Question 1

Other things being equal, the higher the price level, the lower the level of domestic output purchased. This occurs because of:

Accepted Answer

A)   the real-balances effect.
B)   consumer spending on capital goods.
C)   the full-employment-unemployment rate.
D)   the sensitivity to demand-pull inflation.E) None of the above
F) A) and B)

Question 2

1 to AE2 would: A)  move the economy from A to B along AD1. B)  move the economy from B to A along AD1. C)  increase aggregate demand from AD1 to AD2. D)  decrease aggregate demand from AD2 to AD1." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE1 to AE2 would:

Accepted Answer

A)   move the economy from A to B along AD1.
B)   move the economy from B to A along AD1.
C)   increase aggregate demand from AD1 to AD2.
D)   decrease aggregate demand from AD2 to AD1.E) B) and C)
F) A) and B)

Question 3

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) B) and D)
F) B) and C)

Question 4

Other things equal, a reduction in personal and business taxes can be expected to:

Accepted Answer

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

Question 5

Other things equal, an increase in productivity will shift the aggregate supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 6

An increase in taxes will cause a(n) :

Accepted Answer

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

Question 7

Other things equal, a decrease in the price level will:

Accepted Answer

A)   shift the short run aggregate supply curve to the left.
B)   shift the aggregate demand curve to the left.
C)   cause a movement up a short-run aggregate supply curve.
D)   cause a movement down a short run aggregate supply curve.E) A) and B)
F) A) and C)

Question 8

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 9

Which of the following would not shift the aggregate supply curve?

Accepted Answer

A)   an increase in labour productivity
B)   a decline in the price of imported oil
C)   a decline in business taxes
D)   an increase in the price levelE) None of the above
F) A) and B)

Question 10

The relationship between the aggregate demand curve and the aggregate expenditures model is shown in the fact that:

Accepted Answer

A)   a decrease in the price level shifts the aggregate expenditures schedule downward and decreases real GDP.
B)   a decrease in the price level shifts the aggregate expenditures schedule upward and increases real GDP.
C)   an increase in the price level shifts the aggregate expenditures schedule upward and increases real GDP.
D)   an increase in the price level shifts the aggregate expenditures schedule downward and increases real GDP.E) All of the above
F) None of the above

Question 11

With output and input prices fixed, the immediate short run aggregate supply curve is:

Accepted Answer

A)   vertical.
B)   upward sloping.
C)   horizontal.
D)   downward sloping.E) All of the above
F) A) and B)

Question 12

Other things equal, the short-run aggregate supply curve shifts positions when:

Accepted Answer

A)   the price level changes.
B)   the rate of inflation changes.
C)   input prices change.
D)   aggregate demand changes.E) A) and B)
F) None of the above

Question 13

2 and that the economy initially is operating at its full-employment level of output Qf. In the short run, an increase in the price level from P2 to P3 will: A)  change aggregate supply from AS2 to AS3. B)  increase real output from Q1 to Q2. C)  change aggregate supply from AS2 to AS1. D)  increase real output from Qf to Q2." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram. Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf. In the short run, an increase in the price level from P2 to P3 will:

Accepted Answer

A)   change aggregate supply from AS2 to AS3.
B)   increase real output from Q1 to Q2.
C)   change aggregate supply from AS2 to AS1.
D)   increase real output from Qf to Q2.E) B) and D)
F) None of the above

Question 14

Refer to the diagram below. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be: 0 and AS0, the equilibrium price level and level of real domestic output will be:   A)  F and C, respectively. B)  G and B, respectively. C)  F and A, respectively. D)  E and B, respectively." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   F and C, respectively.
B)   G and B, respectively.
C)   F and A, respectively.
D)   E and B, respectively.E) A) and B)
F) A) and C)

Question 15

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 D)
F) None of the above

Question 16

The following table is for a particular country in which C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars. Each question is independent of the other questions.
 g is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars. Each question is independent of the other questions.    -Refer to the above table. The wealth or real balances effect of changes in the price level is: A)  shown by columns (1)  and (2)  of the table. B)  shown by columns (1)  and (5)  of the table. C)  shown by columns (1)  and (4)  of the table. D)  not shown by the data in the table." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above table. The wealth or real balances effect of changes in the price level is:

Accepted Answer

A)   shown by columns (1)  and (2)  of the table.
B)   shown by columns (1)  and (5)  of the table.
C)   shown by columns (1)  and (4)  of the table.
D)   not shown by the data in the table.E) A) and D)
F) None of the above

Question 17

The following list of items are related to aggregate demand and/or aggregate supply.
 
-Refer to the above list. Changes in which combination of factors best explain why the aggregate supply curve would shift?

Accepted Answer

A)   1 and 2
B)   2 and 10
C)   3 and 6
D)   7 and 8E) B) and C)
F) A) and B)

Question 18

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) A) and C)

Question 19

The Canadian economy was able to achieve full employment with relative price level stability in the early 2000 because aggregate:

Accepted Answer

A)   demand increased.
B)   supply decreased.
C)   demand increased and aggregate supply increased.
D)   demand decreased and aggregate supply increased.E) B) and C)
F) A) and B)

Question 20

"If the price level increases in Canada relative to foreign countries, then Canadian consumers will purchase more foreign goods and fewer Canadian goods." This statement describes:

Accepted Answer

A)   the output effect.
B)   the foreign trade effect.
C)   the real-balances effect.
D)   the shift-of-spending effect.E) C) and D)
F) All of the above

Exam 10: Aggregate Demand and Aggregate Supply

Which of the following would not shift the aggregate supply curve?

Correct Answer
verified

Other things equal, an improvement in productivity will:

Correct Answer
verified

"If the price level increases in Canada relative to foreign countries, then Canadian consumers will purchase more foreign goods and fewer Canadian goods." This statement describes:

Correct Answer
verified

With output and input prices fixed, the immediate short run aggregate supply curve is:

Correct Answer
verified

The determinants of aggregate supply:

Correct Answer
verified

The Canadian economy was able to achieve full employment with relative price level stability in the early 2000 because aggregate:

Correct Answer
verified

Other things equal, a decrease in the price level will:

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 equal, a reduction in personal and business taxes can be expected to:

Correct Answer
verified

Other things equal, the short-run aggregate supply curve shifts positions when:

Correct Answer
verified

Refer to the diagram below. If the initial aggregate demand and supply curves are AD₀ and AS₀, the equilibrium price level and level of real domestic output will be:

Correct Answer
verified

An increase in taxes will cause a(n) :

Correct Answer
verified

-Refer to the above diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE₁ to AE₂ would:

Correct Answer
verified

The relationship between the aggregate demand curve and the aggregate expenditures model is shown in the fact that:

Correct Answer
verified

-Refer to the above diagram. Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f. In the short run, an increase in the price level from P₂ to P₃ will:

Correct Answer
verified

Other things equal, an increase in productivity will shift the aggregate supply curve rightward.

Correct Answer
verified

Correct Answer
verified

Other things being equal, the higher the price level, the lower the level of domestic output purchased. This occurs because of:

Correct Answer
verified

The following list of items are related to aggregate demand and/or aggregate supply. -Refer to the above list. Changes in which combination of factors best explain why the aggregate supply curve would shift?

Correct Answer
verified

Correct Answer
verified

Exam 10: Aggregate Demand and Aggregate Supply

Which of the following would not shift the aggregate supply curve?

Correct AnswerverifiedShow Answer

Other things equal, an improvement in productivity will:

Correct AnswerverifiedShow Answer

"If the price level increases in Canada relative to foreign countries, then Canadian consumers will purchase more foreign goods and fewer Canadian goods." This statement describes:

Correct AnswerverifiedShow Answer

With output and input prices fixed, the immediate short run aggregate supply curve is:

Correct AnswerverifiedShow Answer

The determinants of aggregate supply:

Correct AnswerverifiedShow Answer

The Canadian economy was able to achieve full employment with relative price level stability in the early 2000 because aggregate:

Correct AnswerverifiedShow Answer

Other things equal, a decrease in the price level will:

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 equal, a reduction in personal and business taxes can be expected to:

Correct AnswerverifiedShow Answer

Other things equal, the short-run aggregate supply curve shifts positions when:

Correct AnswerverifiedShow Answer

Refer to the diagram below. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be:

Correct AnswerverifiedShow Answer

An increase in taxes will cause a(n) :

Correct AnswerverifiedShow Answer

-Refer to the above diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE1 to AE2 would:

Correct AnswerverifiedShow Answer

The relationship between the aggregate demand curve and the aggregate expenditures model is shown in the fact that:

Correct AnswerverifiedShow Answer

-Refer to the above diagram. Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf. In the short run, an increase in the price level from P2 to P3 will:

Correct AnswerverifiedShow Answer

Other things equal, an increase in productivity will shift the aggregate supply curve rightward.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Other things being equal, the higher the price level, the lower the level of domestic output purchased. This occurs because of:

Correct AnswerverifiedShow Answer

The following list of items are related to aggregate demand and/or aggregate supply. -Refer to the above list. Changes in which combination of factors best explain why the aggregate supply curve would shift?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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 below. If the initial aggregate demand and supply curves are AD₀ and AS₀, the equilibrium price level and level of real domestic output will be:

Correct Answer
verified

Correct Answer
verified

-Refer to the above diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE₁ to AE₂ would:

Correct Answer
verified

Correct Answer
verified

-Refer to the above diagram. Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f. In the short run, an increase in the price level from P₂ to P₃ will:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified