Question 1

Which of the following is the most likely explanation for inflation in the United States?

Accepted Answer

A)  increases in aggregate supply 
B)  decreases in aggregate supply 
C)  increases in aggregate demand 
D)  decreases in aggregate demand 
A)  increases in aggregate supply 
B)  decreases in aggregate supply 
C)  increases in aggregate demand 
D)  decreases in aggregate demand

Question 2

The aggregate supply curve

Accepted Answer

A)  shows what each producer is willing and able to produce at each income level. 
B)  relates planned aggregate production to price level. 
C)  is the sum of all supply curves of natural resources. 
D)  shows a negative relationship between the price level and real Gross Domestic Product (GDP). 
A)  shows what each producer is willing and able to produce at each income level. 
B)  relates planned aggregate production to price level. 
C)  is the sum of all supply curves of natural resources. 
D)  shows a negative relationship between the price level and real Gross Domestic Product (GDP).

Question 3

-In the above figure, a movement from point C to point B could be explained by

Accepted Answer

A)  an increase in the price level. 
B)  an increase in the quantity of money in circulation. 
C)  increased government taxation. 
D)  the real-balance effect. 
A)  an increase in the price level. 
B)  an increase in the quantity of money in circulation. 
C)  increased government taxation. 
D)  the real-balance effect.

Question 4

The total level of all planned expenditures in the economy best describes

Accepted Answer

A)  aggregate supply. 
B)  aggregate demand. 
C)  aggregate expenditures. 
D)  both B and C are correct. 
A)  aggregate supply. 
B)  aggregate demand. 
C)  aggregate expenditures. 
D)  both B and C are correct.

Question 5

When the price level is below the level at which the aggregate demand curve crosses the long run aggregate supply curve

Accepted Answer

A)  there will be no price level change. 
B)  there will be pressures that will lead to a shift of either the aggregate demand or the long run aggregate supply curves. 
C)  total planned real expenditures will exceed actual real GDP, and the price level will increase. 
D)  total planned real expenditure will be lower than actual real GDP, and the price level will increase. 
A)  there will be no price level change. 
B)  there will be pressures that will lead to a shift of either the aggregate demand or the long run aggregate supply curves. 
C)  total planned real expenditures will exceed actual real GDP, and the price level will increase. 
D)  total planned real expenditure will be lower than actual real GDP, and the price level will increase.

Question 6

Other things being equal, appreciation of the dollar

Accepted Answer

A)  increases aggregate demand in the United States, and may increase aggregate supply by reducing the prices of imported resources. 
B)  increases aggregate demand in the United States, and may decrease aggregate supply by reducing the prices of imported resources. 
C)  decreases aggregate demand in the United States, and may increase aggregate supply by reducing the prices of imported resources. 
D)  decreases aggregate demand in the United States, and may decrease aggregate supply by increasing the prices of imported resources. 
A)  increases aggregate demand in the United States, and may increase aggregate supply by reducing the prices of imported resources. 
B)  increases aggregate demand in the United States, and may decrease aggregate supply by reducing the prices of imported resources. 
C)  decreases aggregate demand in the United States, and may increase aggregate supply by reducing the prices of imported resources. 
D)  decreases aggregate demand in the United States, and may decrease aggregate supply by increasing the prices of imported resources.

Question 7

What is measured on the vertical axis when we draw a graph of long-run aggregate supply?

Accepted Answer

A)  production of capital goods 
B)  spending on goods and services in an economy 
C)  the price level 
D)  real GDP 
A)  production of capital goods 
B)  spending on goods and services in an economy 
C)  the price level 
D)  real GDP

Question 8

Secular deflation occurs when

Accepted Answer

A)  there is no economic growth and aggregate demand falls. 
B)  aggregate demand increases at the same time there is no economic growth. 
C)  aggregate demand remains unchanged while economic growth increases long-run aggregate supply. 
D)  both aggregate demand and aggregate supply are shifting left. 
A)  there is no economic growth and aggregate demand falls. 
B)  aggregate demand increases at the same time there is no economic growth. 
C)  aggregate demand remains unchanged while economic growth increases long-run aggregate supply. 
D)  both aggregate demand and aggregate supply are shifting left.

Question 9

Which of the following is NOT an explanation for the shape of the aggregate demand curve?

Accepted Answer

A)  real balance effect 
B)  interest rate effect 
C)  open economy effect 
D)  investment effect 
A)  real balance effect 
B)  interest rate effect 
C)  open economy effect 
D)  investment effect

Question 10

The sum of all planned expenditures for the entire economy at each possible price level is

Accepted Answer

A)  aggregate supply. 
B)  effective demand. 
C)  aggregate demand. 
D)  actual expenditures by consumers. 
A)  aggregate supply. 
B)  effective demand. 
C)  aggregate demand. 
D)  actual expenditures by consumers.

Question 11

An increase in the U.S. price level causes a

Accepted Answer

A)  shift of the U.S. aggregate demand curve to the right. 
B)  shift of the U.S. aggregate demand curve to the left. 
C)  movement up the U.S. aggregate demand curve. 
D)  movement down the U.S. aggregate demand curve. 
A)  shift of the U.S. aggregate demand curve to the right. 
B)  shift of the U.S. aggregate demand curve to the left. 
C)  movement up the U.S. aggregate demand curve. 
D)  movement down the U.S. aggregate demand curve.

Question 12

The aggregate demand curve has

Accepted Answer

A)  no relationship between the price level and real GDP. 
B)  a negative relationship between the price level and real GDP. 
C)  a positive relationship between the price level and real GDP. 
D)  a positive relationship between the price level and nominal GDP. 
A)  no relationship between the price level and real GDP. 
B)  a negative relationship between the price level and real GDP. 
C)  a positive relationship between the price level and real GDP. 
D)  a positive relationship between the price level and nominal GDP.

Question 13

A reduction the amount of oil (a resource) will tend to cause which of the following?

Accepted Answer

A)  a reduction in output and a reduction in the price level 
B)  a reduction in output with no change in the price level 
C)  a reduction in output and an increase in the price level 
D)  an increase in the price level and no change in output if accompanied by an increase in the money supply 
A)  a reduction in output and a reduction in the price level 
B)  a reduction in output with no change in the price level 
C)  a reduction in output and an increase in the price level 
D)  an increase in the price level and no change in output if accompanied by an increase in the money supply

Question 14

How can a country experience economic growth and stable prices?

Accepted Answer

A country can experience economic growth

Question 15

-Refer to the above figure. If the price level is 80

Accepted Answer

A)  the total planned real expenditures by individuals, businesses, and the government are less than total planned production by firms. 
B)  the total planned real expenditures by individuals, businesses, and the government exceed total planned production by firms. 
C)  the economy will have economic growth and the new equilibrium price level will be 80. 
D)  the aggregate demand curve will automatically shift leading to a stable equilibrium. 
A)  the total planned real expenditures by individuals, businesses, and the government are less than total planned production by firms. 
B)  the total planned real expenditures by individuals, businesses, and the government exceed total planned production by firms. 
C)  the economy will have economic growth and the new equilibrium price level will be 80. 
D)  the aggregate demand curve will automatically shift leading to a stable equilibrium.

Question 16

What is measured on the horizontal axis when we draw a graph of the long-run aggregate supply curve?

Accepted Answer

A)  production of capital goods 
B)  production of consumer goods 
C)  the price level 
D)  real GDP 
A)  production of capital goods 
B)  production of consumer goods 
C)  the price level 
D)  real GDP

Question 17

Which of the following will cause the long-run aggregate supply curve to shift? I. Changes in the amount of capital
II) Changes in the price level
III) Changes in the money supply

Accepted Answer

A)  I only 
B)  II only 
C)  I, II, and III 
D)  only I and II 
A)  I only 
B)  II only 
C)  I, II, and III 
D)  only I and II

Question 18

What is the real-balance effect of an increase in the price level?

Accepted Answer

The real-balance effect is the change in

Question 19

The total of all planned production for the economy is

Accepted Answer

A)  aggregate supply. 
B)  aggregate demand. 
C)  endowments. 
D)  real-balance effect. 
A)  aggregate supply. 
B)  aggregate demand. 
C)  endowments. 
D)  real-balance effect.

Question 20

Whenever the general level of prices rises because of continual increases in aggregate demand, we say that the economy is experiencing

Accepted Answer

A)  supply-side inflation. 
B)  monetary stagflation. 
C)  demand-side inflation. 
D)  aggregate supply shock. 
A)  supply-side inflation. 
B)  monetary stagflation. 
C)  demand-side inflation. 
D)  aggregate supply shock.

Exam 10: Real GDP and the Price Level in the Long Run

Which of the following is the most likely explanation for inflation in the United States?

The aggregate supply curve

-In the above figure, a movement from point C to point B could be explained by

The total level of all planned expenditures in the economy best describes

When the price level is below the level at which the aggregate demand curve crosses the long run aggregate supply curve

Other things being equal, appreciation of the dollar

What is measured on the vertical axis when we draw a graph of long-run aggregate supply?

Secular deflation occurs when

Which of the following is NOT an explanation for the shape of the aggregate demand curve?

The sum of all planned expenditures for the entire economy at each possible price level is

An increase in the U.S. price level causes a

The aggregate demand curve has

A reduction the amount of oil (a resource) will tend to cause which of the following?

How can a country experience economic growth and stable prices?

-Refer to the above figure. If the price level is 80

What is measured on the horizontal axis when we draw a graph of the long-run aggregate supply curve?

Which of the following will cause the long-run aggregate supply curve to shift? I. Changes in the amount of capital II) Changes in the price level III) Changes in the money supply

What is the real-balance effect of an increase in the price level?

The total of all planned production for the economy is

Whenever the general level of prices rises because of continual increases in aggregate demand, we say that the economy is experiencing

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters