Question 1

The general shape of the short-run aggregate supply curve is:

Accepted Answer

A) ​upward sloping. 
B) ​downward sloping. 
C) ​vertical. 
D) ​horizontal. 
A) ​upward sloping. 
B) ​downward sloping. 
C) ​vertical. 
D) ​horizontal.

Question 2

If workers and firms expect increases in future prices, it can lead the short run aggregate supply curve to shift left.

Accepted Answer

A) True 
 B)False

Question 3

Demand-pull inflation is caused by:

Accepted Answer

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

Question 4

Explain how changes in the stock of capital affect aggregate supply.

Accepted Answer

Changes in the stock of capital will alt

Question 5

When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation.

Accepted Answer

A) True 
 B)False

Question 6

The misperception effect explanation for an upward-sloping short-run aggregate supply curve is based on:

Accepted Answer

A) ​falling profit margins as the price level rises. 
B) ​rising costs of production as the price level rises. 
C) ​fixed wage labor contracts. 
D) ​people mistaking changes in aggregate demand for changes in the demand for their goods relative to other goods and services. 
A) ​falling profit margins as the price level rises. 
B) ​rising costs of production as the price level rises. 
C) ​fixed wage labor contracts. 
D) ​people mistaking changes in aggregate demand for changes in the demand for their goods relative to other goods and services.

Question 7

If there is currently an inflationary gap, an increase in aggregate demand will make the inflationary gap smaller, but a decrease in aggregate demand would make the inflationary gap larger.

Accepted Answer

A) True 
 B)False

Question 8

In an open economy, as the price level increases, a(n) ____ in demand in the quantity of domestic 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 9

Neither positive nor negative supply shocks

Accepted Answer

A) ​Change AD. 
B) ​Permanently change real output in an economy. 
C) ​Change the price level in the long run. 
D) ​Do any of the above 
A) ​Change AD. 
B) ​Permanently change real output in an economy. 
C) ​Change the price level in the long run. 
D) ​Do any of the above

Question 10

According to the interest rate effect, as the price level increases, households and firms' holdings of money ____, interest rates ____, investments ____, and the quantity RGDP demanded ____.

Accepted Answer

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

Question 11

Cost-push inflation is caused by:

Accepted Answer

A) ​an increase in short-run aggregate supply. 
B) ​a decrease in short-run aggregate supply. 
C) ​an increase in long-run aggregate supply. 
D) ​a decrease in long-run aggregate supply. 
A) ​an increase in short-run aggregate supply. 
B) ​a decrease in short-run aggregate supply. 
C) ​an increase in long-run aggregate supply. 
D) ​a decrease in long-run aggregate supply.

Question 12

If exports and imports both rose, but exports rose more than imports,

Accepted Answer

A) ​AD would decrease. 
B) ​AD would increase. 
C) ​AD would be unaffected. 
D) ​AD could either increase or decrease. 
A) ​AD would decrease. 
B) ​AD would increase. 
C) ​AD would be unaffected. 
D) ​AD could either increase or decrease.

Question 13

If Americans' home equity falls substantially, it would ____ wealth and consumer confidence, ____ consumption, and ____ aggregate demand.

Accepted Answer

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

Question 14

For individuals who are holding money or fixed dollar value assets, inflation has the effect of:

Accepted Answer

A) ​improving their ability to purchase goods and services with those dollars. 
B) ​reducing their ability to purchase goods and services with those dollars. 
C) ​increasing the purchasing power of those dollars. 
D) ​demonstrating the interest rate effect. 
A) ​improving their ability to purchase goods and services with those dollars. 
B) ​reducing their ability to purchase goods and services with those dollars. 
C) ​increasing the purchasing power of those dollars. 
D) ​demonstrating the interest rate effect.

Question 15

​Exhibit 14-1  
-Refer to Exhibit 14-1. Which of the following would be illustrated by a shift in aggregate demand from AD0 to AD1?

