to _______.

Accepted Answer

A)  Increase;increase 
B)  Increase;decrease 
C)  Decrease;increase 
D)  Decrease;decrease 
A)  Increase;increase 
B)  Increase;decrease 
C)  Decrease;increase 
D)  Decrease;decrease

Question 8

Figure 11.2:  
-In Figure 11.2,at which of the following price levels would a surplus occur?

Accepted Answer

A)  P1 
B)  P2 
C)  P3 
D)  P4 
A)  P1 
B)  P2 
C)  P3 
D)  P4

Question 9

The Classical policy approach to the business cycle was to allow the market to correct itself.

Accepted Answer

A) True 
 B)False

Question 10

Output,jobs,and the price level are considered to be determinants of macroeconomic performance.

Accepted Answer

A) True 
 B)False

Question 11

One explanation for why the AS curve slopes upward is that when the output level rises,producers experience increased costs such as higher wages.

Accepted Answer

A) True 
 B)False

Question 12

Figure 11.3:  
-Using Figure 11.3,if the economy is in equilibrium at a real output of Q3 then:

Accepted Answer

A)  Aggregate demand must be AD1. 
B)  Aggregate supply could be either AS1 or AS2 depending on the level of aggregate demand. 
C)  The equilibrium price level is P2. 
D)  Aggregate demand is AD2 and aggregate supply is AS2. 
A)  Aggregate demand must be AD1. 
B)  Aggregate supply could be either AS1 or AS2 depending on the level of aggregate demand. 
C)  The equilibrium price level is P2. 
D)  Aggregate demand is AD2 and aggregate supply is AS2.

Question 13

According to Keynes,which of the following should occur because of a decrease in government expenditure,ceteris paribus?

Accepted Answer

A)  A leftward shift of the aggregate supply curve. 
B)  A rightward shift of the aggregate supply curve. 
C)  A leftward shift of the aggregate demand curve. 
D)  A rightward shift of the aggregate demand curve. 
A)  A leftward shift of the aggregate supply curve. 
B)  A rightward shift of the aggregate supply curve. 
C)  A leftward shift of the aggregate demand curve. 
D)  A rightward shift of the aggregate demand curve.

Question 14

Which of the following are policy levers?

Accepted Answer

A)  Population growth,spending behavior,and invention 
B)  Wars,natural disasters,and trade disruptions 
C)  Government regulation,tax policy,and the availability of money 
D)  Jobs,prices,and growth 
A)  Population growth,spending behavior,and invention 
B)  Wars,natural disasters,and trade disruptions 
C)  Government regulation,tax policy,and the availability of money 
D)  Jobs,prices,and growth

Question 15

The aggregate demand curve is most likely to shift to the right when:

Accepted Answer

A)  Consumer spending falls. 
B)  Taxes fall. 
C)  Government spending falls. 
D)  Technology improves. 
A)  Consumer spending falls. 
B)  Taxes fall. 
C)  Government spending falls. 
D)  Technology improves.

Question 16

Figure 11.1:  
-In Figure 11.1,given that equilibrium occurs at a price level of P2,then the desirable price level:

Accepted Answer

A)  Can be at any price level. 
B)  Must be P2. 
C)  Must be greater than P2. 
D)  Must be less than P2. 
A)  Can be at any price level. 
B)  Must be P2. 
C)  Must be greater than P2. 
D)  Must be less than P2.

Question 17

Figure 11.1:  
-In Figure 11.1,ceteris paribus,if consumers lose confidence in the economy and reduce their spending,the new equilibrium is likely to occur at:

Accepted Answer

A)  P2 and Q2. 
B)  P1 and Q2. 
C)  P3 and Q3. 
D)  P2 and Q4. 
A)  P2 and Q2. 
B)  P1 and Q2. 
C)  P3 and Q3. 
D)  P2 and Q4.

Question 18

Macro controversies focus primarily on the:

Accepted Answer

A)  Level of interest rates. 
B)  Federal budget deficit. 
C)  Potential to shift aggregate demand and supply. 
D)  Potential to change imports and exports. 
A)  Level of interest rates. 
B)  Federal budget deficit. 
C)  Potential to shift aggregate demand and supply. 
D)  Potential to change imports and exports.

Question 19

According to Keynes,the economy is basically stable and government intervention is not required.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a reason for the downward slope of the aggregate demand curve?

Accepted Answer

A)  The real balances effect 
B)  The foreign trade effect 
C)  The cost effect 
D)  The interest rate effect 
A)  The real balances effect 
B)  The foreign trade effect 
C)  The cost effect 
D)  The interest rate effect

What is the cornerstone of Keynes' theory?

Which of the following is likely to occur if a terrorist attack stops air travel in a country for some time,ceteris paribus?

Inflation and unemployment are macroeconomic failures.

Table 11.1-Aggregate supply and demand -In Table 11.1,according to Keynes,which of the following policy options would be most appropriate for the economy if full-employment output occurred at 1600?

The total amount of output producers are willing and able to produce at alternative price levels in a given time period is known as:

The intersection of the aggregate demand and supply curves definitely establishes:

Ceteris paribus,a leftward shift of the aggregate demand curve will cause the equilibrium price level to _ and equilibrium real output to _.

Figure 11.2: -In Figure 11.2,at which of the following price levels would a surplus occur?

The Classical policy approach to the business cycle was to allow the market to correct itself.

Output,jobs,and the price level are considered to be determinants of macroeconomic performance.

One explanation for why the AS curve slopes upward is that when the output level rises,producers experience increased costs such as higher wages.

Figure 11.3: -Using Figure 11.3,if the economy is in equilibrium at a real output of Q₃ then:

According to Keynes,which of the following should occur because of a decrease in government expenditure,ceteris paribus?

Which of the following are policy levers?

The aggregate demand curve is most likely to shift to the right when:

Figure 11.1: -In Figure 11.1,given that equilibrium occurs at a price level of P₂,then the desirable price level:

Figure 11.1: -In Figure 11.1,ceteris paribus,if consumers lose confidence in the economy and reduce their spending,the new equilibrium is likely to occur at:

Macro controversies focus primarily on the:

According to Keynes,the economy is basically stable and government intervention is not required.

Which of the following is not a reason for the downward slope of the aggregate demand curve?

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Exam 11: Aggregate Supply and Demand

What is the cornerstone of Keynes' theory?

Which of the following is likely to occur if a terrorist attack stops air travel in a country for some time,ceteris paribus?

Inflation and unemployment are macroeconomic failures.

Table 11.1-Aggregate supply and demand -In Table 11.1,according to Keynes,which of the following policy options would be most appropriate for the economy if full-employment output occurred at 1600?

The total amount of output producers are willing and able to produce at alternative price levels in a given time period is known as:

The intersection of the aggregate demand and supply curves definitely establishes:

Ceteris paribus,a leftward shift of the aggregate demand curve will cause the equilibrium price level to _______ and equilibrium real output to _______.

Figure 11.2: -In Figure 11.2,at which of the following price levels would a surplus occur?

The Classical policy approach to the business cycle was to allow the market to correct itself.

Output,jobs,and the price level are considered to be determinants of macroeconomic performance.

One explanation for why the AS curve slopes upward is that when the output level rises,producers experience increased costs such as higher wages.

Figure 11.3: -Using Figure 11.3,if the economy is in equilibrium at a real output of Q3 then:

According to Keynes,which of the following should occur because of a decrease in government expenditure,ceteris paribus?

Which of the following are policy levers?

The aggregate demand curve is most likely to shift to the right when:

Figure 11.1: -In Figure 11.1,given that equilibrium occurs at a price level of P2,then the desirable price level:

Figure 11.1: -In Figure 11.1,ceteris paribus,if consumers lose confidence in the economy and reduce their spending,the new equilibrium is likely to occur at:

Macro controversies focus primarily on the:

According to Keynes,the economy is basically stable and government intervention is not required.

Which of the following is not a reason for the downward slope of the aggregate demand curve?

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Ceteris paribus,a leftward shift of the aggregate demand curve will cause the equilibrium price level to _ and equilibrium real output to _.

Figure 11.3: -Using Figure 11.3,if the economy is in equilibrium at a real output of Q₃ then:

Figure 11.1: -In Figure 11.1,given that equilibrium occurs at a price level of P₂,then the desirable price level: