Question 1

When potential GDP increases,short-run aggregate supply also increases,but long-run aggregate supply does not change.

Accepted Answer

A) True 
 B)False

Question 2

Use the dynamic model of aggregate demand and aggregate supply to illustrate a situation where the economy is growing but experiencing inflation in the long run.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

If the aggregate demand curve shifts to

Question 3

What is the result if the economy receives an influx of new workers from immigration?

Accepted Answer

A)  The long-run aggregate supply curve will shift to the left. 
B)  The long-run aggregate supply curve will shift to the right. 
C)  The economy will move up along the long-run aggregate supply curve. 
D)  The economy will move down along the long-run aggregate supply curve. 
A)  The long-run aggregate supply curve will shift to the left. 
B)  The long-run aggregate supply curve will shift to the right. 
C)  The economy will move up along the long-run aggregate supply curve. 
D)  The economy will move down along the long-run aggregate supply curve.

Question 4

The interest-rate effect is described as an increase in the price level which:

Accepted Answer

A)  raises the interest rate, thereby reducing government spending. 
B)  lowers the interest rate, thereby reducing government spending. 
C)  raises the interest rate, thereby reducing investment and consumption spending. 
D)  lowers the interest rate, thereby reducing investment and consumption spending. 
A)  raises the interest rate, thereby reducing government spending. 
B)  lowers the interest rate, thereby reducing government spending. 
C)  raises the interest rate, thereby reducing investment and consumption spending. 
D)  lowers the interest rate, thereby reducing investment and consumption spending.

Question 5

Because a company such as Boeing produces expensive durable goods (aircraft),the demand for their goods

Accepted Answer

A)  is likely to increase during recession. 
B)  declines when incomes in the economy are rising. 
C)  is consistently high, regardless of the state of the economy. 
D)  tends to follow the business cycle. 
A)  is likely to increase during recession. 
B)  declines when incomes in the economy are rising. 
C)  is consistently high, regardless of the state of the economy. 
D)  tends to follow the business cycle.

Question 6

Inflation is generally the result of total spending growing slower than total production.

Accepted Answer

A) True 
 B)False

Question 7

The level of long-run aggregate supply is not affected by changes in ________.

Accepted Answer

A)  technology 
B)  the capital stock 
C)  the price level 
D)  the size of the labour force 
A)  technology 
B)  the capital stock 
C)  the price level 
D)  the size of the labour force

Question 8

Explain why the Australian economy has generally been more stable since the 1950s than before that time.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

First,the economy has changed over time

Question 9

Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment.In the short run

Accepted Answer

A)  output will decline. 
B)  unemployment will decline. 
C)  prices will decline. 
D)  aggregate demand will shift to the left. 
A)  output will decline. 
B)  unemployment will decline. 
C)  prices will decline. 
D)  aggregate demand will shift to the left.

Question 10

'Stagflation' occurs when short-run aggregate supply decreases.

Accepted Answer

A) True 
 B)False

Question 11

The experience of recessions in Australia has shown that

Accepted Answer

A)  cyclical unemployment has been non-existent. 
B)  unemployment continues to rise after a recession ends. 
C)  unemployment falls about 12 months after a recession begins. 
D)  unemployment rises on average about 5 percentage points 12 months after a recession begins. 
A)  cyclical unemployment has been non-existent. 
B)  unemployment continues to rise after a recession ends. 
C)  unemployment falls about 12 months after a recession begins. 
D)  unemployment rises on average about 5 percentage points 12 months after a recession begins.

Question 12

A decrease in the price level results in a(n)________ in the quantity of real GDP demanded because a lower price level ________ consumption,investment and net exports.

Accepted Answer

A)  decrease; increases 
B)  increase; increases 
C)  decrease; decreases 
D)  increase; decreases 
A)  decrease; increases 
B)  increase; increases 
C)  decrease; decreases 
D)  increase; decreases

Question 13

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

Accepted Answer

A)  Potential GDP increases continuously. 
B)  Aggregate demand shifts to the right during most periods. 
C)  Aggregate supply shifts to the right except during periods when workers and firms expect higher wages. 
D)  Aggregate demand and potential GDP decrease continuously. 
A)  Potential GDP increases continuously. 
B)  Aggregate demand shifts to the right during most periods. 
C)  Aggregate supply shifts to the right except during periods when workers and firms expect higher wages. 
D)  Aggregate demand and potential GDP decrease continuously.

Question 14

What do proponents of the real business cycle model argue about the short-run aggregate supply curve?

Accepted Answer

A)  That it is vertical 
B)  That it is positively sloped 
C)  That it is flat 
D)  That it is negatively sloped 
A)  That it is vertical 
B)  That it is positively sloped 
C)  That it is flat 
D)  That it is negatively sloped

Question 15

During an expansion,how do inflation and unemployment typically change?

Accepted Answer

A)  Inflation and unemployment both rise 
B)  Inflation and unemployment both fall 
C)  Inflation falls and unemployment rises 
D)  Inflation rises and unemployment falls 
A)  Inflation and unemployment both rise 
B)  Inflation and unemployment both fall 
C)  Inflation falls and unemployment rises 
D)  Inflation rises and unemployment falls

Question 16

The main result of which of the following models is that the quantity of money should be increased at a constant rate?

Accepted Answer

A)  Monetarist model 
B)  New classical model 
C)  Real business cycle model 
D)  New Keynesian model 
A)  Monetarist model 
B)  New classical model 
C)  Real business cycle model 
D)  New Keynesian model

Question 17

The international-trade effect states that,ceteris paribus,an increase in the price level will

Accepted Answer

A)  increase net exports. 
B)  decrease net exports. 
C)  increase exports. 
D)  decrease imports. 
A)  increase net exports. 
B)  decrease net exports. 
C)  increase exports. 
D)  decrease imports.

Question 18

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

Accepted Answer

A)  raises; recession; lowers; expansion 
B)  raises; expansion; raises; recession 
C)  lowers; expansion; lowers; recession 
D)  lowers; recession; raises; expansion 
A)  raises; recession; lowers; expansion 
B)  raises; expansion; raises; recession 
C)  lowers; expansion; lowers; recession 
D)  lowers; recession; raises; expansion

Question 19

What is the relationship among the AD,SRAS and LRAS curves when the economy is in long-run equilibrium?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

When the economy is in long-ru

Question 20

Explain whether it is possible for a long-run aggregate supply curve to shift leftwards.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

It is not usual,but it is possible.If th

When potential GDP increases,short-run aggregate supply also increases,but long-run aggregate supply does not change.

Use the dynamic model of aggregate demand and aggregate supply to illustrate a situation where the economy is growing but experiencing inflation in the long run. _ _

What is the result if the economy receives an influx of new workers from immigration?

The interest-rate effect is described as an increase in the price level which:

Because a company such as Boeing produces expensive durable goods (aircraft),the demand for their goods

Inflation is generally the result of total spending growing slower than total production.

The level of long-run aggregate supply is not affected by changes in ________.

Explain why the Australian economy has generally been more stable since the 1950s than before that time. _ _

Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment.In the short run

'Stagflation' occurs when short-run aggregate supply decreases.

The experience of recessions in Australia has shown that

A decrease in the price level results in a(n) in the quantity of real GDP demanded because a lower price level consumption,investment and net exports.

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

What do proponents of the real business cycle model argue about the short-run aggregate supply curve?

During an expansion,how do inflation and unemployment typically change?

The main result of which of the following models is that the quantity of money should be increased at a constant rate?

The international-trade effect states that,ceteris paribus,an increase in the price level will

The automatic mechanism the price level in the case of and the price level in the case of .

What is the relationship among the AD,SRAS and LRAS curves when the economy is in long-run equilibrium? _ _

Explain whether it is possible for a long-run aggregate supply curve to shift leftwards. _ _

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 15: Aggregate Demand and Aggregate Supply Analysis

When potential GDP increases,short-run aggregate supply also increases,but long-run aggregate supply does not change.

What is the result if the economy receives an influx of new workers from immigration?

The interest-rate effect is described as an increase in the price level which:

Because a company such as Boeing produces expensive durable goods (aircraft),the demand for their goods

Inflation is generally the result of total spending growing slower than total production.

The level of long-run aggregate supply is not affected by changes in ________.

Explain why the Australian economy has generally been more stable since the 1950s than before that time. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment.In the short run

'Stagflation' occurs when short-run aggregate supply decreases.

The experience of recessions in Australia has shown that

A decrease in the price level results in a(n)________ in the quantity of real GDP demanded because a lower price level ________ consumption,investment and net exports.

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

What do proponents of the real business cycle model argue about the short-run aggregate supply curve?

During an expansion,how do inflation and unemployment typically change?

The main result of which of the following models is that the quantity of money should be increased at a constant rate?

The international-trade effect states that,ceteris paribus,an increase in the price level will

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

What is the relationship among the AD,SRAS and LRAS curves when the economy is in long-run equilibrium? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Explain whether it is possible for a long-run aggregate supply curve to shift leftwards. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Explain why the Australian economy has generally been more stable since the 1950s than before that time. _ _

A decrease in the price level results in a(n) in the quantity of real GDP demanded because a lower price level consumption,investment and net exports.

The automatic mechanism the price level in the case of and the price level in the case of .

What is the relationship among the AD,SRAS and LRAS curves when the economy is in long-run equilibrium? _ _

Explain whether it is possible for a long-run aggregate supply curve to shift leftwards. _ _