Question 1

With cost-push inflation in the short run, there will be:

Accepted Answer

A)   An increase in real GDP
B)   A leftward shift in the aggregate demand curve
C)   A decrease real GDP
D)   A decrease in unemploymentE) C) and D)
F) B) and D)

Question 2

The U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because aggregate:

Accepted Answer

A)   Demand increased
B)   Supply decreased
C)   Demand increased and aggregate supply increased
D)   Demand decreased and aggregate supply increasedE) B) and D)
F) C) and D)

Question 3

An increase in personal income taxes would shift AD to the:

Accepted Answer

A)   Right because C will increase
B)   Left because C will decrease
C)   Right because G will increase
D)   Left because G will decreaseE) C) and D)
F) A) and B)

Question 4

An increase in the price level in the aggregate expenditures model would:

Accepted Answer

A)   Decrease aggregate expenditures and shift the AD curve to the left
B)   Increase aggregate expenditures and shift the AD curve to the right
C)   Decrease aggregate expenditures but would not shift the AD curve
D)   Increase aggregate expenditures but would not shift the AD curveE) B) and C)
F) B) and D)

Question 5

If the dollar depreciates in value relative to foreign currencies, then aggregate:

Accepted Answer

A)   Demand decreases
B)   Demand increases
C)   Supply and aggregate demand increase
D)   Supply and aggregate demand decreaseE) None of the above
F) A) and B)

Question 6

Which would be considered to be one of the factors that shift the aggregate supply curve in the short run? A change in:

Accepted Answer

A)   Personal income taxes
B)   Consumer spending
C)   Government regulation
D)   Profit expectations on investment projectsE) A) and C)
F) C) and D)

Question 7

Refer to the graph above. Which of the following factors does not explain a movement along the AD curve?

Accepted Answer

A)   The expenditure multiplier effect
B)   The real-balances effect
C)   The interest-rate effect
D)   The foreign purchases effectE) A) and B)
F) A) and C)

Question 8

Collective bargaining agreements that prohibit wage cuts for the duration of the contract contribute to:

Accepted Answer

A)   A wealth effect
B)   A multiplier effect
C)   An increase in aggregate supply
D)   A price level that is inflexible downwardE) B) and D)
F) A) and D)

Question 9

Answer the question based on the following list of factors that are related to the aggregate demand curve.  Which of the above factors best explain the downward slope of aggregate demand curve?

Accepted Answer

A)   2, 4, and 6
B)   7, 9, and 10
C)   1, 3, and 8
D)   4, 6, and 7E) None of the above
F) A) and D)

Question 10

The interest rate effect on aggregate demand indicates that a(n) :

Accepted Answer

A)   Decrease in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending
B)   Decrease in the price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending
C)   Increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending
D)   Increase in the supply of money will increase interest rates and decrease interest-sensitive consumption and investment spendingE) A) and B)
F) B) and D)

Question 11

When the dollar appreciates relative to foreign currencies, it means that:

Accepted Answer

A)   We need more dollars to buy each unit of another currency
B)   We can buy less foreign currency with a given amount of dollars
C)   The value of foreign currencies decreased relative to our dollar
D)   Foreigners need less of their currency to buy one dollarE) All of the above
F) A) and D)

Question 12

Refer to the graph above. It depicts an economy in the:

Accepted Answer

A)   Immediate short run
B)   Short run
C)   Immediate long run
D)   Long runE) B) and D)
F) None of the above

Question 13

Government actions that were taken in order to stimulate the economy during the Great Recession of 2007-09 included the following, except:

Accepted Answer

A)   A significant reduction of interest rates to nearly zero
B)   A large increase in transfer payments
C)   An increase in the deficit-spending of the government
D)   A sharp increase in the natural rate of unemploymentE) A) and D)
F) A) and C)

Question 14

Wage contracts, efficiency wages, and the minimum wage are explanations for why:

Accepted Answer

A)   Competition results in price wars
B)   Wages tend to be inflexible downward
C)   The aggregate demand curve slopes downward
D)   There is little support for the existence of a real-balances effectE) C) and D)
F) A) and D)

Question 15

1 shifts to AD2, the full multiplier effect would be an increase in real GDP from: A)  Q1 to Q2 B)  Q1 to Q3 C)  Q2 to Q3 D)  Q2 to more than Q3" class="answers-bank-image d-inline" rel="preload" > Refer to the figure above. If AD1 shifts to AD2, the full multiplier effect would be an increase in real GDP from:

Accepted Answer

A)   Q1 to Q2
B)   Q1 to Q3
C)   Q2 to Q3
D)   Q2 to more than Q3E) A) and D)
F) B) and D)

Question 16

Answer the question based on the following list of factors that are related to the aggregate demand curve.  Refer to the list above. A change in net export spending would most likely be caused by changes in:

Accepted Answer

A)   2 and 3
B)   5 and 6
C)   7 and 8
D)   6 and 9E) None of the above
F) C) and D)

Question 17

A movement upward along a given aggregate demand curve is equivalent to a(n) :

Accepted Answer

A)   Increase in aggregate supply
B)   Increase in aggregate demand
C)   Upward shift in the aggregate expenditures schedule
D)   Downward shift in the aggregate expenditures scheduleE) A) and D)
F) A) and C)

Question 18

If Congress passed new laws significantly increasing the regulation of business, this action would tend to:

Accepted Answer

A)   Increase per-unit production costs and shift the aggregate supply curve to the left
B)   Increase per-unit production costs and shift the aggregate supply curve to the right
C)   Increase per-unit production costs and shift the aggregate demand curve to the left
D)   Decrease per-unit production costs and shift the aggregate supply curve to the leftE) A) and B)
F) A) and C)

Question 19

The version of aggregate supply that allows for changes in both product prices and resource prices is the:

Accepted Answer

A)   Immediate short-run
B)   Short run
C)   Immediate long-run
D)   Long runE) B) and D)
F) A) and B)

Question 20

The equivalent of the aggregate supply curve in the aggregate expenditures model is the 45-degree line.

Accepted Answer

A) True 
 B)False

Exam 12: Aggregate Demand and Aggregate Supply

If the dollar depreciates in value relative to foreign currencies, then aggregate:

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When the dollar appreciates relative to foreign currencies, it means that:

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If Congress passed new laws significantly increasing the regulation of business, this action would tend to:

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Which would be considered to be one of the factors that shift the aggregate supply curve in the short run? A change in:

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Refer to the graph above. It depicts an economy in the:

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The equivalent of the aggregate supply curve in the aggregate expenditures model is the 45-degree line.

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Refer to the figure above. If AD1 shifts to AD2, the full multiplier effect would be an increase in real GDP from:

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A movement upward along a given aggregate demand curve is equivalent to a(n) :

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The version of aggregate supply that allows for changes in both product prices and resource prices is the:

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Wage contracts, efficiency wages, and the minimum wage are explanations for why:

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The U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because aggregate:

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The interest rate effect on aggregate demand indicates that a(n) :

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Refer to the graph above. Which of the following factors does not explain a movement along the AD curve?

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With cost-push inflation in the short run, there will be:

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Answer the question based on the following list of factors that are related to the aggregate demand curve. Which of the above factors best explain the downward slope of aggregate demand curve?

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Collective bargaining agreements that prohibit wage cuts for the duration of the contract contribute to:

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Answer the question based on the following list of factors that are related to the aggregate demand curve. Refer to the list above. A change in net export spending would most likely be caused by changes in:

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An increase in the price level in the aggregate expenditures model would:

Correct AnswerverifiedShow Answer

Government actions that were taken in order to stimulate the economy during the Great Recession of 2007-09 included the following, except:

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An increase in personal income taxes would shift AD to the:

Correct AnswerverifiedShow Answer

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Refer to the figure above. If AD₁ shifts to AD₂, the full multiplier effect would be an increase in real GDP from:

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