Question 1

Potential GDP is also referred to as

Accepted Answer

A)  realised GDP. 
B)  full-employment GDP. 
C)  unemployment GDP. 
D)  balanced-budget GDP. 
A)  realised GDP. 
B)  full-employment GDP. 
C)  unemployment GDP. 
D)  balanced-budget GDP.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

Figure 14.2  
-In Figure 14.2,given the economy is at point A in year 1 and point B in year 2,what is the growth rate in real GDP between those two years?

Accepted Answer

A)  2.5 per cent 
B)  7.3 per cent 
C)  8.0 per cent 
D)  10.0 per cent 
A)  2.5 per cent 
B)  7.3 per cent 
C)  8.0 per cent 
D)  10.0 per cent

Question 5

Figure 14.2  
-Refer to Figure 14.2.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

Accepted Answer

A)  0.3 per cent 
B)  1.1 per cent 
C)  2.7 per cent 
D)  3.7 per cent 
A)  0.3 per cent 
B)  1.1 per cent 
C)  2.7 per cent 
D)  3.7 per cent

Question 6

The inflation rate is defined as the

Accepted Answer

A)  percentage change in the price level between time periods. 
B)  percentage decrease in the price level between time periods. 
C)  dollar increase in prices between time periods. 
D)  percentage change in real GDP during a year. 
A)  percentage change in the price level between time periods. 
B)  percentage decrease in the price level between time periods. 
C)  dollar increase in prices between time periods. 
D)  percentage change in real GDP during a year.

Question 7

On the 45° line diagram,for points that lie above the 45° line

Accepted Answer

A)  planned aggregate expenditure is greater than GDP. 
B)  planned aggregate expenditure is less than GDP. 
C)  planned aggregate expenditure is equal to GDP. 
D)  planned aggregate expenditure is less than aggregate income. 
A)  planned aggregate expenditure is greater than GDP. 
B)  planned aggregate expenditure is less than GDP. 
C)  planned aggregate expenditure is equal to GDP. 
D)  planned aggregate expenditure is less than aggregate income.

Question 8

The long-run aggregate supply curve has a

Accepted Answer

A)  negative slope. 
B)  steep but positive slope. 
C)  flat slope. 
D)  vertical slope. 
A)  negative slope. 
B)  steep but positive slope. 
C)  flat slope. 
D)  vertical slope.

Question 9

Figure 14.1  
-Suppose the economy is at point A in Figure 14.1.If consumer spending increases in the economy,where will the eventual long-run equilibrium be?

Accepted Answer

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

Question 10

Figure 14.3  
-In Figure 14.3,if the economy is at a level of aggregate expenditure given by point K,

Accepted Answer

A)  the economy is in equilibrium. 
B)  production is greater than spending. 
C)  production is less than spending. 
D)  inventories will increase above their desired level. 
A)  the economy is in equilibrium. 
B)  production is greater than spending. 
C)  production is less than spending. 
D)  inventories will increase above their desired level.

Question 11

Explain how each of the following events would affect the aggregate demand curve.
a. Lower interest rates
b. A decrease in net exports
c. A decrease in the price level
d. Slower income growth in other countries
e. A decrease in imports

Accepted Answer

a. Lower interest rates would increase i

Question 12

If real GDP is less than planned aggregate expenditure,there will be an unplanned decline in inventories,ultimately leading to a movement up along the aggregate expenditure line.

Accepted Answer

A) True 
 B)False

Question 13

As the economy nears the end of an expansion,interest rates usually ________ and wages rise more ________ than prices.

Accepted Answer

A)  rise; rapidly 
B)  rise; slowly 
C)  fall; rapidly 
D)  fall; slowly 
A)  rise; rapidly 
B)  rise; slowly 
C)  fall; rapidly 
D)  fall; slowly

Question 14

An increase in disposable income will shift the aggregate demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 15

What effect does a change in expectations by households and firms have on the aggregate demand curve?

Accepted Answer

Changes in expectations by households an

Question 16

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

Question 17

An economic contraction can cause the unemployment rate to ________ and the inflation rate to ________.

Accepted Answer

A)  fall or rise; rise 
B)  rise; fall or rise 
C)  fall; rise 
D)  fall; fall 
A)  fall or rise; rise 
B)  rise; fall or rise 
C)  fall; rise 
D)  fall; fall

Question 18

During the expansion phase of the business cycle

Accepted Answer

A)  production increases. 
B)  employment decreases. 
C)  income decreases. 
D)  unemployment increases. 
A)  production increases. 
B)  employment decreases. 
C)  income decreases. 
D)  unemployment increases.

Question 19

Beginning at long-run equilibrium,(i)use the basic (static)aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a supply shock,and (ii)use the basic (static)aggregate supply and demand model to illustrate what happens in the long run following this supply shock.

Accepted Answer

(i)In the following graph,the economy is

Question 20

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

Accepted Answer

A) True 
 B)False

Potential GDP is also referred to as

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

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

Figure 14.2 -In Figure 14.2,given the economy is at point A in year 1 and point B in year 2,what is the growth rate in real GDP between those two years?

Figure 14.2 -Refer to Figure 14.2.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

The inflation rate is defined as the

On the 45° line diagram,for points that lie above the 45° line

The long-run aggregate supply curve has a

Figure 14.1 -Suppose the economy is at point A in Figure 14.1.If consumer spending increases in the economy,where will the eventual long-run equilibrium be?

Figure 14.3 -In Figure 14.3,if the economy is at a level of aggregate expenditure given by point K,

Explain how each of the following events would affect the aggregate demand curve. a. Lower interest rates b. A decrease in net exports c. A decrease in the price level d. Slower income growth in other countries e. A decrease in imports

If real GDP is less than planned aggregate expenditure,there will be an unplanned decline in inventories,ultimately leading to a movement up along the aggregate expenditure line.

As the economy nears the end of an expansion,interest rates usually and wages rise more than prices.

An increase in disposable income will shift the aggregate demand curve to the right.

What effect does a change in expectations by households and firms have on the aggregate demand curve?

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

An economic contraction can cause the unemployment rate to and the inflation rate to .

During the expansion phase of the business cycle

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 14: Economic Growth, the Financial System and Business Cycles

Potential GDP is also referred to as

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

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

Figure 14.2 -In Figure 14.2,given the economy is at point A in year 1 and point B in year 2,what is the growth rate in real GDP between those two years?

Figure 14.2 -Refer to Figure 14.2.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

The inflation rate is defined as the

On the 45° line diagram,for points that lie above the 45° line

The long-run aggregate supply curve has a

Figure 14.1 -Suppose the economy is at point A in Figure 14.1.If consumer spending increases in the economy,where will the eventual long-run equilibrium be?

Figure 14.3 -In Figure 14.3,if the economy is at a level of aggregate expenditure given by point K,

Explain how each of the following events would affect the aggregate demand curve. a. Lower interest rates b. A decrease in net exports c. A decrease in the price level d. Slower income growth in other countries e. A decrease in imports

If real GDP is less than planned aggregate expenditure,there will be an unplanned decline in inventories,ultimately leading to a movement up along the aggregate expenditure line.

As the economy nears the end of an expansion,interest rates usually ________ and wages rise more ________ than prices.

An increase in disposable income will shift the aggregate demand curve to the right.

What effect does a change in expectations by households and firms have on the aggregate demand curve?

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

An economic contraction can cause the unemployment rate to ________ and the inflation rate to ________.

During the expansion phase of the business cycle

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

As the economy nears the end of an expansion,interest rates usually and wages rise more than prices.

An economic contraction can cause the unemployment rate to and the inflation rate to .