Question 1

Which of the following will cause the aggregate demand curve to shift to the right?

Accepted Answer

A) The discovery of new oil fields. 
B) A decrease in the money supply. 
C) A decrease in the interest rate. 
D) An increase in the exchange rate. 
E) A decrease in the incomes of our major trading partners. 
A) The discovery of new oil fields. 
B) A decrease in the money supply. 
C) A decrease in the interest rate. 
D) An increase in the exchange rate. 
E) A decrease in the incomes of our major trading partners.

Question 2

List the four factors that can cause a decrease in exports?

Accepted Answer

The following will cause a decrease in e

Question 3

What is the slope of the LAS curve?

Accepted Answer

A) Horizontal. 
B) Upward-sloping. 
C) Vertical. 
D) Downward-sloping. 
E) It is the same slope as the SAS curve. 
A) Horizontal. 
B) Upward-sloping. 
C) Vertical. 
D) Downward-sloping. 
E) It is the same slope as the SAS curve.

Question 4

All of the following,except one,are possible causes of the business cycle.Which is the exception?

Accepted Answer

A) An increase in the economic growth rate. 
B) A change in government spending. 
C) A change in interest rates. 
D) A change in the foreign demand for Canadian products. 
E) A significant technological breakthrough. 
A) An increase in the economic growth rate. 
B) A change in government spending. 
C) A change in interest rates. 
D) A change in the foreign demand for Canadian products. 
E) A significant technological breakthrough.

Question 5

What does the foreign-trade effect suggest will happen if there is a decrease in the Canadian price level relative to other countries?

Accepted Answer

A) It will increase the volume of both Canadian exports and imports. 
B) It will decrease the volume of both Canadian exports and imports. 
C) It will increase the volume of Canadian exports but decrease the volume of imports. 
D) It will decrease the volume of Canadian exports but increase the volume of imports. 
A) It will increase the volume of both Canadian exports and imports. 
B) It will decrease the volume of both Canadian exports and imports. 
C) It will increase the volume of Canadian exports but decrease the volume of imports. 
D) It will decrease the volume of Canadian exports but increase the volume of imports.

Question 6

Which component of aggregate demand is most likely to change as a result of the interest-rate effect?

Accepted Answer

A) Consumption. 
B) Investment. 
C) Government spending. 
D) Exports. 
E) Imports. 
A) Consumption. 
B) Investment. 
C) Government spending. 
D) Exports. 
E) Imports.

Question 7

Assume an economy is currently in equilibrium with Real GDP at $500 billion.If potential Real GDP (LAS)is $600 billion,which of the following is true?

Accepted Answer

A) There is a recessionary gap of 100 percent. 
B) There is a recessionary gap of $100 billion. 
C) There is an inflationary gap of $100 billion. 
D) There is an inflationary gap of 100 percent. 
A) There is a recessionary gap of 100 percent. 
B) There is a recessionary gap of $100 billion. 
C) There is an inflationary gap of $100 billion. 
D) There is an inflationary gap of 100 percent.

Question 8

What will be the effect of a leftward shift in the AS curve?

Accepted Answer

A) It will shift the LAS curve left. 
B) It will cause a rise in the price level. 
C) It might be caused by a decrease in resource prices. 
D) It will not affect output levels. 
A) It will shift the LAS curve left. 
B) It will cause a rise in the price level. 
C) It might be caused by a decrease in resource prices. 
D) It will not affect output levels.

Question 9

What is the result of a decrease in the LAS curve?

Accepted Answer

A) It will raise the price level and raise Real GDP. 
B) It will raise the price level and decrease Real GDP. 
C) It will lower the price level and raise Real GDP. 
D) It will lower the price level and decrease Real GDP. 
E) It will leave the price level unchanged and decrease Real GDP. 
A) It will raise the price level and raise Real GDP. 
B) It will raise the price level and decrease Real GDP. 
C) It will lower the price level and raise Real GDP. 
D) It will lower the price level and decrease Real GDP. 
E) It will leave the price level unchanged and decrease Real GDP.

Question 10

The following are an aggregate demand and supply schedules for a hypothetical economy.All figures in $ billions.
  
-Refer to the information above to answer this question.What is the equilibrium level of output?

Accepted Answer

A) 800. 
B) 900. 
C) 1,000. 
D) 1,100. 
E) 1,050. 
A) 800. 
B) 900. 
C) 1,000. 
D) 1,100. 
E) 1,050.

Question 11

All of the following,except one,will cause an increase in both aggregate supply and long-run aggregate supply.Which is the exception?

Accepted Answer

A) An increase in human capital. 
B) Technological improvement. 
C) A decrease in factor prices. 
D) An increase in the capital stock. 
A) An increase in human capital. 
B) Technological improvement. 
C) A decrease in factor prices. 
D) An increase in the capital stock.

Question 12

According to neoclassical economists,which of the following statements is correct?

Accepted Answer

A) The AD curve is horizontal but the AS is vertical. 
B) The AD curve is vertical but the AS is horizontal. 
C) The AS is vertical. 
D) The AS is horizontal. 
A) The AD curve is horizontal but the AS is vertical. 
B) The AD curve is vertical but the AS is horizontal. 
C) The AS is vertical. 
D) The AS is horizontal.

Question 13

"The aggregate quantity of goods and services produced by all sellers at various prices".Of what is this a definition?

Accepted Answer

A) Aggregate expenditure. 
B) Aggregate supply. 
C) Aggregate demand. 
D) Potential GDP. 
A) Aggregate expenditure. 
B) Aggregate supply. 
C) Aggregate demand. 
D) Potential GDP.

Question 14

Assume that the present price level is P1.
  
-Refer to the above graph to answer this question.Which graph illustrates full-employment equilibrium?

Accepted Answer

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

Question 15

Aggregate demand is the total quantity of final goods and services that consumers,businesses,government and those living outside the country would buy at various different price levels.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true of a recessionary gap?

Accepted Answer

A) Firms will increase output because Real GDP is below Potential GDP. 
B) Firms will decrease output because the price level is low. 
C) Firms have no incentive to produce more because they can't sell additional output. 
D) Firms have no incentive to produce more because it's very expensive to employ more labour. 
E) It is correctly described as "too much money chasing too few goods." 
A) Firms will increase output because Real GDP is below Potential GDP. 
B) Firms will decrease output because the price level is low. 
C) Firms have no incentive to produce more because they can't sell additional output. 
D) Firms have no incentive to produce more because it's very expensive to employ more labour. 
E) It is correctly described as "too much money chasing too few goods."

Question 17

The following are aggregate demand and supply schedules for a hypothetical economy.All figures are in $ billions.
   Note: Potential GDP is 3,000.
-Refer to the information above to answer this question.What will equilibrium price level and GDP be?

Accepted Answer

A) 150 and 2,600 
B) 150 and 3,000 
C) 170 and 3,600 
D) 170 and 3,000 
A) 150 and 2,600 
B) 150 and 3,000 
C) 170 and 3,600 
D) 170 and 3,000

Question 18

-Refer to the information above to answer this question.What is the equilibrium level of prices?

Accepted Answer

A) 200. 
B) 190. 
C) 180. 
D) 210. 
E) 220. 
A) 200. 
B) 190. 
C) 180. 
D) 210. 
E) 220.

Question 19

The following is a list of economic events:
1.A big cut in the price of imported oil.
2.An increase in the money supply.
3.An increase in labour productivity.
4.A decline in the GDP of the USA
5.A big rise in nominal wages.
-How does the economy eventually adjust to an inflationary gap?

Accepted Answer

A) The nominal wage and price levels will both increase. 
B) The nominal wage and price level will both decrease. 
C) The nominal wage level will decrease but the price level will increase. 
D) The nominal wage level will increase but the price level will decrease. 
A) The nominal wage and price levels will both increase. 
B) The nominal wage and price level will both decrease. 
C) The nominal wage level will decrease but the price level will increase. 
D) The nominal wage level will increase but the price level will decrease.

Question 20

Which of the following is an example of the real-balances effect?

Accepted Answer

A) Workers are better able to negotiate a wage increase when the price level increases. 
B) Nominal interest rates will increase when the price level increases. 
C) Consumption decreases because products are more expensive when the price level increases. 
D) Consumption decreases when the price level increases,because future prices are expected to fall. 
E) The real value of savings will decrease when the price level increases. 
A) Workers are better able to negotiate a wage increase when the price level increases. 
B) Nominal interest rates will increase when the price level increases. 
C) Consumption decreases because products are more expensive when the price level increases. 
D) Consumption decreases when the price level increases,because future prices are expected to fall. 
E) The real value of savings will decrease when the price level increases.

Which of the following will cause the aggregate demand curve to shift to the right?

List the four factors that can cause a decrease in exports?

What is the slope of the LAS curve?

All of the following,except one,are possible causes of the business cycle.Which is the exception?

What does the foreign-trade effect suggest will happen if there is a decrease in the Canadian price level relative to other countries?

Which component of aggregate demand is most likely to change as a result of the interest-rate effect?

Assume an economy is currently in equilibrium with Real GDP at $500 billion.If potential Real GDP (LAS)is $600 billion,which of the following is true?

What will be the effect of a leftward shift in the AS curve?

What is the result of a decrease in the LAS curve?

The following are an aggregate demand and supply schedules for a hypothetical economy.All figures in $ billions. -Refer to the information above to answer this question.What is the equilibrium level of output?

All of the following,except one,will cause an increase in both aggregate supply and long-run aggregate supply.Which is the exception?

According to neoclassical economists,which of the following statements is correct?

"The aggregate quantity of goods and services produced by all sellers at various prices".Of what is this a definition?

Assume that the present price level is P1. -Refer to the above graph to answer this question.Which graph illustrates full-employment equilibrium?

Aggregate demand is the total quantity of final goods and services that consumers,businesses,government and those living outside the country would buy at various different price levels.

Which of the following is true of a recessionary gap?

The following are aggregate demand and supply schedules for a hypothetical economy.All figures are in $ billions. Note: Potential GDP is 3,000. -Refer to the information above to answer this question.What will equilibrium price level and GDP be?

-Refer to the information above to answer this question.What is the equilibrium level of prices?

The following is a list of economic events: 1.A big cut in the price of imported oil. 2.An increase in the money supply. 3.An increase in labour productivity. 4.A decline in the GDP of the USA 5.A big rise in nominal wages. -How does the economy eventually adjust to an inflationary gap?

Which of the following is an example of the real-balances effect?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Exam 5: Aggregate Demand and Supply

Which of the following will cause the aggregate demand curve to shift to the right?

List the four factors that can cause a decrease in exports?

What is the slope of the LAS curve?

All of the following,except one,are possible causes of the business cycle.Which is the exception?

What does the foreign-trade effect suggest will happen if there is a decrease in the Canadian price level relative to other countries?

Which component of aggregate demand is most likely to change as a result of the interest-rate effect?

Assume an economy is currently in equilibrium with Real GDP at $500 billion.If potential Real GDP (LAS)is $600 billion,which of the following is true?

What will be the effect of a leftward shift in the AS curve?

What is the result of a decrease in the LAS curve?

The following are an aggregate demand and supply schedules for a hypothetical economy.All figures in $ billions. -Refer to the information above to answer this question.What is the equilibrium level of output?

All of the following,except one,will cause an increase in both aggregate supply and long-run aggregate supply.Which is the exception?

According to neoclassical economists,which of the following statements is correct?

"The aggregate quantity of goods and services produced by all sellers at various prices".Of what is this a definition?

Assume that the present price level is P1. -Refer to the above graph to answer this question.Which graph illustrates full-employment equilibrium?

Aggregate demand is the total quantity of final goods and services that consumers,businesses,government and those living outside the country would buy at various different price levels.

Which of the following is true of a recessionary gap?

The following are aggregate demand and supply schedules for a hypothetical economy.All figures are in $ billions. Note: Potential GDP is 3,000. -Refer to the information above to answer this question.What will equilibrium price level and GDP be?

-Refer to the information above to answer this question.What is the equilibrium level of prices?

The following is a list of economic events: 1.A big cut in the price of imported oil. 2.An increase in the money supply. 3.An increase in labour productivity. 4.A decline in the GDP of the USA 5.A big rise in nominal wages. -How does the economy eventually adjust to an inflationary gap?

Which of the following is an example of the real-balances effect?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters