Question 1

In the diagram, the economy's immediate-short-run AS curve is line ______, its short-run AS curve is _____, and its long-run AS curve is line ______.

Accepted Answer

A)   1; 2; 4
B)   1; 2; 3
C)   2; 3; 4
D)   3; 2; 1

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Refer to the graph, which shows an aggregate demand curve. If the economy is at point C and the price level increases by 100, then the wealth, interest-rate, and foreign purchases effects will

Accepted Answer

A)   move the economy to point A.
B)   move the economy to point B.
C)   move the economy to point D.
D)   shift the AD curve to the left.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Price Level CIgGXM Real GDP 128$18$2$3$1$51252043241222263331192483421162610351\begin{array} { | c | c | c | c | c | c | c | } \hline 	ext { Price Level } & C & I _ { g } & G & X & M & 	ext { Real GDP } \\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 1 & \$ 5 & \\hline 125 & 20 & 4 & 3 & 2 & 4 & \\hline 122 & 22 & 6 & 3 & 3 & 3 & \\hline 119 & 24 & 8 & 3 & 4 & 2 & \\hline 116 & 26 & 10 & 3 & 5 & 1 & \\hline\end{array} Price Level 128125122119116​C$1820222426​Ig​$246810​G$33333​X$12345​M$54321​ Real GDP ​​  In the accompanying table for a particular country, C is consumption expenditures,  IgI _ { g }Ig​  is gross
Investment expenditures, G is government expenditures, X is exports, and M is imports. All ?gures
Are in billions of dollars. If this nation's equilibrium price level is 125, its net exports will be

Accepted Answer

A)   minus $4 billion.
B)   minus $2 billion.
C)   zero.
D)   $2 billion.

Question 6

Graphically, cost-push inﬂation is shown as a

Accepted Answer

A)   leftward shift of the AD curve.
B)   rightward shift of the AS curve.
C)   leftward shift of the AS curve.
D)   rightward shift of the AD curve.

Question 7

If investment decreases by $20 billion and the economy's MPC is 0.5, the aggregate demand curve will shift

Accepted Answer

A)   leftward by $40 billion at each price level.
B)   rightward by $20 billion at each price level.
C)   rightward by $40 billion at each price level.
D)   leftward by $20 billion at each price level. A

Question 8

The short-run aggregate supply curve shows the

Accepted Answer

A)   inverse relationship between the price level and real GDP purchased.
B)   inverse relationship between the price level and real GDP produced.
C)   direct relationship between the price level and real GDP produced.
D)   direct relationship between the price level and real GDP purchased. C

Question 9

The foreign purchases effect on aggregate demand suggests that a

Accepted Answer

A)   fall in our domestic price level will increase our imports and reduce our exports, thereby reducing the net exports component of aggregate demand.
B)   fall in our domestic price level will decrease our imports and increase our exports, thereby reducing the net exports component of aggregate demand.
C)   rise in our domestic price level will increase our imports and reduce our exports, thereby reducing the net exports component of aggregate demand.
D)   rise in our domestic price level will decrease our imports and increase our exports, thereby reducing the net exports component of aggregate demand.

Question 10

Accepted Answer

A)   A
B)   B
C)   C
D)   D

Question 11

The labels for the axes of an aggregate supply curve should be

Accepted Answer

A)   real domestic output for the vertical axis and price level for the horizontal axis.
B)   real domestic output for the horizontal axis and price level for the vertical axis.
C)   real employment for the vertical axis and price level for the horizontal axis.
D)   aggregate demand for the vertical axis and real national output for the horizontal axis.

Question 12

The labels for the axes of the aggregate demand graph should be

Accepted Answer

A)   quantity of a product on the vertical axis and the price of a product on the horizontal axis.
B)   price of a product on the vertical axis and quantity of a product on the horizontal axis.
C)   real domestic output on the vertical axis and the price level on the horizontal axis.
D)   real domestic output on the horizontal axis and the price level on the vertical axis.

Question 13

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 spending.

Question 14

Price Level CIgGXM Real GDP 128$18$2$3$1$51252043241222263331192483421162610351\begin{array} { | c | c | c | c | c | c | c | } \hline 	ext { Price Level } & C & I _ { g } & G & X & M & 	ext { Real GDP } \\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 1 & \$ 5 & \\hline 125 & 20 & 4 & 3 & 2 & 4 & \\hline 122 & 22 & 6 & 3 & 3 & 3 & \\hline 119 & 24 & 8 & 3 & 4 & 2 & \\hline 116 & 26 & 10 & 3 & 5 & 1 & \\hline\end{array} Price Level 128125122119116​C$1820222426​Ig​$246810​G$33333​X$12345​M$54321​ Real GDP ​​  In the accompanying table for a particular country, C is consumption expenditures,  IgI _ { g }Ig​  is gross
Investment expenditures, G is government expenditures, X is exports, and M is imports. All ?gures
Are in billions of dollars. A decline in the international value of the dollar would

Accepted Answer

A)   increase the values in the X and M columns and reduce aggregate demand.
B)   decrease the values in the X and M columns and increase aggregate demand.
C)   decrease the values in column X increase the values in column M, and reduce aggregate demand.
D)   increase the values in column X, decrease the values in column M, and increase aggregate demand.

Question 15

An increase in business excise taxes will shift the aggregate supply curve leftward.

Accepted Answer

A) True 
 B)False  True

Question 16

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. The per-unit cost of production in the economy described is

Accepted Answer

A)   $0.50.
B)   $1.
C)   $2.
D)   $5.

Question 17

In the accompanying graph, the long-run aggregate supply curve would be represented by which line?

Accepted Answer

A)   1
B)   2
C)   3
D)   4

Question 18

The short-run aggregate supply curve represents circumstances where

Accepted Answer

A)   both input and output prices are ﬁxed.
B)   both input and output prices are ﬂexible.
C)   input prices are ﬁxed, but output prices are ﬂexible.
D)   input prices are ﬂexible, but output prices are ﬁxed.

Question 19

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 unemployment.

Question 20

What determines the equilibrium price level and the level of real domestic output in the aggregate
demand-aggregate supply model?

Accepted Answer

The intersection of the aggregate demand...

Exam 12: Aggregate Demand and Aggregate Supply

In the diagram, the economy's immediate-short-run AS curve is line ____, its short-run AS curve is _, and its long-run AS curve is line ____.

Correct Answer
verified

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

Correct Answer
verified

Refer to the graph, which shows an aggregate demand curve. If the economy is at point C and the price level increases by 100, then the wealth, interest-rate, and foreign purchases effects will

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Graphically, cost-push inﬂation is shown as a

Correct Answer
verified

If investment decreases by $20 billion and the economy's MPC is 0.5, the aggregate demand curve will shift

Correct Answer
verified
A

The short-run aggregate supply curve shows the

Correct Answer
verified
C

The foreign purchases effect on aggregate demand suggests that a

Correct Answer
verified

Correct Answer
verified

The labels for the axes of an aggregate supply curve should be

Correct Answer
verified

The labels for the axes of the aggregate demand graph should be

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

An increase in business excise taxes will shift the aggregate supply curve leftward.

Correct Answer
verified
True

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. The per-unit cost of production in the economy described is

Correct Answer
verified

In the accompanying graph, the long-run aggregate supply curve would be represented by which line?

Correct Answer
verified

The short-run aggregate supply curve represents circumstances where

Correct Answer
verified

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

Correct Answer
verified

What determines the equilibrium price level and the level of real domestic output in the aggregate demand-aggregate supply model?

Correct Answer
verified
The intersection of the aggregate demand...
View Answer

Exam 12: Aggregate Demand and Aggregate Supply

In the diagram, the economy's immediate-short-run AS curve is line ______, its short-run AS curve is _____, and its long-run AS curve is line ______.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the graph, which shows an aggregate demand curve. If the economy is at point C and the price level increases by 100, then the wealth, interest-rate, and foreign purchases effects will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Graphically, cost-push inﬂation is shown as a

Correct AnswerverifiedShow Answer

If investment decreases by $20 billion and the economy's MPC is 0.5, the aggregate demand curve will shift

Correct AnswerverifiedA

The short-run aggregate supply curve shows the

Correct AnswerverifiedC

The foreign purchases effect on aggregate demand suggests that a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The labels for the axes of an aggregate supply curve should be

Correct AnswerverifiedShow Answer

The labels for the axes of the aggregate demand graph should be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in business excise taxes will shift the aggregate supply curve leftward.

Correct AnswerverifiedTrue

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. The per-unit cost of production in the economy described is

Correct AnswerverifiedShow Answer

In the accompanying graph, the long-run aggregate supply curve would be represented by which line?

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve represents circumstances where

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

Correct AnswerverifiedShow Answer

What determines the equilibrium price level and the level of real domestic output in the aggregate demand-aggregate supply model?

Correct AnswerverifiedThe intersection of the aggregate demand...View AnswerShow Answer

In the diagram, the economy's immediate-short-run AS curve is line ____, its short-run AS curve is _, and its long-run AS curve is line ____.

Correct Answer
verified

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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A

Correct Answer
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C

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
verified

Correct Answer
verified
True

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
The intersection of the aggregate demand...
View Answer