Question 1

Along the long-run aggregate supply curve, the price level ____ with increases in aggregate demand.

Accepted Answer

A) ​does not change 
B) ​increases 
C) ​decreases slightly 
D) ​decreases dramatically 
A) ​does not change 
B) ​increases 
C) ​decreases slightly 
D) ​decreases dramatically

Question 2

An increase in the price level will:

Accepted Answer

A) ​increase the quantity of RGDP supplied, but not increase short-run aggregate supply. 
B) ​decrease the quantity of RGDP supplied, but not decrease short-run aggregate supply. 
C) ​increase short-run aggregate supply. 
D) ​decrease short-run aggregate supply. 
A) ​increase the quantity of RGDP supplied, but not increase short-run aggregate supply. 
B) ​decrease the quantity of RGDP supplied, but not decrease short-run aggregate supply. 
C) ​increase short-run aggregate supply. 
D) ​decrease short-run aggregate supply.

Question 3

A decrease in the expected future price level:

Accepted Answer

A) ​Shifts both SRAS and LRAS to the left. 
B) ​Shifts both SRAS and LRAS to the right. 
C) ​Shifts SRAS left but leaves LRAS unchanged. 
D) ​Shifts SRAS right but leaves LRAS unchanged. 
A) ​Shifts both SRAS and LRAS to the left. 
B) ​Shifts both SRAS and LRAS to the right. 
C) ​Shifts SRAS left but leaves LRAS unchanged. 
D) ​Shifts SRAS right but leaves LRAS unchanged.

Question 4

Increases in the burdens of government regulations can make production more costly for producers, shifting the short run aggregate supply curve left; it can also reduce potential output, shifting the long-run aggregate supply curve left.

Accepted Answer

A) True 
 B)False

Question 5

Point A suggests:

Accepted Answer

A) ​an economy operating with an inflationary gap. 
B) ​an economy operating with a recessionary gap. 
C) ​an economy operating at long-run equilibrium. 
D) ​There is not sufficient information to draw a conclusion. 
A) ​an economy operating with an inflationary gap. 
B) ​an economy operating with a recessionary gap. 
C) ​an economy operating at long-run equilibrium. 
D) ​There is not sufficient information to draw a conclusion.

Question 6

If the stock market continues a steady climb upwards, this ____ consumer confidence and wealth, leading to ____ consumption, and ____ aggregate demand.

Accepted Answer

A) ​increases, decreased, increased 
B) ​decreases, decreased, decreased 
C) ​increases, increased, increased 
D) ​increases, increased, decreased 
A) ​increases, decreased, increased 
B) ​decreases, decreased, decreased 
C) ​increases, increased, increased 
D) ​increases, increased, decreased

Question 7

Which of the following would lead to stagflation?

Accepted Answer

A) ​demand-pull inflation 
B) ​cost-push inflation 
C) ​both of the above 
D) ​none of the above 
A) ​demand-pull inflation 
B) ​cost-push inflation 
C) ​both of the above 
D) ​none of the above

Question 8

Sticky wages and input prices can explain why profits change along a short run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 9

During the 1970s, U.S. prices generally rose faster than prices in other parts of the world. Which of the following changes would the open economy effect predict took place in response to these price level changes?

Accepted Answer

A) ​Americans reduced the proportion of foreign goods bought since their foreign prices became relatively lower. 
B) ​Americans reduced the amount of investment they undertook because interest rates increased. 
C) ​Americans reduced the amount of goods and services they wanted to purchase for consumption because they felt less wealthy. 
D) ​Americans reduced the fraction of purchases they made from domestic producers of goods and services, since foreign prices became relatively lower. 
A) ​Americans reduced the proportion of foreign goods bought since their foreign prices became relatively lower. 
B) ​Americans reduced the amount of investment they undertook because interest rates increased. 
C) ​Americans reduced the amount of goods and services they wanted to purchase for consumption because they felt less wealthy. 
D) ​Americans reduced the fraction of purchases they made from domestic producers of goods and services, since foreign prices became relatively lower.

Question 10

If you are living in a period of continued high inflation on a fixed income, the cost of the goods and services you buy ____ and your nominal income ____.

Accepted Answer

A) ​decreases, decreases 
B) ​increases, increases 
C) ​decreases, remains the same 
D) ​increases, remains the same 
A) ​decreases, decreases 
B) ​increases, increases 
C) ​decreases, remains the same 
D) ​increases, remains the same

Question 11

An increase in investment, combined with an increase in imports, would have what effect on aggregate demand?

Accepted Answer

A) ​AD would increase. 
B) ​AD would decrease. 
C) ​AD would stay the same. 
D) ​AD could either increase or decrease, depending on which change was of a greater magnitude. 
A) ​AD would increase. 
B) ​AD would decrease. 
C) ​AD would stay the same. 
D) ​AD could either increase or decrease, depending on which change was of a greater magnitude.

Question 12

If consumption in the United States was 68 percent of GDP, investment was 19 percent, government purchases were 13 percent, exports were 14 percent, and imports were 14 percent, net exports were equal to ____ percent of GDP.

Accepted Answer

A) ​-1 
B) ​0 
C) ​-28 
D) ​28 
A) ​-1 
B) ​0 
C) ​-28 
D) ​28

Question 13

In an open economy as the price level decreases, a(n) ____ in demand for domestic goods relative to foreign goods results in a(n) ____ in the quantity of RGDP demanded.

Accepted Answer

A) ​increase, decrease 
B) ​increase, increase 
C) ​decrease, decrease 
D) ​decrease, increase 
A) ​increase, decrease 
B) ​increase, increase 
C) ​decrease, decrease 
D) ​decrease, increase

Question 14

A long run equilibrium:

Accepted Answer

A) ​Will be at a greater output level than the natural level of real output. 
B) ​Will be at the natural level of real output. 
C) ​Will be at a smaller output level than the natural level of real output. 
D) ​Long-run equilibrium could be at any of the above levels of output. 
A) ​Will be at a greater output level than the natural level of real output. 
B) ​Will be at the natural level of real output. 
C) ​Will be at a smaller output level than the natural level of real output. 
D) ​Long-run equilibrium could be at any of the above levels of output.

Question 15

Which of the following increases U.S. aggregate demand?

Accepted Answer

A) ​a lower price level, increasing citizen's real wealth 
B) ​a lower price level, reducing interest rates 
C) ​a lower price level, increasing exports and decreasing imports 
D) ​None of the above 
A) ​a lower price level, increasing citizen's real wealth 
B) ​a lower price level, reducing interest rates 
C) ​a lower price level, increasing exports and decreasing imports 
D) ​None of the above

Question 16

A recession is most commonly caused by:

Accepted Answer

A) ​an increase in aggregate demand. 
B) ​a decrease in aggregate demand. 
C) ​an increase in aggregate supply. 
D) ​a decrease in aggregate supply. 
A) ​an increase in aggregate demand. 
B) ​a decrease in aggregate demand. 
C) ​an increase in aggregate supply. 
D) ​a decrease in aggregate supply.

Question 17

Which of the following is the most unstable category of GDP?

Accepted Answer

A) ​consumption 
B) ​investment 
C) ​government purchases 
D) ​net exports 
A) ​consumption 
B) ​investment 
C) ​government purchases 
D) ​net exports

Question 18

An increase in the expected future price level:

Accepted Answer

A) ​Shifts both SRAS and LRAS to the left. 
B) ​Shifts both SRAS and LRAS to the right. 
C) ​Shifts SRAS left but leaves LRAS unchanged. 
D) ​Shifts SRAS right but leaves LRAS unchanged. 
A) ​Shifts both SRAS and LRAS to the left. 
B) ​Shifts both SRAS and LRAS to the right. 
C) ​Shifts SRAS left but leaves LRAS unchanged. 
D) ​Shifts SRAS right but leaves LRAS unchanged.

Question 19

When there is an inflationary gap:

Accepted Answer

A) ​Real output exceeds the natural level of real output. 
B) ​Real output equals the natural level of real output. 
C) ​Real output is less than the natural level of real output. 
D) ​Any of the above is possible. 
A) ​Real output exceeds the natural level of real output. 
B) ​Real output equals the natural level of real output. 
C) ​Real output is less than the natural level of real output. 
D) ​Any of the above is possible.

Question 20

The long-run aggregate supply relationship refers to:

Accepted Answer

A) ​a time period long enough for the prices of both outputs and inputs to adjust to changes in the economy. 
B) ​any time period of more than a year. 
C) ​a time period in which input prices can change, but output prices have not had time to adjust. 
D) ​a time period in which output prices can change but input prices have not had time to adjust. 
A) ​a time period long enough for the prices of both outputs and inputs to adjust to changes in the economy. 
B) ​any time period of more than a year. 
C) ​a time period in which input prices can change, but output prices have not had time to adjust. 
D) ​a time period in which output prices can change but input prices have not had time to adjust.

Exam 14: Monopolistic Competition and Product Differentiation

Along the long-run aggregate supply curve, the price level ____ with increases in aggregate demand.

An increase in the price level will:

A decrease in the expected future price level:

Increases in the burdens of government regulations can make production more costly for producers, shifting the short run aggregate supply curve left; it can also reduce potential output, shifting the long-run aggregate supply curve left.

Point A suggests:

If the stock market continues a steady climb upwards, this ____ consumer confidence and wealth, leading to ____ consumption, and ____ aggregate demand.

Which of the following would lead to stagflation?

Sticky wages and input prices can explain why profits change along a short run aggregate supply curve.

During the 1970s, U.S. prices generally rose faster than prices in other parts of the world. Which of the following changes would the open economy effect predict took place in response to these price level changes?

If you are living in a period of continued high inflation on a fixed income, the cost of the goods and services you buy ____ and your nominal income ____.

An increase in investment, combined with an increase in imports, would have what effect on aggregate demand?

If consumption in the United States was 68 percent of GDP, investment was 19 percent, government purchases were 13 percent, exports were 14 percent, and imports were 14 percent, net exports were equal to ____ percent of GDP.

In an open economy as the price level decreases, a(n) ____ in demand for domestic goods relative to foreign goods results in a(n) ____ in the quantity of RGDP demanded.

A long run equilibrium:

Which of the following increases U.S. aggregate demand?

A recession is most commonly caused by:

Which of the following is the most unstable category of GDP?

An increase in the expected future price level:

When there is an inflationary gap:

The long-run aggregate supply relationship refers to:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

If the stock market continues a steady climb upwards, this consumer confidence and wealth, leading to consumption, and aggregate demand.

If you are living in a period of continued high inflation on a fixed income, the cost of the goods and services you buy and your nominal income .

In an open economy as the price level decreases, a(n) in demand for domestic goods relative to foreign goods results in a(n) in the quantity of RGDP demanded.