Accepted Answer

A) ​an increase in investment, combined with an increase in imports 
B) ​a reduction in business expectations, combined with the imposition of new tariffs by major trading partners 
C) ​the discovery of new profitable technological investment opportunities, combined with inventory levels that have fallen below desired levels 
D) ​all of the above 
A) ​an increase in investment, combined with an increase in imports 
B) ​a reduction in business expectations, combined with the imposition of new tariffs by major trading partners 
C) ​the discovery of new profitable technological investment opportunities, combined with inventory levels that have fallen below desired levels 
D) ​all of the above

Question 16

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) ​an increase in Americans' expected future incomes 
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) ​an increase in Americans' expected future incomes

Question 17

Changes in the expected future price level:

Accepted Answer

A) ​Shifts the short run aggregate supply curve upward. 
B) ​Shift the long run aggregate supply curve to the right. 
C) ​Shift short run aggregate supply curves upward and long run aggregate supply curves to the right. 
D) ​Do none of the above 
A) ​Shifts the short run aggregate supply curve upward. 
B) ​Shift the long run aggregate supply curve to the right. 
C) ​Shift short run aggregate supply curves upward and long run aggregate supply curves to the right. 
D) ​Do none of the above

Question 18

As the price level decreases, other things being equal,

Accepted Answer

A) ​aggregate demand increases. 
B) ​the quantity of real gross domestic product demanded increases. 
C) ​the quantity of real gross domestic product demanded decreases. 
D) ​real gross domestic product supplied increases. 
A) ​aggregate demand increases. 
B) ​the quantity of real gross domestic product demanded increases. 
C) ​the quantity of real gross domestic product demanded decreases. 
D) ​real gross domestic product supplied increases.

Question 19

​Exhibit 14-2  
-In Exhibit 14-2, which curve represents long-run aggregate supply?

Accepted Answer

A) ​A 
B) ​B 
C) ​C 
D) ​none of the above 
A) ​A 
B) ​B 
C) ​C 
D) ​none of the above

Question 20

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.

Exam 14: Monopolistic Competition and Product Differentiation

The general shape of the short-run aggregate supply curve is:

If workers and firms expect increases in future prices, it can lead the short run aggregate supply curve to shift left.

Demand-pull inflation is caused by:

Explain how changes in the stock of capital affect aggregate supply.

When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation.

The misperception effect explanation for an upward-sloping short-run aggregate supply curve is based on:

If there is currently an inflationary gap, an increase in aggregate demand will make the inflationary gap smaller, but a decrease in aggregate demand would make the inflationary gap larger.

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

Neither positive nor negative supply shocks

According to the interest rate effect, as the price level increases, households and firms' holdings of money ____, interest rates ____, investments ____, and the quantity RGDP demanded ____.

Cost-push inflation is caused by:

If exports and imports both rose, but exports rose more than imports,

If Americans' home equity falls substantially, it would ____ wealth and consumer confidence, ____ consumption, and ____ aggregate demand.

For individuals who are holding money or fixed dollar value assets, inflation has the effect of:

​Exhibit 14-1 -Refer to Exhibit 14-1. Which of the following would be illustrated by a shift in aggregate demand from AD0 to AD1?

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

Changes in the expected future price level:

As the price level decreases, other things being equal,

​Exhibit 14-2 -In Exhibit 14-2, which curve represents long-run aggregate supply?

Point A suggests:

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

In an open economy, as the price level increases, a(n) in demand in the quantity of domestic goods results in a(n) in the quantity of RGDP demanded.

According to the interest rate effect, as the price level increases, households and firms' holdings of money , interest rates , investments , and the quantity RGDP demanded .

If Americans' home equity falls substantially, it would wealth and consumer confidence, consumption, and aggregate demand.

Exhibit 14-1 -Refer to Exhibit 14-1. Which of the following would be illustrated by a shift in aggregate demand from AD₀ to AD₁?

Exhibit 14-2 -In Exhibit 14-2, which curve represents long-run aggregate supply?