Question 1

An increase in net exports can be expected to shift the:

Accepted Answer

A)  aggregate expenditures curve upward and the aggregate demand curve rightward.
B)  aggregate expenditures curve upward and the aggregate demand curve leftward.
C)  aggregate expenditures curve downward and the aggregate demand curve rightward.
D)  aggregate expenditures curve downward and the aggregate demand curve leftward.E) C) and D)
F) A) and C)

Question 2

If the dollar price of foreign currencies falls (that is, the dollar appreciates) , we would expect:

Accepted Answer

A)  aggregate demand to decrease and aggregate supply to increase.
B)  both aggregate demand and aggregate supply to decrease.
C)  both aggregate demand and aggregate supply to increase.
D)  aggregate demand to increase and aggregate supply to decrease.E) B) and D)
F) A) and B)

Question 3

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

Question 4

Which one of the following would not shift the aggregate demand curve?

Accepted Answer

A)  a change in the price level
B)  depreciation of the international value of the dollar
C)  a decline in the interest rate at each possible price level
D)  an increase in personal income tax ratesE) All of the above
F) A) and D)

Question 5

Suppose the full-employment level of real output (Q)  for a hypothetical economy is $500 and that the price level (P)  initially is 100.Use the following short-run aggregate supply schedules to answer the next question.  Refer to the information above.If the price level unexpectedly increases from 100 to 125, the level of real output in the short run will:

Accepted Answer

A)  rise from $500 to $560.
B)  fall from $500 to $440.
C)  fall from $560 to $500.
D)  rise from $440 to $500.E) A) and D)
F) B) and C)

Question 6

Efficiency wages will:

Accepted Answer

A)  make wages inflexible downward.
B)  elicit minimum work effort from workers.
C)  impose a legal price floor on wages.
D)  increase the number of strikes.E) None of the above
F) A) and D)

Question 7

Which effect best explains the downward slope of the aggregate demand curve?

Accepted Answer

A)  a multiplier effect
B)  an income effect
C)  a substitution effect
D)  an interest rate effectE) None of the above
F) A) and D)

Question 8

If personal taxes were decreased and input productivity increased simultaneously, the equilibrium:

Accepted Answer

A)  output would rise.
B)  output would fall.
C)  price level would necessarily fall.
D)  price level would necessarily rise.E) All of the above
F) None of the above

Question 9

An increase in wealth from a substantial increase in stock prices will move the economy along the existing aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 10

A decrease in government spending will cause a(n) :

Accepted Answer

A)  increase in the quantity of real domestic output demanded.
B)  decrease in the quantity of real domestic output demanded.
C)  decrease in aggregate demand.
D)  increase in aggregate demand.E) All of the above
F) A) and B)

Question 11

Which of the following is true of aggregate supply in the long run?

Accepted Answer

A)  Nominal wages and output prices are both fixed.
B)  Nominal wages are fixed but output prices can vary.
C)  Output prices are fixed.
D)  Nominal wages are fully responsive to changes in the price level.E) B) and D)
F) C) and D)

Question 12

Refer to the diagram below. 1 to AD0 might be caused by a(n) : A) increase in the price level. B) increase in the price of resources. C) increase in investment spending. D) decrease in net export spending." class="answers-bank-image d-inline" rel="preload" > A shift of the aggregate demand curve from AD1 to AD0 might be caused by a(n) :

Accepted Answer

A)  increase in the price level.
B)  increase in the price of resources.
C)  increase in investment spending.
D)  decrease in net export spending.E) B) and D)
F) All of the above

Question 13

Suppose the full-employment level of real output (Q)  for a hypothetical economy is $500 and that the price level (P)  initially is 100.Use the following short-run aggregate supply schedules to answer the next question.  Refer to the information above.If the price level unexpectedly declines from 100 to 75, the level of real output in the short run will:

Accepted Answer

A)  rise from $500 to $560.
B)  fall from $500 to $440.
C)  fall from $560 to $500.
D)  rise from $440 to $500.E) B) and D)
F) B) and C)

Question 14

Productivity is calculated by:

Accepted Answer

A)  dividing total output by total input.
B)  dividing total input by total output.
C)  multiplying total output by total input.
D)  adding total input to total output.E) A) and B)
F) None of the above

Question 15

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Refer to the above information.Given an increase in input price from $4 to $6, we would expect the aggregate:

Accepted Answer

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

Question 16

Other things being equal, if the national incomes of our major international lending partners were to rise, our:

Accepted Answer

A)  aggregate demand curve would shift to the right.
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) A) and C)
F) A) and B)

Question 17

All else equal, an increase in imports will shift the aggregate expenditures curve:

Accepted Answer

A)  upward and the aggregate demand curve rightward.
B)  upward and the aggregate demand curve leftward.
C)  downward and the aggregate demand curve rightward.
D)  downward and the aggregate demand curve leftward.E) All of the above
F) B) and D)

Question 18

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.The per unit cost of production in this economy is:

Accepted Answer

A)  $.05.
B)  $.10.
C)  $.50.
D)  $1.00.E) None of the above
F) A) and C)

Question 19

The aggregate demand curve is:

Accepted Answer

A)  vertical if full employment exists.
B)  horizontal when there is considerable unemployment in the economy.
C)  downward sloping because of the interest-rate, real balances, and foreign trade effects.
D)  downward sloping because production costs decrease as real output increases.E) All of the above
F) B) and C)

Question 20

Menu costs will:

Accepted Answer

A)  increase the amount of training of workers.
B)  result in price wars between businesses.
C)  increase the legal minimum wage.
D)  make prices inflexible downward.E) All of the above
F) C) and D)

Exam 12: B: Aggregate Demand and Aggregate Supply

Efficiency wages will:

Correct Answer
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Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Refer to the above information.Given an increase in input price from $4 to $6, we would expect the aggregate:

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Which one of the following would not shift the aggregate demand curve?

Correct Answer
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Menu costs will:

Correct Answer
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Which of the following is true of aggregate supply in the long run?

Correct Answer
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All else equal, an increase in imports will shift the aggregate expenditures curve:

Correct Answer
verified

An increase in wealth from a substantial increase in stock prices will move the economy along the existing aggregate demand curve.

Correct Answer
verified

Other things being equal, if the national incomes of our major international lending partners were to rise, our:

Correct Answer
verified

Refer to the diagram below. A shift of the aggregate demand curve from AD₁ to AD₀ might be caused by a(n) :

Correct Answer
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The aggregate demand curve is:

Correct Answer
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An increase in net exports can be expected to shift the:

Correct Answer
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If the dollar price of foreign currencies falls (that is, the dollar appreciates) , we would expect:

Correct Answer
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Productivity is calculated by:

Correct Answer
verified

If personal taxes were decreased and input productivity increased simultaneously, the equilibrium:

Correct Answer
verified

Which effect best explains the downward slope of the aggregate demand curve?

Correct Answer
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A decrease in government spending will cause a(n) :

Correct Answer
verified

Exam 12: B: Aggregate Demand and Aggregate Supply

Efficiency wages will:

Correct AnswerverifiedShow Answer

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Refer to the above information.Given an increase in input price from $4 to $6, we would expect the aggregate:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following would not shift the aggregate demand curve?

Correct AnswerverifiedShow Answer

Menu costs will:

Correct AnswerverifiedShow Answer

Which of the following is true of aggregate supply in the long run?

Correct AnswerverifiedShow Answer

All else equal, an increase in imports will shift the aggregate expenditures curve:

Correct AnswerverifiedShow Answer

An increase in wealth from a substantial increase in stock prices will move the economy along the existing aggregate demand curve.

Correct AnswerverifiedShow Answer

Other things being equal, if the national incomes of our major international lending partners were to rise, our:

Correct AnswerverifiedShow Answer

Refer to the diagram below. A shift of the aggregate demand curve from AD1 to AD0 might be caused by a(n) :

Correct AnswerverifiedShow Answer

The aggregate demand curve is:

Correct AnswerverifiedShow Answer

An increase in net exports can be expected to shift the:

Correct AnswerverifiedShow Answer

If the dollar price of foreign currencies falls (that is, the dollar appreciates) , we would expect:

Correct AnswerverifiedShow Answer

Productivity is calculated by:

Correct AnswerverifiedShow Answer

If personal taxes were decreased and input productivity increased simultaneously, the equilibrium:

Correct AnswerverifiedShow Answer

Which effect best explains the downward slope of the aggregate demand curve?

Correct AnswerverifiedShow Answer

A decrease in government spending will cause a(n) :

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Refer to the diagram below. A shift of the aggregate demand curve from AD₁ to AD₀ might be caused by a(n) :

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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