Question 1

What happens if the economy is at its long-run equilibrium and aggregate demand increases?

Accepted Answer

The increase in aggregate demand means t...

Question 2

-The curve labeled A in the above figure is

Accepted Answer

A)   a short-run aggregate supply curve.
B)   an aggregate demand curve.
C)   a long-run aggregate supply curve.
D)   a production possibilities curve.

Question 3

Which of the following directly shifts the short-run aggregate supply curve?

Accepted Answer

A)   a change in aggregate demand
B)   a change in the price level
C)   a change in resource prices
D)   all of the above

Question 4

-In the above figure,the aggregate demand curve is AD₂,so the short-run equilibrium level of real GDP is

Accepted Answer

A)   $13 trillion.
B)   $13.5 trillion.
C)   more than $13 and less than $13.5 trillion.
D)   None of the above answers is correct.

Question 5

-The curve labeled A in the above figure is a

Accepted Answer

A)   short-run aggregate demand curve.
B)   short-run aggregate supply curve.
C)   long-run aggregate demand curve.
D)   long-run aggregate supply curve.

Question 6

-In the above figure,the short-run equilibrium will eventually adjust to a long-run equilibrium with a

Accepted Answer

A)   lower price level and smaller real GDP
B)   higher price level and larger real GDP.
C)   higher price level and smaller real GDP.
D)   lower price level and larger real GDP.

Question 7

When the labor market is at full employment,

Accepted Answer

A)   real GDP equals potential GDP.
B)   the price level is stable.
C)   the price level equals the potential price level.
D)   the SAS curve is horizontal.

Question 8

-In the above figure,when the economy is in a long-run equilibrium,the price level will be

Accepted Answer

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

Question 9

-In the figure above,the economy is at point A when the price level rises to 120.Money wage rates and other resource prices remain constant.Firms are willing to supply output equal to

Accepted Answer

A)   $12.5 trillion.
B)   $13.0 trillion.
C)   $13.5 trillion.
D)   None of the above answers is correct.

Question 10

According to the intertemporal substitution effect,when the price level increases,the interest rate

Accepted Answer

A)   rises and the quantity of real GDP demanded increases.
B)   rises and the quantity of real GDP demanded decreases.
C)   falls and the quantity of real GDP demanded decreases.
D)   is not affected.

Question 11

An above full-employment equilibrium is

Accepted Answer

A)   a theoretical possibility but cannot happen in reality.
B)   the equilibrium in which the economy is in most of the time.
C)   when real GDP exceeds potential GDP.
D)   the period of time when prices are falling.

Question 12

Which of the following changes would NOT shift the aggregate demand curve?

Accepted Answer

A)   a change in fiscal policy
B)   a change in monetary policy
C)   a change in expectations about future income
D)   an increase in technology

Question 13

Which of the following events will increase short-run aggregate supply?

Accepted Answer

A)   an advance in technology
B)   an increase in resource prices
C)   an increase in the natural unemployment rate
D)   an increase in foreign income

Question 14

The aggregate demand curve

Accepted Answer

A)   has a negative slope.
B)   has a positive slope.
C)   is vertical.
D)   is horizontal.

Question 15

A rise in the price level changes aggregate demand because

Accepted Answer

A)   firms increase their investment when prices are higher.
B)   the real value of people's wealth varies directly with the price level and so does their spending.
C)   the real value of people's wealth decreases and so they decrease their consumption.
D)   the more money people have, the more it is worth and hence the more goods and services they demand.

Question 16

The short-run aggregate supply curve

Accepted Answer

A)   is vertical.
B)   shows the impact changes in the price level have on the quantity of real GDP when resource prices are constant.
C)   illustrates the level of potential real GDP.
D)   shifts whenever the price level changes.

Question 17

If the price level in Great Britain increases from 102 to 105 (holding all else constant) ,real wealth ________ and there is a movement ________ along Great Britain's aggregate demand curve.

Accepted Answer

A)   decreases; upward
B)   increases; upward
C)   decreases; downward
D)   increases; downward

Question 18

The short-run aggregate supply curve shifts leftward when the

Accepted Answer

A)   price level increases.
B)   general level of technology advances.
C)   money wage rate increases.
D)   availability of on-the-job training expands to all workers.

Question 19

Which of the following occurs while moving along a short-run aggregate supply curve?

Accepted Answer

A)   The money wage rate and the price level change by the same percentage.
B)   The money wage rate changes and the price level is constant.
C)   The price level changes and the money wage rate is constant.
D)   Neither the price level nor the money wage rate changes.

Question 20

An increase in the quantity of money shifts the aggregate demand curve rightward.

Accepted Answer

A) True 
 B)False

Exam 10: Aggregate Supply and Aggregate Demand

Which of the following directly shifts the short-run aggregate supply curve?

Correct AnswerverifiedShow Answer

If the price level in Great Britain increases from 102 to 105 (holding all else constant) ,real wealth ________ and there is a movement ________ along Great Britain's aggregate demand curve.

Correct AnswerverifiedShow Answer

Which of the following occurs while moving along a short-run aggregate supply curve?

Correct AnswerverifiedShow Answer

According to the intertemporal substitution effect,when the price level increases,the interest rate

Correct AnswerverifiedShow Answer

A rise in the price level changes aggregate demand because

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Which of the following events will increase short-run aggregate supply?

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-In the above figure,when the economy is in a long-run equilibrium,the price level will be

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An increase in the quantity of money shifts the aggregate demand curve rightward.

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-The curve labeled A in the above figure is

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-The curve labeled A in the above figure is a

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-In the above figure,the aggregate demand curve is AD₂,so the short-run equilibrium level of real GDP is

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-In the figure above,the economy is at point A when the price level rises to 120.Money wage rates and other resource prices remain constant.Firms are willing to supply output equal to

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When the labor market is at full employment,

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The short-run aggregate supply curve

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Which of the following changes would NOT shift the aggregate demand curve?

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The aggregate demand curve

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What happens if the economy is at its long-run equilibrium and aggregate demand increases?

Correct AnswerverifiedThe increase in aggregate demand means t...View AnswerShow Answer

-In the above figure,the short-run equilibrium will eventually adjust to a long-run equilibrium with a

Correct AnswerverifiedShow Answer

An above full-employment equilibrium is

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve shifts leftward when the

Correct AnswerverifiedShow Answer

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If the price level in Great Britain increases from 102 to 105 (holding all else constant) ,real wealth and there is a movement along Great Britain's aggregate demand curve.

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The increase in aggregate demand means t...
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