Question 1

Use the figure below to answer the following questions.
  
Figure 26.1.1
-Refer to Figure 26.1.1.Which graph illustrates what happens when factor prices decrease?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
D)  (d) 
E)  (a) and (b)

Question 2

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3.Which of the graphs illustrates an above full-employment equilibrium?

Accepted Answer

A)  (a) only
B)  (b) only
C)  (c) only
D)  (d) only
E)  both (c) and (d)

Question 3

Everything else remaining the same,an increase in the quantity of money

Accepted Answer

A)  shifts the aggregate demand curve rightward.
B)  shifts the aggregate demand curve leftward.
C)  shifts the aggregate supply curve leftward.
D)  shifts the aggregate supply curve rightward.
E)  creates a movement down along the aggregate demand curve. A

Question 4

Use the table below to answer the following questions.
Table 26.3.3
 
-Refer to Table 26.3.3.With no interference from the central bank or the government,the

Accepted Answer

A)  money wage rate will eventually rise.
B)  money wage rate will eventually fall.
C)  short-run aggregate supply curve will shift leftward.
D)  long-run aggregate supply curve will shift leftward.
E)  aggregate demand curve will shift rightward.

Question 5

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3.In which of the graphs would we predict that eventually the price level will fall and real GDP will decrease,all else remaining the same?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
D)  (d) 
E)  none of the graphs

Question 6

A recessionary gap is the amount by which

Accepted Answer

A)  potential GDP exceeds real GDP.
B)  demand will increase to achieve full employment at a given price level.
C)  the supply curve must increase to achieve full employment at a given price level.
D)  the price level must adjust to achieve full employment.
E)  real GDP exceeds potential GDP.

Question 7

Use the figure below to answer the following questions.
  
Figure 26.3.1
-Refer to Figure 26.3.1.Consider statements (1) and (2) and select the correct answer.
(1)  The economy of Econoworld is experiencing a below full-employment equilibrium.
(2)  The actual unemployment rate equals the natural unemployment rate.

Accepted Answer

A)  (1) is true;(2) is false.
B)  (2) is true;(1) is false.
C)  (1) and (2) are false.
D)  (1) and (2) are true.
E)  (1) is true;(2) is true if the natural unemployment rate is too high.

Question 8

Use the figure below to answer the following questions.
  
Figure 26.2.1
-Refer to Figure 26.2.1.Which graph illustrates what happens when expected future income increases?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
D)  (d) 
E)  None of the above.

Question 9

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3.Which one of the graphs illustrates a below full-employment equilibrium?

Accepted Answer

A)  (a) only
B)  (b) only
C)  (c) only
D)  (d) only
E)  both (c) and (d)

Question 10

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3.Which one of the graphs illustrates a full-employment equilibrium?

Accepted Answer

A)  (a) only
B)  (b) only
C)  (c) only
D)  (d) only
E)  (c) and (d)

Question 11

Which of the following news quotes best describes a new classical view of a recession?

Accepted Answer

A)  "Rapid computerization is creating obsolete workers and higher unemployment."
B)  "The unexpectedly tight fiscal policy is raising spending and lowering unemployment."
C)  "The anti-inflationary policy of the Bank of Canada is increasing spending."
D)  "The cuts in government spending have helped lower consumer spending and created unemployment."
E)  "Businesses are very worried about future sales and have lowered their purchases of capital equipment."

Question 12

Everything else remaining the same,an increase in the expected inflation rate

Accepted Answer

A)  shifts the aggregate demand curve rightward.
B)  shifts the aggregate demand curve leftward.
C)  shifts the short-run aggregate supply curve leftward.
D)  shifts the long-run aggregate supply curve rightward.
E)  creates a movement up along the aggregate demand curve.

Question 13

The defining feature of the Keynesian view of macroeconomics is that the economy is

Accepted Answer

A)  rarely at full employment.
B)  self-regulating and always at full employment.
C)  that the quantity of money is the most significant influence on aggregate demand.
D)  constantly bombarded by shocks that arise from the uneven pace of technological change.
E)  no active stabilization is needed to offset changes in aggregate demand.

Question 14

Use the table below to answer the following questions.
Table 26.3.1
 
-Refer to Table 26.3.1.Consider the economy represented in the table.In short-run macroeconomic equilibrium,the price level is ________ and the level of real GDP is ________ billion.

Accepted Answer

A)  120;$600
B)  120;$500
C)  125;$550
D)  130;$600
E)  130;$500

Question 15

If real GDP is greater than potential GDP,the economy is

Accepted Answer

A)  not in short-run equilibrium.
B)  in a recessionary equilibrium.
C)  in an above full-employment equilibrium.
D)  in a below full-employment equilibrium.
E)  in long-run equilibrium.

Question 16

Use the table below to answer the following questions.
Table 26.3.3
 
-Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the economy

Accepted Answer

A)  is also in a long-run macroeconomic equilibrium.
B)  has an inflationary gap.
C)  has a recessionary gap.
D)  has neither an inflationary nor a recessionary gap.
E)  Both A and D are correct.

Question 17

We observe an increase in the price level and a decrease in real GDP.Which of the following is a possible explanation?

Accepted Answer

A)  an increase in expected future profits
B)  an increase in expected future income
C)  an increase in factor prices
D)  an increase in the quantity of capital
E)  an increase in the quantity of money

Question 18

Use the figure below to answer the following questions.
  
Figure 26.2.1
-Refer to Figure 26.2.1.Which graph illustrates what happens when government expenditure increases?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
D)  (d) 
E)  None of the above

Question 19

Use the table below to answer the following questions.
Table 26.3.3
 
-Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the price level is

Accepted Answer

A)  90.
B)  110.
C)  100.
D)  120.
E)  130. D

Question 20

Which of the following statements about the Keynesian view of the macroeconomy is incorrect?

Accepted Answer

A)  Technological change is the most significant influence on both aggregate demand and aggregate supply.
B)  To achieve and maintain full employment, active help from fiscal policy and monetary policy is required.
C)  Expectations are based on "animal spirits."
D)  The money wage rate is extremely sticky in the downward direction so there is no automatic mechanism for eliminating a recessionary gap.
E)  Expectations are the most significant influence on aggregate demand. A

Exam 26: Aggregate Supply and Aggregate Demand

Use the figure below to answer the following questions. Figure 26.1.1 -Refer to Figure 26.1.1.Which graph illustrates what happens when factor prices decrease?

Correct Answer
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Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.Which of the graphs illustrates an above full-employment equilibrium?

Correct Answer
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Everything else remaining the same,an increase in the quantity of money

Correct Answer
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A

Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.With no interference from the central bank or the government,the

Correct Answer
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Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.In which of the graphs would we predict that eventually the price level will fall and real GDP will decrease,all else remaining the same?

Correct Answer
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A recessionary gap is the amount by which

Correct Answer
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Correct Answer
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Use the figure below to answer the following questions. Figure 26.2.1 -Refer to Figure 26.2.1.Which graph illustrates what happens when expected future income increases?

Correct Answer
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Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.Which one of the graphs illustrates a below full-employment equilibrium?

Correct Answer
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Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.Which one of the graphs illustrates a full-employment equilibrium?

Correct Answer
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Which of the following news quotes best describes a new classical view of a recession?

Correct Answer
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Everything else remaining the same,an increase in the expected inflation rate

Correct Answer
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The defining feature of the Keynesian view of macroeconomics is that the economy is

Correct Answer
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Use the table below to answer the following questions. Table 26.3.1 -Refer to Table 26.3.1.Consider the economy represented in the table.In short-run macroeconomic equilibrium,the price level is and the level of real GDP is billion.

Correct Answer
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If real GDP is greater than potential GDP,the economy is

Correct Answer
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Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the economy

Correct Answer
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We observe an increase in the price level and a decrease in real GDP.Which of the following is a possible explanation?

Correct Answer
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Use the figure below to answer the following questions. Figure 26.2.1 -Refer to Figure 26.2.1.Which graph illustrates what happens when government expenditure increases?

Correct Answer
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Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the price level is

Correct Answer
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D

Which of the following statements about the Keynesian view of the macroeconomy is incorrect?

Correct Answer
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A

Exam 26: Aggregate Supply and Aggregate Demand

Use the figure below to answer the following questions. Figure 26.1.1 -Refer to Figure 26.1.1.Which graph illustrates what happens when factor prices decrease?

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.Which of the graphs illustrates an above full-employment equilibrium?

Correct AnswerverifiedShow Answer

Everything else remaining the same,an increase in the quantity of money

Correct AnswerverifiedA

Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.With no interference from the central bank or the government,the

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.In which of the graphs would we predict that eventually the price level will fall and real GDP will decrease,all else remaining the same?

Correct AnswerverifiedShow Answer

A recessionary gap is the amount by which

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 26.2.1 -Refer to Figure 26.2.1.Which graph illustrates what happens when expected future income increases?

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.Which one of the graphs illustrates a below full-employment equilibrium?

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 26.3.3 -Refer to Figure 26.3.3.Which one of the graphs illustrates a full-employment equilibrium?

Correct AnswerverifiedShow Answer

Which of the following news quotes best describes a new classical view of a recession?

Correct AnswerverifiedShow Answer

Everything else remaining the same,an increase in the expected inflation rate

Correct AnswerverifiedShow Answer

The defining feature of the Keynesian view of macroeconomics is that the economy is

Correct AnswerverifiedShow Answer

Use the table below to answer the following questions. Table 26.3.1 -Refer to Table 26.3.1.Consider the economy represented in the table.In short-run macroeconomic equilibrium,the price level is ________ and the level of real GDP is ________ billion.

Correct AnswerverifiedShow Answer

If real GDP is greater than potential GDP,the economy is

Correct AnswerverifiedShow Answer

Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the economy

Correct AnswerverifiedShow Answer

We observe an increase in the price level and a decrease in real GDP.Which of the following is a possible explanation?

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 26.2.1 -Refer to Figure 26.2.1.Which graph illustrates what happens when government expenditure increases?

Correct AnswerverifiedShow Answer

Use the table below to answer the following questions. Table 26.3.3 -Refer to Table 26.3.3.When the economy is at its short-run macroeconomic equilibrium,the price level is

Correct AnswerverifiedD

Which of the following statements about the Keynesian view of the macroeconomy is incorrect?

Correct AnswerverifiedA

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A

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Use the table below to answer the following questions. Table 26.3.1 -Refer to Table 26.3.1.Consider the economy represented in the table.In short-run macroeconomic equilibrium,the price level is and the level of real GDP is billion.

Correct Answer
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D

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A