Question 1

The determinants of aggregate supply:

Accepted Answer

A)  are consumption, investment, government, and net export spending.
B)  explain why real domestic output and the price level are directly related.
C)  explain the three distinct ranges of the aggregate supply curve.
D)  include input prices and r productivity.E) B) and C)
F) A) and D)

Question 2

The recession that began in 2008 dispelled the idea of The Great Moderation.

Accepted Answer

A) True 
 B)False

Question 3

An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labour to produce its total output of 640 units.Each unit of capital costs $10, each unit of raw materials, $4, and each unit of labour, $3.Refer to the above information.If the per unit price of raw materials rises from $4 to $8 and all else remains constant, the per unit cost of production will rise by about:

Accepted Answer

A)  100 percent.
B)  50 percent.
C)  40 percent.
D)  30 percent.E) B) and D)
F) A) and D)

Question 4

Depreciation of the dollar relative to foreign currencies will tend to increase net exports and aggregate demand.

Accepted Answer

A) True 
 B)False

Question 5

The following aggregate demand and supply schedules are for a hypothetical economy:  Refer to the above data.The change in aggregate demand indicated in the previous question might have been caused by:

Accepted Answer

A)  an increase in net exports.
B)  a worsening of business expectations.
C)  an increase in consumer wealth.
D)  a decrease in the personal income tax.E) A) and D)
F) B) and C)

Question 6

Refer to the diagram given below. 1 and the price level decreases from P1, there should have been a: A) shift of the aggregate supply curve from AS1 to AS2. B) shift of the aggregate supply curve from AS1 to AS3. C) movement along the aggregate demand curve from e1 to e2. D) movement along the aggregate demand curve from e3 to e1." class="answers-bank-image d-inline" rel="preload" > When the real output increases from Q1 and the price level decreases from P1, there should have been a:

Accepted Answer

A)  shift of the aggregate supply curve from AS1 to AS2.
B)  shift of the aggregate supply curve from AS1 to AS3.
C)  movement along the aggregate demand curve from e1 to e2.
D)  movement along the aggregate demand curve from e3 to e1.E) B) and C)
F) A) and B)

Question 7

A decrease in the price level in the aggregate expenditures model would:

Accepted Answer

A)  decrease aggregate expenditures and real GDP.
B)  increase aggregate expenditures and real GDP.
C)  decrease aggregate expenditures and increase real GDP.
D)  increase aggregate expenditures and decrease real GDP.E) B) and D)
F) A) and B)

Question 8

A movement upward along an existing aggregate demand curve that changes the price level is equivalent to a(n) :

Accepted Answer

A)  decrease in aggregate demand.
B)  increase in aggregate demand.
C)  upward shift in the aggregate expenditures schedule.
D)  downward shift in the aggregate expenditures schedule.E) A) and B)
F) All of the above

Question 9

Refer to the diagram given below. 2 and that the economy is initially operating at its full-employment level of output Qf.In the long run, demand-pull inflation could best be shown as: A) a movement from point b to point c on AS2. B) a movement from point a to point b. C) a shift of the aggregate supply curve from AS2 to AS1. D) a movement from point b to point d." class="answers-bank-image d-inline" rel="preload" > Assume that the nominal wages of workers are initially set on the basis of the price level P2 and that the economy is initially operating at its full-employment level of output Qf.In the long run, demand-pull inflation could best be shown as:

Accepted Answer

A)  a movement from point b to point c on AS2.
B)  a movement from point a to point b.
C)  a shift of the aggregate supply curve from AS2 to AS1.
D)  a movement from point b to point d.E) A) and B)
F) A) and C)

Question 10

1 because of an increase in aggregate demand, the: A) economy will move up along curve B and output will temporarily increase. B) long-run aggregate supply curve C will shift upward. C) short-run aggregate supply curve B will automatically shift to the right. D) economy's output first will decline, then increase, and finally return to Q1." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.If the price level rises above P1 because of an increase in aggregate demand, the:

Accepted Answer

A)  economy will move up along curve B and output will temporarily increase.
B)  long-run aggregate supply curve C will shift upward.
C)  short-run aggregate supply curve B will automatically shift to the right.
D)  economy's output first will decline, then increase, and finally return to Q1.E) B) and C)
F) A) and B)

Question 11

A decrease in per unit production costs will shift the aggregate supply curve leftward.

Accepted Answer

A) True 
 B)False

Question 12

Other things equal, an improvement in productivity will:

Accepted Answer

A)  shift the aggregate demand curve to the left.
B)  shift the aggregate supply curve to the left.
C)  shift the aggregate supply curve to the right.
D)  increase the price level.E) A) and C)
F) All of the above

Question 13

An increase in consumer wealth will decrease aggregate demand.

Accepted Answer

A) True 
 B)False

Question 14

Other things equal, an improvement in productivity will:

Accepted Answer

A)  tend to increase the equilibrium price level.
B)  shift the aggregate supply curve to the left.
C)  shift the aggregate supply curve to the right.
D)  shift the aggregate demand curve to the left.E) B) and D)
F) B) and C)

Question 15

Refer to the diagram given below. 1 and the price level increases from P1, there should have been a: A) shift in the aggregate supply curve from AS1 to AS3. B) shift in the aggregate supply curve from AS2 to AS1. C) movement along the aggregate demand curve from e2 to e1. D) movement along the aggregate demand curve from e1 to e2." class="answers-bank-image d-inline" rel="preload" > When the real output decreases from Q1 and the price level increases from P1, there should have been a:

Accepted Answer

A)  shift in the aggregate supply curve from AS1 to AS3.
B)  shift in the aggregate supply curve from AS2 to AS1.
C)  movement along the aggregate demand curve from e2 to e1.
D)  movement along the aggregate demand curve from e1 to e2.E) A) and B)
F) None of the above

Question 16

The interest-rate effect is one of the determinants of aggregate demand.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

The following aggregate demand and supply schedules are for a hypothetical economy:  Refer to the above data.If the amount of real output demanded at each price level falls by $200, the equilibrium price level and equilibrium level of real domestic output will fall to:

Accepted Answer

A)  250 and $200, respectively.
B)  200 and $300, respectively.
C)  150 and $300, respectively.
D)  150 and $200, respectively.E) A) and D)
F) All of the above

Question 19

The equilibrium price level and level of real output occur where:

Accepted Answer

A)  real output is at its highest possible level.
B)  exports equal imports.
C)  the price level is at its lowest level.
D)  the aggregate demand and supply curves intersect.E) A) and B)
F) A) and C)

Question 20

Which would increase aggregate supply?

Accepted Answer

A)  an increase in business regulation
B)  a decline in productivity
C)  an increase in business subsidies
D)  a decrease in the capital stockE) None of the above
F) A) and D)

Exam 12: B: Aggregate Demand and Aggregate Supply

The determinants of aggregate supply:

Correct Answer
verified

Other things equal, an improvement in productivity will:

Correct Answer
verified

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

Correct Answer
verified

The following aggregate demand and supply schedules are for a hypothetical economy: Refer to the above data.The change in aggregate demand indicated in the previous question might have been caused by:

Correct Answer
verified

Refer to the diagram given below. When the real output decreases from Q₁ and the price level increases from P₁, there should have been a:

Correct Answer
verified

A decrease in the price level in the aggregate expenditures model would:

Correct Answer
verified

Refer to the diagram given below. Assume that the nominal wages of workers are initially set on the basis of the price level P₂ and that the economy is initially operating at its full-employment level of output Q_f.In the long run, demand-pull inflation could best be shown as:

Correct Answer
verified

The recession that began in 2008 dispelled the idea of The Great Moderation.

Correct Answer
verified

The equilibrium price level and level of real output occur where:

Correct Answer
verified

Correct Answer
verified

Which would increase aggregate supply?

Correct Answer
verified

Other things equal, an improvement in productivity will:

Correct Answer
verified

An increase in consumer wealth will decrease aggregate demand.

Correct Answer
verified

Refer to the diagram given below. When the real output increases from Q₁ and the price level decreases from P₁, there should have been a:

Correct Answer
verified

A movement upward along an existing aggregate demand curve that changes the price level is equivalent to a(n) :

Correct Answer
verified

The interest-rate effect is one of the determinants of aggregate demand.

Correct Answer
verified

A decrease in per unit production costs will shift the aggregate supply curve leftward.

Correct Answer
verified

The following aggregate demand and supply schedules are for a hypothetical economy: Refer to the above data.If the amount of real output demanded at each price level falls by $200, the equilibrium price level and equilibrium level of real domestic output will fall to:

Correct Answer
verified

Refer to the above diagram.If the price level rises above P₁ because of an increase in aggregate demand, the:

Correct Answer
verified

Depreciation of the dollar relative to foreign currencies will tend to increase net exports and aggregate demand.

Correct Answer
verified

Exam 12: B: Aggregate Demand and Aggregate Supply

The determinants of aggregate supply:

Correct AnswerverifiedShow Answer

Other things equal, an improvement in productivity will:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The following aggregate demand and supply schedules are for a hypothetical economy: Refer to the above data.The change in aggregate demand indicated in the previous question might have been caused by:

Correct AnswerverifiedShow Answer

Refer to the diagram given below. When the real output decreases from Q1 and the price level increases from P1, there should have been a:

Correct AnswerverifiedShow Answer

A decrease in the price level in the aggregate expenditures model would:

Correct AnswerverifiedShow Answer

Refer to the diagram given below. Assume that the nominal wages of workers are initially set on the basis of the price level P2 and that the economy is initially operating at its full-employment level of output Qf.In the long run, demand-pull inflation could best be shown as:

Correct AnswerverifiedShow Answer

The recession that began in 2008 dispelled the idea of The Great Moderation.

Correct AnswerverifiedShow Answer

The equilibrium price level and level of real output occur where:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which would increase aggregate supply?

Correct AnswerverifiedShow Answer

Other things equal, an improvement in productivity will:

Correct AnswerverifiedShow Answer

An increase in consumer wealth will decrease aggregate demand.

Correct AnswerverifiedShow Answer

Refer to the diagram given below. When the real output increases from Q1 and the price level decreases from P1, there should have been a:

Correct AnswerverifiedShow Answer

A movement upward along an existing aggregate demand curve that changes the price level is equivalent to a(n) :

Correct AnswerverifiedShow Answer

The interest-rate effect is one of the determinants of aggregate demand.

Correct AnswerverifiedShow Answer

A decrease in per unit production costs will shift the aggregate supply curve leftward.

Correct AnswerverifiedShow Answer

The following aggregate demand and supply schedules are for a hypothetical economy: Refer to the above data.If the amount of real output demanded at each price level falls by $200, the equilibrium price level and equilibrium level of real domestic output will fall to:

Correct AnswerverifiedShow Answer

Refer to the above diagram.If the price level rises above P1 because of an increase in aggregate demand, the:

Correct AnswerverifiedShow Answer

Depreciation of the dollar relative to foreign currencies will tend to increase net exports and aggregate demand.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the diagram given below. When the real output decreases from Q₁ and the price level increases from P₁, there should have been a:

Correct Answer
verified

Correct Answer
verified

Refer to the diagram given below. Assume that the nominal wages of workers are initially set on the basis of the price level P₂ and that the economy is initially operating at its full-employment level of output Q_f.In the long run, demand-pull inflation could best be shown as:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the diagram given below. When the real output increases from Q₁ and the price level decreases from P₁, there should have been a:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the above diagram.If the price level rises above P₁ because of an increase in aggregate demand, the:

Correct Answer
verified

Correct Answer
verified