Question 1

A change in business taxes and regulation can affect production costs and aggregate supply.

Accepted Answer

A) True 
 B)False

Question 2

If the price level increases, then the aggregate expenditures schedule will shift down and the aggregate demand curve will shift to the left.

Accepted Answer

A) True 
 B)False

Question 3

A decrease in aggregate supply means:

Accepted Answer

A)  Both the real domestic output and the price level would decrease 
B)  The real domestic output would increase and rises in the price level would become smaller 
C)  The real domestic output would decrease and the price level would rise 
D)  Both the real domestic output and rises in the price level would become greater 
A)  Both the real domestic output and the price level would decrease 
B)  The real domestic output would increase and rises in the price level would become smaller 
C)  The real domestic output would decrease and the price level would rise 
D)  Both the real domestic output and rises in the price level would become greater

Question 4

The immediate-short-run aggregate supply curve is:

Accepted Answer

A)  Vertical 
B)  Horizontal 
C)  Upward-sloping 
D)  Downward-sloping 
A)  Vertical 
B)  Horizontal 
C)  Upward-sloping 
D)  Downward-sloping

Question 5

An aggregate supply curve represents the relationship between the:

Accepted Answer

A)  Price level and the buying of real domestic output 
B)  Price level and the production of real domestic output 
C)  Real domestic output bought and the real domestic output sold 
D)  Price level that producers are willing to accept and the price level buyers are willing to pay 
A)  Price level and the buying of real domestic output 
B)  Price level and the production of real domestic output 
C)  Real domestic output bought and the real domestic output sold 
D)  Price level that producers are willing to accept and the price level buyers are willing to pay

Question 6

A decrease in personal and business taxes will cause government spending and aggregate demand to decrease.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the graph above. When output increases from Q1 and the price level decreases from P1, this change will:

Accepted Answer

A)  Be caused by a shift in the aggregate supply curve from AS1 to AS2 
B)  Be caused by a shift in the aggregate supply curve from AS1 to AS3 
C)  Result in a movement along the aggregate demand curve from e1 to e2 
D)  Result in a movement along the aggregate demand curve from e3 to e1 
A)  Be caused by a shift in the aggregate supply curve from AS1 to AS2 
B)  Be caused by a shift in the aggregate supply curve from AS1 to AS3 
C)  Result in a movement along the aggregate demand curve from e1 to e2 
D)  Result in a movement along the aggregate demand curve from e3 to e1

Question 8

If the U.S. dollar appreciates in value relative to foreign currencies, then this will:

Accepted Answer

A)  Increase aggregate demand and aggregate supply 
B)  Decrease aggregate demand and aggregate supply 
C)  Decrease aggregate demand and increase aggregate supply 
D)  Increase aggregate demand and decrease aggregate supply 
A)  Increase aggregate demand and aggregate supply 
B)  Decrease aggregate demand and aggregate supply 
C)  Decrease aggregate demand and increase aggregate supply 
D)  Increase aggregate demand and decrease aggregate supply

Question 9

Answer the question based on the following list of factors that are related to the aggregate demand curve.   Refer to the list above. Investment spending would most likely be influenced by changes in:

Accepted Answer

A)  1 and 3 
B)  4 and 6 
C)  5 and 10 
D)  8 and 9 
A)  1 and 3 
B)  4 and 6 
C)  5 and 10 
D)  8 and 9

Question 10

Macroeconomic equilibrium in the short run always occurs at full-employment GDP.

Accepted Answer

A) True 
 B)False

Question 11

Answer the question based on the following list of items that are related to aggregate demand and/or aggregate supply.   Refer to the list above. A change in which factor is most likely to change both aggregate demand and aggregate supply?

Accepted Answer

A)  3 
B)  5 
C)  7 
D)  6 
A)  3 
B)  5 
C)  7 
D)  6

Question 12

The intersection of the aggregate demand and aggregate supply curves determines the:

Accepted Answer

A)  Productivity level in the economy 
B)  Shape of the aggregate demand curve 
C)  Per-unit cost of production in the economy 
D)  Equilibrium level of real domestic output and prices 
A)  Productivity level in the economy 
B)  Shape of the aggregate demand curve 
C)  Per-unit cost of production in the economy 
D)  Equilibrium level of real domestic output and prices

Question 13

Menu costs will:

Accepted Answer

A)  Increase the amount of training of workers 
B)  Result in price wars between businesses 
C)  Increase the legal minimum wage 
D)  Make prices inflexible downward 
A)  Increase the amount of training of workers 
B)  Result in price wars between businesses 
C)  Increase the legal minimum wage 
D)  Make prices inflexible downward

Question 14

The aggregate demand curve shows that when the price level rises, the quantity of real output demanded decreases.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would not shift the aggregate demand curve? Changes in:

Accepted Answer

A)  Productivity rates 
B)  Foreign-exchange rates 
C)  Real interest rates 
D)  Income tax rates 
A)  Productivity rates 
B)  Foreign-exchange rates 
C)  Real interest rates 
D)  Income tax rates

Question 16

The table below shows the aggregate demand and aggregate supply schedules for a hypothetical economy.   Refer to the table above. The equilibrium price and output levels will be:

Accepted Answer

A)  200 and $5000 
B)  200 and $6000 
C)  250 and $7000 
D)  300 and $8000 
A)  200 and $5000 
B)  200 and $6000 
C)  250 and $7000 
D)  300 and $8000

Question 17

When there is an increase in aggregate demand in the short run, there will be an increase in the price level but not in the level of output or employment.

Accepted Answer

A) True 
 B)False

Question 18

Which would most likely shift the aggregate supply curve? A change in the prices of:

Accepted Answer

A)  Domestic products 
B)  Foreign products 
C)  Financial assets 
D)  Resources 
A)  Domestic products 
B)  Foreign products 
C)  Financial assets 
D)  Resources

Question 19

Demand-pull inflation is illustrated in the short run aggregate supply-aggregate demand model as a shift of the aggregate:

Accepted Answer

A)  Supply to the right 
B)  Supply to the left 
C)  Demand to the right 
D)  Demand to the left 
A)  Supply to the right 
B)  Supply to the left 
C)  Demand to the right 
D)  Demand to the left

Question 20

Answer the question based on the following list of factors that are related to the aggregate demand curve.   Changes in which two of the factors in the list above would most likely cause a shift in aggregate demand due to a change in consumer spending?

Accepted Answer

A)  1 and 3 
B)  2 and 4 
C)  5 and 10 
D)  8 and 9 
A)  1 and 3 
B)  2 and 4 
C)  5 and 10 
D)  8 and 9

Exam 12: Aggregate Demand and Aggregate Supply

A change in business taxes and regulation can affect production costs and aggregate supply.

If the price level increases, then the aggregate expenditures schedule will shift down and the aggregate demand curve will shift to the left.

A decrease in aggregate supply means:

The immediate-short-run aggregate supply curve is:

An aggregate supply curve represents the relationship between the:

A decrease in personal and business taxes will cause government spending and aggregate demand to decrease.

Refer to the graph above. When output increases from Q1 and the price level decreases from P1, this change will:

If the U.S. dollar appreciates in value relative to foreign currencies, then this will:

Answer the question based on the following list of factors that are related to the aggregate demand curve. Refer to the list above. Investment spending would most likely be influenced by changes in:

Macroeconomic equilibrium in the short run always occurs at full-employment GDP.

Answer the question based on the following list of items that are related to aggregate demand and/or aggregate supply. Refer to the list above. A change in which factor is most likely to change both aggregate demand and aggregate supply?

The intersection of the aggregate demand and aggregate supply curves determines the:

Menu costs will:

The aggregate demand curve shows that when the price level rises, the quantity of real output demanded decreases.

Which of the following would not shift the aggregate demand curve? Changes in:

The table below shows the aggregate demand and aggregate supply schedules for a hypothetical economy. Refer to the table above. The equilibrium price and output levels will be:

When there is an increase in aggregate demand in the short run, there will be an increase in the price level but not in the level of output or employment.

Which would most likely shift the aggregate supply curve? A change in the prices of:

Demand-pull inflation is illustrated in the short run aggregate supply-aggregate demand model as a shift of the aggregate:

Answer the question based on the following list of factors that are related to the aggregate demand curve. Changes in which two of the factors in the list above would most likely cause a shift in aggregate demand due to a change in consumer spending?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Refer to the graph above. When output increases from Q₁ and the price level decreases from P₁, this change will: