Question 1

An increase in imports (independently of a change in our price level) will increase both aggregate supply and aggregate demand.

Accepted Answer

A) True 
 B)False

Question 2

The foreign trade effect:

Accepted Answer

A)  shifts the aggregate demand curve rightward.
B)  shifts the aggregate demand curve leftward.
C)  shifts the aggregate supply curve rightward.
D)  none of these.E) B) and C)
F) A) and B)

Question 3

The following table is for a particular country in which C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports.All figures are in billions of dollars.Each question is independent of the other questions. g is gross investment expenditures, G is government expenditures, X is exports, and M is imports.All figures are in billions of dollars.Each question is independent of the other questions.   Refer to the above table.If the equilibrium level of real GDP is $43 billion in this country, its level of consumption will be: A) $18 billion. B) $20 billion. C) $22 billion. D) $26 billion." class="answers-bank-image d-inline" rel="preload" > Refer to the above table.If the equilibrium level of real GDP is $43 billion in this country, its level of consumption will be:

Accepted Answer

A)  $18 billion.
B)  $20 billion.
C)  $22 billion.
D)  $26 billion.E) A) and B)
F) A) and C)

Question 4

An increase in investment spending can be expected to shift the:

Accepted Answer

A)  aggregate expenditures curve downward and the aggregate demand curve leftward.
B)  aggregate expenditures curve upward and the aggregate demand curve leftward.
C)  aggregate expenditures curve downward and the aggregate demand curve rightward.
D)  aggregate expenditures curve upward and the aggregate demand curve rightward.E) None of the above
F) A) and D)

Question 5

An increase in productivity will shift the aggregate:

Accepted Answer

A)  demand curve leftward.
B)  demand curve rightward.
C)  supply curve rightward.
D)  supply curve leftward.E) B) and D)
F) All of the above

Question 6

The following table is for a particular country in which C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports.All figures are in billions of dollars.Each question is independent of the other questions. g is gross investment expenditures, G is government expenditures, X is exports, and M is imports.All figures are in billions of dollars.Each question is independent of the other questions.   Refer to the above table.If the aggregate supply schedule intersects the aggregate demand at price level 119 in this country, its equilibrium level of real GDP will be: A) $37 billion. B) $35 billion. C) $26 billion. D) $43 billion." class="answers-bank-image d-inline" rel="preload" > Refer to the above table.If the aggregate supply schedule intersects the aggregate demand at price level 119 in this country, its equilibrium level of real GDP will be:

Accepted Answer

A)  $37 billion.
B)  $35 billion.
C)  $26 billion.
D)  $43 billion.E) None of the above
F) B) and C)

Question 7

Refer to the diagram given below. 1 to AS2, then the price level will: A) increase and real domestic output will increase. B) decrease and real domestic output will increase. C) increase and real domestic output will decrease. D) decrease and real domestic output will decrease." class="answers-bank-image d-inline" rel="preload" > If aggregate supply shifts from AS1 to AS2, then the price level will:

Accepted Answer

A)  increase and real domestic output will increase.
B)  decrease and real domestic output will increase.
C)  increase and real domestic output will decrease.
D)  decrease and real domestic output will decrease.E) A) and D)
F) B) and D)

Question 8

Refer to the diagram below. 2 and that the economy initially is operating at the full-employment level of output Qf.In the short run, cost-push inflation could best be shown by a: A) leftward shift of the aggregate supply curve from AS2 to AS3. B) movement from point b to point c on AS2. C) movement from point b point a on AS2. D) rightward shift of the aggregate supply curve from AS2 to AS1." class="answers-bank-image d-inline" rel="preload" > Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P2 and that the economy initially is operating at the full-employment level of output Qf.In the short run, cost-push inflation could best be shown by a:

Accepted Answer

A)  leftward shift of the aggregate supply curve from AS2 to AS3.
B)  movement from point b to point c on AS2.
C)  movement from point b point a on AS2.
D)  rightward shift of the aggregate supply curve from AS2 to AS1.E) None of the above
F) B) and C)

Question 9

A decrease in consumer spending can be expected to shift the:

Accepted Answer

A)  aggregate expenditures curve downward and the aggregate demand curve leftward.
B)  aggregate expenditures curve upward and the aggregate demand curve leftward.
C)  aggregate expenditures curve downward and the aggregate demand curve rightward.
D)  aggregate expenditures curve upward and the aggregate demand curve rightward.E) C) and D)
F) A) and B)

Question 10

When the price level decreases:

Accepted Answer

A)  the demand for money falls and the interest rate falls.
B)  holders of financial assets with fixed money values decrease their spending.
C)  holders of financial assets with fixed money values have less purchasing power.
D)  there is a decrease in consumer spending that is sensitive to changes in interest rates.E) All of the above
F) B) and C)

Question 11

The determinants of aggregate demand:

Accepted Answer

A)  explain why the aggregate demand curve is downward sloping.
B)  explain shifts in the aggregate demand curve.
C)  demonstrate why real output and the price level are inversely related.
D)  include input prices and resource productivity.E) None of the above
F) All of the above

Question 12

The real-balances effect suggests that a:

Accepted Answer

A)  lower price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending.
B)  lower price level will decrease the real value of many financial assets and therefore cause an increase in spending.
C)  lower price level will increase the real value of many financial assets and therefore cause an increase in spending.
D)  higher price level will increase the real value of many financial assets and therefore cause an increase in spending.E) A) and D)
F) A) and C)

Question 13

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Refer to the information above, the level of productivity is:

Accepted Answer

A)  20
B)  10
C)  5
D)  2E) A) and B)
F) None of the above

Question 14

Minimum wage laws tend to make the price level more flexible rather than less flexible.

