Question 1

Other things equal, the short-run aggregate supply curve shifts positions when:

Accepted Answer

A)  the price level changes.
B)  the rate of inflation changes.
C)  input prices change.
D)  aggregate demand changes.E) All of the above
F) C) and D)

Question 2

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) A) and B)
F) A) and C)

Question 3

Which one of the following would increase per unit production cost and therefore shift the aggregate supply curve to the left?

Accepted Answer

A)  a reduction in business taxes
B)  an increase in the number of resources used in production
C)  an increase in the price of imported resources
D)  deregulation of industryE) None of the above
F) B) and C)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the above diagrams best portrays the effects of an increase in productivity?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) A) and C)
F) None of the above

Question 6

The real-balances, interest rate, and foreign trade effects all help explain:

Accepted Answer

A)  why the aggregate demand curve is downward sloping.
B)  why the aggregate supply curve is upward sloping.
C)  shifts in the aggregate demand curve.
D)  shifts in the aggregate supply curve.E) C) and D)
F) All of the above

Question 7

In terms of aggregate supply, in the immediate short run:

Accepted Answer

A)  the price level is variable.
B)  real output is fixed.
C)  nominal wages are variable.
D)  both input prices and output prices are fixed.E) B) and C)
F) A) and B)

Question 8

The Great Moderation refers to:

Accepted Answer

A)  the period from 1982 to 2008 when business cycles were longer and relatively mild.
B)  the recession that began in 2008 and continued through to 2009.
C)  the fact that businesses and governments cannot smooth out the business cycle.
D)  the period from 1982 to 2008 when cycles were shorter.E) B) and D)
F) A) and C)

Question 9

The relationship between the aggregate demand curve and the aggregate expenditures model is shown in the fact that:

Accepted Answer

A)  a decrease in the price level shifts the aggregate expenditures schedule downward and decreases real GDP.
B)  a decrease in the price level shifts the aggregate expenditures schedule upward and increases real GDP.
C)  an increase in the price level shifts the aggregate expenditures schedule upward and increases real GDP.
D)  an increase in the price level shifts the aggregate expenditures schedule downward and increases real GDP.E) B) and C)
F) B) and D)

Question 10

The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy:  Refer to the above information, the level of productivity is:

Accepted Answer

A)  2
B)  .5.
C)  4
D)  200E) A) and B)
F) B) and C)

Question 11

Refer to the diagram given below. 1 shifts to AD2, then the equilibrium output and price level are: A) P1 and Q3. B) P2 and Q3. C) P1 and Q2. D) P2 and Q2." class="answers-bank-image d-inline" rel="preload" > If AD1 shifts to AD2, then the equilibrium output and price level are:

Accepted Answer

A)  P1 and Q3.
B)  P2 and Q3.
C)  P1 and Q2.
D)  P2 and Q2.E) B) and C)
F) C) and D)

Question 12

The aggregate demand curve:

Accepted Answer

A)  is upward sloping because a higher price level is necessary to make production profitable as production costs rise.
B)  is downward sloping because production costs decline as real output increases?
C)  shows the amount of expenditures required to induce the production of each possible level of real output.
D)  shows the amount of real output which will be purchased at each possible price level.E) A) and B)
F) All of the above

Question 13

The horizontal shape of the immediate short run aggregate supply implies that:

Accepted Answer

A)  the total amount of output in the economy depends only on the general price level.
B)  the total amount of output in the economy depends only on the volume of spending.
C)  the total amount of output in the economy is fixed.
D)  the total amount of spending depends on the price of inputs.E) All of the above
F) B) and D)

Question 14

The aggregate supply curve slopes downward.

Accepted Answer

A) True 
 B)False

Question 15

An expected decline in the prices of consumer goods will:

Accepted Answer

A)  decrease aggregate demand.
B)  increase the quantity of real domestic output demanded.
C)  increase aggregate demand.
D)  decrease the quantity of real domestic output demanded.E) B) and C)
F) A) and C)

Question 16

The long run aggregate supply:

Accepted Answer

A)  is downward sloping.
B)  is vertical.
C)  is horizontal.
D)  is upward sloping.E) A) and D)
F) C) and D)

Question 17

Refer to the diagram below.Suppose that aggregate demand increased from AD1 to AD2.For the price level to stay constant: 1 to AD2.For the price level to stay constant:   A) the aggregate supply curve would have to shift rightward. B) the aggregate supply curve would have to shift leftward. C) real domestic output would have to remain constant. D) the aggregate supply curve would have to be vertical." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  the aggregate supply curve would have to shift rightward.
B)  the aggregate supply curve would have to shift leftward.
C)  real domestic output would have to remain constant.
D)  the aggregate supply curve would have to be vertical.E) B) and C)
F) A) and D)

Question 18

An increase in business taxes will shift the aggregate supply curve leftward.

Accepted Answer

A) True 
 B)False

Question 19

Changes in which of the two factors below would most likely cause a change in consumer spending? The following list of factors, are related to the aggregate demand curve.Real-balances effect
Household expectations
Interest-rate effect
Personal income tax rates
Profit expectations
National income abroad
Government spending
Foreign trade effect
Exchange rates
Degree of excess capacity

Accepted Answer

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

Question 20

If there is a decrease in the price level, then it will increase aggregate expenditures and this change is equivalent to a(n) :

Accepted Answer

A)  increase in aggregate supply.
B)  increase in aggregate demand.
C)  decrease in aggregate demand.
D)  movement along an aggregate demand curve.E) A) and B)
F) None of the above

Exam 12: B: Aggregate Demand and Aggregate Supply

The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy: Refer to the above information, the level of productivity is:

Correct Answer
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In terms of aggregate supply, in the immediate short run:

Correct Answer
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Refer to the diagram given below. If AD₁ shifts to AD₂, then the equilibrium output and price level are:

Correct Answer
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The aggregate demand curve:

Correct Answer
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The Great Moderation refers to:

Correct Answer
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The long run aggregate supply:

Correct Answer
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The aggregate supply curve slopes downward.

Correct Answer
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Refer to the diagram below.Suppose that aggregate demand increased from AD₁ to AD₂.For the price level to stay constant:

Correct Answer
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The relationship between the aggregate demand curve and the aggregate expenditures model is shown in the fact that:

Correct Answer
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The real-balances, interest rate, and foreign trade effects all help explain:

Correct Answer
verified

An expected decline in the prices of consumer goods will:

Correct Answer
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Correct Answer
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Other things equal, the short-run aggregate supply curve shifts positions when:

Correct Answer
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Which of the above diagrams best portrays the effects of an increase in productivity?

Correct Answer
verified

An increase in business taxes will shift the aggregate supply curve leftward.

Correct Answer
verified

An increase in productivity will shift the aggregate:

Correct Answer
verified

If there is a decrease in the price level, then it will increase aggregate expenditures and this change is equivalent to a(n) :

Correct Answer
verified

Which one of the following would increase per unit production cost and therefore shift the aggregate supply curve to the left?

Correct Answer
verified

The horizontal shape of the immediate short run aggregate supply implies that:

Correct Answer
verified

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

Correct Answer
verified

Exam 12: B: Aggregate Demand and Aggregate Supply

The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy: Refer to the above information, the level of productivity is:

Correct AnswerverifiedShow Answer

In terms of aggregate supply, in the immediate short run:

Correct AnswerverifiedShow Answer

Refer to the diagram given below. If AD1 shifts to AD2, then the equilibrium output and price level are:

Correct AnswerverifiedShow Answer

The aggregate demand curve:

Correct AnswerverifiedShow Answer

The Great Moderation refers to:

Correct AnswerverifiedShow Answer

The long run aggregate supply:

Correct AnswerverifiedShow Answer

The aggregate supply curve slopes downward.

Correct AnswerverifiedShow Answer

Refer to the diagram below.Suppose that aggregate demand increased from AD1 to AD2.For the price level to stay constant:

Correct AnswerverifiedShow Answer

The relationship between the aggregate demand curve and the aggregate expenditures model is shown in the fact that:

Correct AnswerverifiedShow Answer

The real-balances, interest rate, and foreign trade effects all help explain:

Correct AnswerverifiedShow Answer

An expected decline in the prices of consumer goods will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Other things equal, the short-run aggregate supply curve shifts positions when:

Correct AnswerverifiedShow Answer

Which of the above diagrams best portrays the effects of an increase in productivity?

Correct AnswerverifiedShow Answer

An increase in business taxes will shift the aggregate supply curve leftward.

Correct AnswerverifiedShow Answer

An increase in productivity will shift the aggregate:

Correct AnswerverifiedShow Answer

If there is a decrease in the price level, then it will increase aggregate expenditures and this change is equivalent to a(n) :

Correct AnswerverifiedShow Answer

Which one of the following would increase per unit production cost and therefore shift the aggregate supply curve to the left?

Correct AnswerverifiedShow Answer

The horizontal shape of the immediate short run aggregate supply implies that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Refer to the diagram given below. If AD₁ shifts to AD₂, then the equilibrium output and price level are:

Correct Answer
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Refer to the diagram below.Suppose that aggregate demand increased from AD₁ to AD₂.For the price level to stay constant:

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