Question 1

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 2

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.

Question 3

Autoworkers agree to a cut in the nominal wage rate. This event ________ short-run aggregate supply and ________ long-run aggregate supply.

Accepted Answer

A)  does not change; does not change
B)  decreases; does not change;
C)  increases; does not change;
D)  increases; increases
E)  decreases; does not change

Question 4

Consider an economy starting from a position of full employment. Which one of the following changes does not occur as a result of a decrease in aggregate demand?

Accepted Answer

A)  The price level decreases.
B)  The level of real GDP decreases in the short run.
C)  A recessionary gap arises.
D)  Factor prices decrease in the long run, shifting the short-run aggregate supply curve rightward.
E)  The long-run aggregate supply curve shifts leftward to create the new long-run equilibrium.

Question 5

Classical macroeconomists recommend

Accepted Answer

A)  policies that actively offset changes in long-run aggregate supply that result in negative economic growth.
B)  an increase in the quantity of money to offset decreases in aggregate demand and a decrease in the quantity of money to offset increases in aggregate demand.
C)  policies that actively offset changes in aggregate demand that bring recession.
D)  policies that minimize the disincentive effects of taxes on employment, investment, and technological change.
E)  all of the above

Question 6

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 7

The world goes into an expansion. Starting from a position of long-run equilibrium, what effect does this event have on Canada's economy in the short run?

Accepted Answer

A)  Real GDP increases and the price level rises.
B)  Real GDP decreases and the price level falls.
C)  Real GDP increases and the price level falls.
D)  Real GDP decreases and the price level rises.
E)  There is no change in either real GDP or the price level.

Question 8

The quantity of real GDP demanded does not depend on decisions made by

Accepted Answer

A)  foreigners.
B)  households.
C)  suppliers.
D)  governments.
E)  firms.

Question 9

Which one of the following newspaper quotations describes a leftward shift of the LAS curve?

Accepted Answer

A)  "The decrease in consumer spending may lead to a recession."
B)  "The increase in consumer spending is expected to lead to inflation, without any increase in real GDP."
C)  "Recent higher wage settlements are expected to cause higher inflation this year."
D)  "Growth has been unusually high the last few years due to more women entering the work force."
E)  "The recent tornadoes destroyed many factories in Calgary and Edmonton."

Question 10

If real GDP is greater than potential GDP, we would expect

Accepted Answer

A)  the money wage rate to fall.
B)  the money wage rate to rise.
C)  potential GDP to increase.
D)  potential GDP to decrease.
E)  the expected future inflation rate to decrease.

Question 11

Suppose that the E.U. economy goes into an expansion. Canadian real GDP ________ and Canadian unemployment ________ in the short run.

Accepted Answer

A)  increases; decreases
B)  increases; increases
C)  decreases; decreases
D)  decreases; increases
E)  does not change; does not change

Question 12

Use the figure below to answer the following questions.
  
Figure 26.3.2
-Refer to Figure 26.3.2. If the economy of Mythlo automatically adjusts to long-run equilibrium, then

Accepted Answer

A)  the price level rises to 90.
B)  real GDP is $600 billion.
C)  the actual unemployment rate exceeds the natural unemployment rate.
D)  potential GDP decreases.
E)  the SAS curve shifts rightward.

Question 13

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

Question 14

Use the figure below to answer the following questions.
  
Figure 26.3.2
-Refer to Figure 26.3.2. Currently in Mythlo

Accepted Answer

A)  there is a below full-employment equilibrium.
B)  the actual unemployment rate is less than the natural unemployment rate.
C)  potential GDP is greater than equilibrium GDP.
D)  the actual unemployment rate is equal to the natural unemployment rate.
E)  there is a recessionary gap.

Question 15

Which one, if any, of the following events shift the short-run aggregate supply curve but not the long-run aggregate supply curve?

Accepted Answer

A)  a change in factor prices
B)  a change in the quantity of capital
C)  an advance in technology
D)  an increase in the full-employment quantity of labour
E)  none of the above

Question 16

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)

Exam 26: Aggregate Supply and Aggregate Demand

Use the figure below to answer the following questions. Figure 26.3.2 -Refer to Figure 26.3.2. Currently in Mythlo

Correct Answer
verified

Autoworkers agree to a cut in the nominal wage rate. This event short-run aggregate supply and long-run aggregate supply.

Correct Answer
verified

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

Correct Answer
verified

Consider an economy starting from a position of full employment. Which one of the following changes does not occur as a result of a decrease in aggregate demand?

Correct Answer
verified

If real GDP is greater than potential GDP, we would expect

Correct Answer
verified

The quantity of real GDP demanded does not depend on decisions made by

Correct Answer
verified

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

Correct Answer
verified

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
verified

The world goes into an expansion. Starting from a position of long-run equilibrium, what effect does this event have on Canada's economy in the short run?

Correct Answer
verified

Which one of the following newspaper quotations describes a leftward shift of the LAS curve?

Correct Answer
verified

Which one, if any, of the following events shift the short-run aggregate supply curve but not the long-run aggregate supply curve?

Correct Answer
verified

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
verified

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

Correct Answer
verified

Suppose that the E.U. economy goes into an expansion. Canadian real GDP and Canadian unemployment in the short run.

Correct Answer
verified

Use the figure below to answer the following questions. Figure 26.3.2 -Refer to Figure 26.3.2. If the economy of Mythlo automatically adjusts to long-run equilibrium, then

Correct Answer
verified

Classical macroeconomists recommend

Correct Answer
verified

Exam 26: Aggregate Supply and Aggregate Demand

Use the figure below to answer the following questions. Figure 26.3.2 -Refer to Figure 26.3.2. Currently in Mythlo

Correct AnswerverifiedShow Answer

Autoworkers agree to a cut in the nominal wage rate. This event ________ short-run aggregate supply and ________ long-run aggregate supply.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Consider an economy starting from a position of full employment. Which one of the following changes does not occur as a result of a decrease in aggregate demand?

Correct AnswerverifiedShow Answer

If real GDP is greater than potential GDP, we would expect

Correct AnswerverifiedShow Answer

The quantity of real GDP demanded does not depend on decisions made by

Correct AnswerverifiedShow Answer

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

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

The world goes into an expansion. Starting from a position of long-run equilibrium, what effect does this event have on Canada's economy in the short run?

Correct AnswerverifiedShow Answer

Which one of the following newspaper quotations describes a leftward shift of the LAS curve?

Correct AnswerverifiedShow Answer

Which one, if any, of the following events shift the short-run aggregate supply curve but not the long-run aggregate supply curve?

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

Suppose that the E.U. economy goes into an expansion. Canadian real GDP ________ and Canadian unemployment ________ in the short run.

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 26.3.2 -Refer to Figure 26.3.2. If the economy of Mythlo automatically adjusts to long-run equilibrium, then

Correct AnswerverifiedShow Answer

Classical macroeconomists recommend

Correct AnswerverifiedShow Answer

Correct Answer
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Autoworkers agree to a cut in the nominal wage rate. This event short-run aggregate supply and long-run aggregate supply.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Suppose that the E.U. economy goes into an expansion. Canadian real GDP and Canadian unemployment in the short run.

Correct Answer
verified

Correct Answer
verified

Correct Answer
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