Accepted Answer

A) True 
 B)False

Question 15

A firm is concerned that if it lowers its prices, its competitors will not only match its price cuts but may also retaliate by making even deeper cuts.This is referred to as:

Accepted Answer

A)  price wars.
B)  healthy competition.
C)  the capitalist system at work.
D)  unfair trade practices.E) All of the above
F) A) and B)

Question 16

Suppose that nominal wages fall and productivity rises in a particular economy.Other things equal, the aggregate:

Accepted Answer

A)  demand curve will shift leftward.
B)  supply curve will shift rightward.
C)  supply curve will shift leftward.
D)  expenditures curve will shift downward.E) A) and B)
F) None of the above

Question 17

The equilibrium price level and level of real output occur where:

Accepted Answer

A)  real output is at its highest possible level.
B)  exports equal imports.
C)  the price level is at its lowest level.
D)  the aggregate demand and supply curves intersect.E) All of the above
F) None of the above

Question 18

Other things equal, a decrease in the price level will:

Accepted Answer

A)  shift the short run aggregate supply curve to the left.
B)  shift the aggregate demand curve to the left.
C)  cause a movement up a short-run aggregate supply curve.
D)  cause a movement down a short run aggregate supply curve.E) B) and C)
F) None of the above

Question 19

The long-run aggregate supply curve is vertical:

Accepted Answer

A)  because the rate of inflation is steady in the long run.
B)  because resource prices eventually catch up with product prices.
C)  because product prices always increase at a faster rate than resource prices.
D)  only when the money supply increases at the same rate as real GDP.E) All of the above
F) A) and B)

Question 20

The aggregate demand curve shows the:

Accepted Answer

A)  inverse relationship between the price level and real GDP purchased.
B)  direct relationship between the price level and real GDP produced.
C)  inverse relationship between interest rates and real GDP produced.
D)  direct relationship between real-balances and real GDP purchased.E) A) and D)
F) A) and B)

Exam 12: Part B: Aggregate Demand and Aggregate Supply

Suppose that nominal wages fall and productivity rises in a particular economy.Other things equal, the aggregate:

Correct Answer
verified

An increase in imports (independently of a change in our price level) will increase both aggregate supply and aggregate demand.

Correct Answer
verified

Refer to the diagram below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P₂ and that the economy initially is operating at the full-employment level of output Q_f.In the short run, cost-push inflation could best be shown by a:

Correct Answer
verified

An increase in investment spending can be expected to shift the:

Correct Answer
verified

Correct Answer
verified

The aggregate demand curve shows the:

Correct Answer
verified

When the price level decreases:

Correct Answer
verified

Other things equal, a decrease in the price level will:

Correct Answer
verified

The real-balances effect suggests that a:

Correct Answer
verified

The determinants of aggregate demand:

Correct Answer
verified

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Refer to the information above, the level of productivity is:

Correct Answer
verified

Correct Answer
verified

The equilibrium price level and level of real output occur where:

Correct Answer
verified

Refer to the diagram given below. If aggregate supply shifts from AS₁ to AS₂, then the price level will:

Correct Answer
verified

A firm is concerned that if it lowers its prices, its competitors will not only match its price cuts but may also retaliate by making even deeper cuts.This is referred to as:

Correct Answer
verified

A decrease in consumer spending can be expected to shift the:

Correct Answer
verified

An increase in productivity will shift the aggregate:

Correct Answer
verified

The long-run aggregate supply curve is vertical:

Correct Answer
verified

The foreign trade effect:

Correct Answer
verified

Minimum wage laws tend to make the price level more flexible rather than less flexible.

Correct Answer
verified

Exam 12: Part B: Aggregate Demand and Aggregate Supply

Suppose that nominal wages fall and productivity rises in a particular economy.Other things equal, the aggregate:

Correct AnswerverifiedShow Answer

An increase in imports (independently of a change in our price level) will increase both aggregate supply and aggregate demand.

Correct AnswerverifiedShow Answer

Refer to the diagram below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P2 and that the economy initially is operating at the full-employment level of output Qf.In the short run, cost-push inflation could best be shown by a:

Correct AnswerverifiedShow Answer

An increase in investment spending can be expected to shift the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The aggregate demand curve shows the:

Correct AnswerverifiedShow Answer

When the price level decreases:

Correct AnswerverifiedShow Answer

Other things equal, a decrease in the price level will:

Correct AnswerverifiedShow Answer

The real-balances effect suggests that a:

Correct AnswerverifiedShow Answer

The determinants of aggregate demand:

Correct AnswerverifiedShow Answer

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Refer to the information above, the level of productivity is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The equilibrium price level and level of real output occur where:

Correct AnswerverifiedShow Answer

Refer to the diagram given below. If aggregate supply shifts from AS1 to AS2, then the price level will:

Correct AnswerverifiedShow Answer

A firm is concerned that if it lowers its prices, its competitors will not only match its price cuts but may also retaliate by making even deeper cuts.This is referred to as:

Correct AnswerverifiedShow Answer

A decrease in consumer spending can be expected to shift the:

Correct AnswerverifiedShow Answer

An increase in productivity will shift the aggregate:

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve is vertical:

Correct AnswerverifiedShow Answer

The foreign trade effect:

Correct AnswerverifiedShow Answer

Minimum wage laws tend to make the price level more flexible rather than less flexible.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Refer to the diagram below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P₂ and that the economy initially is operating at the full-employment level of output Q_f.In the short run, cost-push inflation could best be shown by a:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the diagram given below. If aggregate supply shifts from AS₁ to AS₂, then the price level will:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified