Question 1

If potential GDP increases,then the

Accepted Answer

A)  aggregate supply curve shifts leftward.
B)  aggregate supply curve shifts rightward.
C)  real wage rate increases.
D)  real wage rate falls.
E)  aggregate demand curve shifts rightward.F) A) and C)
G) A) and B)

Question 2

List three changes that lead to a shift of the aggregate supply curve.Discuss why each change shifts the aggregate supply curve and in which direction the curve shifts.

Accepted Answer

A change in potential GDP,a change in th...

Question 3

If the price level increases,there is ________ the AD curve and the quantity of real GDP demanded ________.

Accepted Answer

A)  a movement upward along;increases
B)  a movement downward along;increases
C)  a movement upward along;decreases
D)  a leftward shift in;decreases
E)  no change in;does not changeF) A) and E)
G) All of the above

Question 4

All of the following shift the aggregate demand curve to the right EXCEPT

Accepted Answer

A)  an increase in taxes.
B)  an expansion of the global economy.
C)  an increase in foreign income.
D)  an increase in government expenditure.
E)  an increase in expected future profit.F) C) and D)
G) A) and B)

Question 5

What factors can start a cost-push inflation? What must the Fed's response be for the inflation to continue?

Accepted Answer

Cost push inflation starts with a decrea...

Question 6

A rise in the price level produces ________ the potential GDP line.

Accepted Answer

A)  a rightward shift of
B)  a movement downward along
C)  a leftward shift of
D)  a movement upward along
E)  neither a shift of the potential GDP line nor a movement alongF) A) and D)
G) A) and C)

Question 7

Which of the following changes aggregate supply and shifts the AS curve?
I.a change in the price of a major resource
Ii.increases in the amount of capital
Iii.a change in the money income of consumers

Accepted Answer

A)  i only
B)  ii only
C)  iii only
D)  i and ii
E)  i,ii,and iiiF) All of the above
G) A) and E)

Question 8

Which of the following statements is correct?

Accepted Answer

A)  An increase in people's expected future income shifts the aggregate demand curve leftward.
B)  A tax increase shifts the aggregate demand curve leftward.
C)  An increase in potential GDP shifts the aggregate demand curve rightward.
D)  An increase in exports shifts the aggregate demand curve leftward.
E)  The higher the price level,the larger is the quantity of real GDP demanded.F) A) and D)
G) None of the above

Question 9

If the price of oil rises,the

Accepted Answer

A)  AD curve shifts rightward,real GDP increases,and the price level rises.
B)  AS curve shifts leftward,the price level rises,and real GDP decreases.
C)  AD curve and the AS curve shift leftward,real GDP decreases,and the price level rises.
D)  AD curve and the AS curve shift rightward,the price level rises,and real GDP decreases.
E)  AS curve shifts leftward,the price level rises,and real GDP increases.F) A) and B)
G) None of the above

Question 10

If the Fed increases the quantity of money,then

Accepted Answer

A)  aggregate demand decreases and the AD curve shifts leftward.
B)  aggregate demand increases and the AD curve shifts rightward.
C)  the quantity of real GDP demanded decreases and there is a movement up along the AD curve.
D)  the quantity of real GDP demanded increases and there is a movement down along the AD curve.
E)  both the aggregate demand curve and the aggregate supply curve shift leftward.F) A) and B)
G) A) and C)

Question 11

If taxes are cut,there is

Accepted Answer

A)  an increase in aggregate demand and the AD curve shifts rightward.
B)  a decrease in aggregate demand and the AD curve shifts leftward.
C)  an increase in the quantity of real GDP demanded and a movement up along the AD curve.
D)  a decrease in the quantity of real GDP demanded and a movement down along the AD curve.
E)  no change in aggregate demand,only a change in potential GDP.F) B) and D)
G) A) and B)

Question 12

A tax cut ________ aggregate demand and ________.

Accepted Answer

A)  decreases;shifts the AD curve rightward
B)  increases;shifts the AD curve leftward
C)  increases;shifts the AD curve rightward
D)  decreases;shifts the AD curve leftward
E)  does not change;does not shift the AD curveF) B) and D)
G) A) and D)

Question 13

A rise in the money wage rate shifts the

Accepted Answer

A)  AD curve rightward.
B)  AD curve leftward.
C)  AS curve rightward.
D)  AS curve leftward.
E)  potential GDP curve rightward.F) B) and E)
G) A) and B)

Question 14

When the domestic price level increases,exports decrease and imports increase.Other things the same,this change is illustrated by a

Accepted Answer

A)  movement upward along the aggregate demand curve.
B)  movement downward along the aggregate demand curve.
C)  rightward shift of the aggregate demand curve.
D)  leftward shift of the aggregate demand curve.
E)  rightward shift of the aggregate supply curve.F) D) and E)
G) A) and E)

Question 15

If real GDP is greater than potential GDP,then to restore equilibrium,________ and the price level ________.

Accepted Answer

A)  the aggregate demand curve shifts leftward;rises
B)  the aggregate demand curve shifts rightward;falls
C)  the aggregate supply curve shifts leftward;rises
D)  the aggregate supply curve shifts rightward;falls
E)  potential GDP increases;fallsF) C) and E)
G) A) and B)

Question 16

The slope of the aggregate supply curve shows that the ________ the price level,the ________.

Accepted Answer

A)  higher;greater is the quantity of real GDP supplied
B)  higher;smaller is the quantity of real GDP supplied
C)  lower;greater is the quantity of real GDP supplied
D)  higher;is the quantity of potential GDP supplied
E)  lower;is the quantity of potential GDP suppliedF) None of the above
G) A) and B)

Question 17

If there is a rise in the price level,there is ________ in the quantity of real GDP supplied and a movement ________ along the AS curve.

Accepted Answer

A)  a decrease;downward
B)  an increase;upward
C)  an increase;downward
D)  a decrease;upward
E)  no change;upwardF) C) and D)
G) A) and E)

Question 18

If the quantity of real GDP demanded is greater than the quantity of real GDP supplied,then

Accepted Answer

A)  the economy must be producing at potential GDP.
B)  the price level falls and firms decrease production.
C)  the price level rises and firms increase production.
D)  the price level falls to restore the macroeconomic equilibrium.
E)  aggregate demand changes to restore equilibrium.F) A) and B)
G) None of the above

Question 19

Potential GDP

Accepted Answer

A)  increases as the price level increases because firms supply more goods and services.
B)  decreases as the price level increases because people demand fewer goods and services.
C)  might either increase or decrease as the price level increases,depending on whether aggregate demand increases or decreases.
D)  is independent of the price level.
E)  never changes.F) A) and B)
G) B) and E)

Question 20

The aggregate supply curve shifts

Accepted Answer

A)  rightward if potential GDP decreases.
B)  rightward if the money wage rate falls.
C)  rightward if the money wage rate rises.
D)  leftward if potential GDP increases.
E)  leftward if the aggregate demand curve shifts leftward.F) A) and C)
G) B) and C)

Exam 19: Aggregate Supply and Aggregate Demand

The slope of the aggregate supply curve shows that the ________ the price level,the ________.

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If the price level increases,there is ________ the AD curve and the quantity of real GDP demanded ________.

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A rise in the price level produces ________ the potential GDP line.

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Potential GDP

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A rise in the money wage rate shifts the

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If the quantity of real GDP demanded is greater than the quantity of real GDP supplied,then

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List three changes that lead to a shift of the aggregate supply curve.Discuss why each change shifts the aggregate supply curve and in which direction the curve shifts.

Correct AnswerverifiedA change in potential GDP,a change in th...View AnswerShow Answer

When the domestic price level increases,exports decrease and imports increase.Other things the same,this change is illustrated by a

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All of the following shift the aggregate demand curve to the right EXCEPT

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What factors can start a cost-push inflation? What must the Fed's response be for the inflation to continue?

Correct AnswerverifiedCost push inflation starts with a decrea...View AnswerShow Answer

A tax cut ________ aggregate demand and ________.

Correct AnswerverifiedShow Answer

If the price of oil rises,the

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If there is a rise in the price level,there is ________ in the quantity of real GDP supplied and a movement ________ along the AS curve.

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If taxes are cut,there is

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If the Fed increases the quantity of money,then

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If potential GDP increases,then the

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Which of the following changes aggregate supply and shifts the AS curve? I.a change in the price of a major resource Ii.increases in the amount of capital Iii.a change in the money income of consumers

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The aggregate supply curve shifts

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If real GDP is greater than potential GDP,then to restore equilibrium,________ and the price level ________.

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Which of the following statements is correct?

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The slope of the aggregate supply curve shows that the the price level,the .

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If the price level increases,there is the AD curve and the quantity of real GDP demanded .

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A change in potential GDP,a change in th...
View Answer

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Cost push inflation starts with a decrea...
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A tax cut aggregate demand and .

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If there is a rise in the price level,there is in the quantity of real GDP supplied and a movement along the AS curve.

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If real GDP is greater than potential GDP,then to restore equilibrium, and the price level .

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