Question 1

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 above information.All else being equal,if the price of each input increased from $4 to $6,productivity would:

Accepted Answer

A)   fall from 2 to 3.
B)   fall from .50 to .33.
C)   rise from 1 to 2.
D)   remain unchanged.E) A) and D)
F) C) and D)

Question 2

The aggregate demand curve is:

Accepted Answer

A)   vertical if full employment exists.
B)   horizontal when there is considerable unemployment in the economy.
C)   downward sloping because of the interest-rate,real balances,and foreign trade effects.
D)   downward sloping because production costs decrease as real output increases.E) C) and D)
F) A) and B)

Question 3

Other things equal,if the international value of the dollar were to depreciate,the:

Accepted Answer

A)   aggregate demand curve would remain fixed in place.
B)   aggregate supply curve would shift to the left.
C)   aggregate supply curve would shift to the right.
D)   aggregate demand curve would shift to the left.E) A) and C)
F) All of the above

Question 4

-Which of the above diagrams best portrays the effects of declines in the incomes of other major nations with whom we trade?

Accepted Answer

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

Question 5

Suppose the full-employment level of real output (Q) for a hypothetical economy is $500 and that the price level (P) initially is 100.Use the following short-run aggregate supply schedules to answer the next question.
 
-Refer to the information above.If the price level unexpectedly declines from 100 to 75,the level of real output in the short run will:

Accepted Answer

A)   rise from $500 to $560.
B)   fall from $500 to $440.
C)   fall from $560 to $500.
D)   rise from $440 to $500.E) A) and C)
F) All of the above

Question 6

An increase in consumer wealth will decrease aggregate demand.

Accepted Answer

A) True 
 B)False

Question 7

1 to AS3,then real domestic output will: A)  increase and the price level will increase. B)  increase and the price level will decrease. C)  decrease and the price level will increase. D)  decrease and the price level will decrease." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram.If aggregate supply shifts from AS1 to AS3,then real domestic output will:

Accepted Answer

A)   increase and the price level will increase.
B)   increase and the price level will decrease.
C)   decrease and the price level will increase.
D)   decrease and the price level will decrease.E) B) and C)
F) A) and D)

Question 8

Aggregate demand decreases and real output falls but the price level remains the same.Which factor most likely contributes to downward price inflexibility?

Accepted Answer

A)   the multiplier effect
B)   the wealth effect
C)   fear of price wars
D)   business taxesE) A) and C)
F) A) and B)

Question 9

All else equal,an increase in imports will shift the aggregate expenditures curve:

Accepted Answer

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

Question 10

Which of the diagrams below best portrays the effects of an increase in consumer spending?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and B)
F) A) and C)

Question 11

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 above information.Given an increase in input price from $4 to $6,we would expect the aggregate:

Accepted Answer

A)   supply curve to shift to the left.
B)   supply curve to shift to the right.
C)   demand curve to shift to the left.
D)   demand curve to shift to the right.E) A) and D)
F) B) and D)

Question 12

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) All of the above
F) B) and D)

Question 13

Assume that an initial change in spending of $10 billion results in a rightward shift in aggregate demand that increases real GDP by $40 billion.The multiplier is:

Accepted Answer

A)   $10 billion.
B)   $40 billion.
C)   4
D)   5E) A) and C)
F) B) and C)

Question 14

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.    -Which of the following is incorrect? A)  As the Canadian price level rises,Canadian goods become relatively more expensive so that its exports fall and its imports rise. B)  As the price level falls,the demand for money declines,the interest rate declines,and interest rate-sensitive spending increases. C)  When the price level increases,real balances increase,businesses and households find themselves wealthier and therefore increase their spending. D)  Given aggregate demand,an increase in aggregate supply increases real output and,assuming downward flexible prices,reduces the price level." class="answers-bank-image d-inline" rel="preload" >
-Which of the following is incorrect?

Accepted Answer

A)   As the Canadian price level rises,Canadian goods become relatively more expensive so that its exports fall and its imports rise.
B)   As the price level falls,the demand for money declines,the interest rate declines,and interest rate-sensitive spending increases.
C)   When the price level increases,real balances increase,businesses and households find themselves wealthier and therefore increase their spending.
D)   Given aggregate demand,an increase in aggregate supply increases real output and,assuming downward flexible prices,reduces the price level.E) B) and C)
F) C) and D)

Question 15

Cost-push inflation is characterized by a(n) :

Accepted Answer

A)   increase in aggregate supply and a decrease in aggregate demand.
B)   increase in aggregate demand and no change in aggregate supply.
C)   decrease in aggregate supply and no change in aggregate demand.
D)   decrease in both aggregate supply and aggregate demand.E) B) and C)
F) B) and D)

Question 16

Suppose the full-employment level of real output (Q) for a hypothetical economy is $500 and that the price level (P) initially is 100.Use the following short-run aggregate supply schedules to answer the next question.
 
-Refer to the information above.In the long run,a fall in the price level from 100 to 75 will:

Accepted Answer

A)   decrease real output from $500 to $440.
B)   increase real output from $500 to $620.
C)   change the aggregate supply schedule from (a) to (c) and produce an equilibrium level of real output of $500.
D)   change the aggregate supply schedule from (a) to (b) and produce an equilibrium level of real output of $500.E) B) and C)
F) A) and D)

Question 17

In which of the following sets of circumstances can we confidently expect inflation?

Accepted Answer

A)   aggregate supply and aggregate demand both increase
B)   aggregate supply and aggregate demand both decrease
C)   aggregate supply decreases and aggregate demand increases
D)   aggregate supply increases and aggregate demand decreasesE) A) and B)
F) C) and D)

Question 18

List four government tax or spending policy options that would shift the short-run aggregate supply curve rightward.

Accepted Answer

Some possible answers are tax cuts or re...

Question 19

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) B) and C)
F) All of the above

Question 20

1 and the price level increases from P1,then this change will: A)  be caused by a shift in the aggregate supply curve from AS1 to AS3. B)  be caused by a shift in the aggregate supply curve from AS2 to AS1. C)  result in a movement along the aggregate demand curve from e2 to e1. D)  result in a movement along the aggregate demand curve from e1 to e2." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram.When output decreases from Q1 and the price level increases from P1,then this change will:

Accepted Answer

A)   be caused by a shift in the aggregate supply curve from AS1 to AS3.
B)   be caused by a shift in the aggregate supply curve from AS2 to AS1.
C)   result in a movement along the aggregate demand curve from e2 to e1.
D)   result in a movement along the aggregate demand curve from e1 to e2.E) A) and B)
F) B) and D)

Exam 12: Aggregate Demand and Aggregate Supply

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

Correct Answer
verified

-Refer to the above diagram.When output decreases from Q₁ and the price level increases from P₁,then this change will:

Correct Answer
verified

In which of the following sets of circumstances can we confidently expect inflation?

Correct Answer
verified

-Which of the above diagrams best portrays the effects of declines in the incomes of other major nations with whom we trade?

Correct Answer
verified

Other things equal,if the international value of the dollar were to depreciate,the:

Correct Answer
verified

Correct Answer
verified

-Refer to the above diagram.If aggregate supply shifts from AS₁ to AS₃,then real domestic output will:

Correct Answer
verified

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 above information.Given an increase in input price from $4 to $6,we would expect the aggregate:

Correct Answer
verified

The aggregate demand curve is:

Correct Answer
verified

All else equal,an increase in imports will shift the aggregate expenditures curve:

Correct Answer
verified

Which of the diagrams below best portrays the effects of an increase in consumer spending?

Correct Answer
verified

Cost-push inflation is characterized by a(n) :

Correct Answer
verified

Assume that an initial change in spending of $10 billion results in a rightward shift in aggregate demand that increases real GDP by $40 billion.The multiplier is:

Correct Answer
verified

Aggregate demand decreases and real output falls but the price level remains the same.Which factor most likely contributes to downward price inflexibility?

Correct Answer
verified

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 above information.All else being equal,if the price of each input increased from $4 to $6,productivity would:

Correct Answer
verified

Correct Answer
verified

An increase in consumer wealth will decrease aggregate demand.

Correct Answer
verified

List four government tax or spending policy options that would shift the short-run aggregate supply curve rightward.

Correct Answer
verified
Some possible answers are tax cuts or re...
View Answer

Exam 12: Aggregate Demand and Aggregate Supply

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

Correct AnswerverifiedShow Answer

-Refer to the above diagram.When output decreases from Q1 and the price level increases from P1,then this change will:

Correct AnswerverifiedShow Answer

In which of the following sets of circumstances can we confidently expect inflation?

Correct AnswerverifiedShow Answer

-Which of the above diagrams best portrays the effects of declines in the incomes of other major nations with whom we trade?

Correct AnswerverifiedShow Answer

Other things equal,if the international value of the dollar were to depreciate,the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-Refer to the above diagram.If aggregate supply shifts from AS1 to AS3,then real domestic output will:

Correct AnswerverifiedShow Answer

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 above information.Given an increase in input price from $4 to $6,we would expect the aggregate:

Correct AnswerverifiedShow Answer

The aggregate demand curve is:

Correct AnswerverifiedShow Answer

All else equal,an increase in imports will shift the aggregate expenditures curve:

Correct AnswerverifiedShow Answer

Which of the diagrams below best portrays the effects of an increase in consumer spending?

Correct AnswerverifiedShow Answer

Cost-push inflation is characterized by a(n) :

Correct AnswerverifiedShow Answer

Assume that an initial change in spending of $10 billion results in a rightward shift in aggregate demand that increases real GDP by $40 billion.The multiplier is:

Correct AnswerverifiedShow Answer

Aggregate demand decreases and real output falls but the price level remains the same.Which factor most likely contributes to downward price inflexibility?

Correct AnswerverifiedShow Answer

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 above information.All else being equal,if the price of each input increased from $4 to $6,productivity would:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in consumer wealth will decrease aggregate demand.

Correct AnswerverifiedShow Answer

List four government tax or spending policy options that would shift the short-run aggregate supply curve rightward.

Correct AnswerverifiedSome possible answers are tax cuts or re...View AnswerShow Answer

Correct Answer
verified

-Refer to the above diagram.When output decreases from Q₁ and the price level increases from P₁,then this change will:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

-Refer to the above diagram.If aggregate supply shifts from AS₁ to AS₃,then real domestic output will:

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Some possible answers are tax cuts or re...
View Answer