Question 1

Shifts in the aggregate supply curve are caused by changes in:

Accepted Answer

A)  consumption spending.
B)  the quantity of real output demanded.
C)  the quantity of real output supplied.
D)  one or more of the determinants of aggregate supply.E) A) and B)
F) A) and C)

Question 2

The foreign trade effect suggests that a decrease in the Canadian price level relative to other countries will:

Accepted Answer

A)  shift the aggregate demand curve leftward.
B)  shift the aggregate supply curve leftward.
C)  decrease Canadian exports and increase Canadian imports.
D)  increase Canadian exports and decrease Canadian imports.E) None of the above
F) B) and D)

Question 3

The interest rate effect 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.E) B) and C)
F) A) and C)

Question 4

A change in business taxes and regulation can affect input prices and aggregate supply.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the figure given below. 1 and AS1 represent the original aggregate demand and aggregate supply curves, respectively.AD2 and AS2 show the new aggregate demand and aggregate supply curves.At the original equilibrium price and quantity, this economy is experiencing: A) inflation. B) economic growth. C) full employment. D) less than full-capacity output." class="answers-bank-image d-inline" rel="preload" > In the above figure, AD1 and AS1 represent the original aggregate demand and aggregate supply curves, respectively.AD2 and AS2 show the new aggregate demand and aggregate supply curves.At the original equilibrium price and quantity, this economy is experiencing:

Accepted Answer

A)  inflation.
B)  economic growth.
C)  full employment.
D)  less than full-capacity output.E) None of the above
F) B) and D)

Question 6

We would expect a decline in personal and corporate income taxes to:

Accepted Answer

A)  shift the aggregate demand curve rightward.
B)  increase consumption and investment spending.
C)  increase the real output.
D)  all of these.E) A) and B)
F) A) and D)

Question 7

The factors which affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the:

Accepted Answer

A)  wealth, interest rate, and foreign trade effects.
B)  determinants of aggregate supply.
C)  determinants of aggregate demand.
D)  sole determinants of the equilibrium price level and the equilibrium real output.E) A) and B)
F) A) and D)

Question 8

1, then: A) aggregate demand is AD2. B) the equilibrium output level is Q3. C) the equilibrium output level is Q2. D) producers will supply output level Q1." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.If the equilibrium price level is P1, then:

Accepted Answer

A)  aggregate demand is AD2.
B)  the equilibrium output level is Q3.
C)  the equilibrium output level is Q2.
D)  producers will supply output level Q1.E) B) and D)
F) B) and C)

Question 9

In which of the following sets of circumstances can we confidently expect inflation?

Accepted Answer

A)  aggregate supply and aggregate demand both increase
B)  aggregate supply and aggregate demand both decrease
C)  aggregate supply decreases and aggregate demand increases
D)  aggregate supply increases and aggregate demand decreasesE) All of the above
F) A) and B)

Question 10

Refer to the diagram below. 2 to AD1? A) A decline in personal income tax rates B) An increase in the international value of the Canadian dollar C) An increase in government spending D) An increase in expected returns on investment projects" class="answers-bank-image d-inline" rel="preload" > Which of the following would shift the aggregate demand curve from AD2 to AD1?

Accepted Answer

A)  A decline in personal income tax rates
B)  An increase in the international value of the Canadian dollar
C)  An increase in government spending
D)  An increase in expected returns on investment projectsE) B) and C)
F) A) and B)

Question 11

Refer to the diagram given below. 2 and that the economy is initially operating at the full-employment level of output Qf.In the short run, demand-pull inflation could best be shown as: A) a movement from point b to point c on AS2. B) a movement from point b to point d. C) a shift of the aggregate supply curve from AS2 to AS3. D) a shift of the aggregate supply curve from AS1 to AS2." class="answers-bank-image d-inline" rel="preload" > Assume that the nominal wages of workers are initially set on the basis of the price level P2 and that the economy is initially operating at the full-employment level of output Qf.In the short run, demand-pull inflation could best be shown as:

Accepted Answer

A)  a movement from point b to point c on AS2.
B)  a movement from point b to point d.
C)  a shift of the aggregate supply curve from AS2 to AS3.
D)  a shift of the aggregate supply curve from AS1 to AS2.E) A) and B)
F) None of the above

Question 12

The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy:  Suppose that the price of each input increased from $5 to $8.The per unit cost of production in the above economy would:

Accepted Answer

A)  rise by $1.50 and the aggregate supply curve would shift to the right.
B)  rise by 60 percent and the aggregate supply curve would shift to the left.
C)  rise by 60 percent and the aggregate demand curve would shift to the left.
D)  fall by $1.50 and the aggregate demand curve would shift to the right.E) C) and D)
F) A) and B)

Question 13

Which of the factors below best explain the downward slope of aggregate demand curve? The following list of factors, are related to the aggregate demand curve.Real-balances effect
Household expectations
Interest-rate effect
Personal income tax rates
Profit expectations
National income abroad
Government spending
Foreign trade effect
Exchange rates
Degree of excess capacity

Accepted Answer

A)  2, 4, and 6
B)  7, 9, and 10
C)  1, 3, and 8
D)  4, 6, and 7E) A) and D)
F) B) and C)

Question 14

An increase in investment spending can be expected to shift the:

Accepted Answer

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

Question 15

Refer to the diagram below. 2 and that the economy initially is operating at the full-employment level of output Qf.In the short run, cost-push inflation could best be shown by a: A) leftward shift of the aggregate supply curve from AS2 to AS3. B) movement from point b to point c on AS2. C) movement from point b point a on AS2. D) rightward shift of the aggregate supply curve from AS2 to AS1." class="answers-bank-image d-inline" rel="preload" > Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P2 and that the economy initially is operating at the full-employment level of output Qf.In the short run, cost-push inflation could best be shown by a:

Accepted Answer

A)  leftward shift of the aggregate supply curve from AS2 to AS3.
B)  movement from point b to point c on AS2.
C)  movement from point b point a on AS2.
D)  rightward shift of the aggregate supply curve from AS2 to AS1.E) B) and C)
F) A) and B)

Question 16

Which of the above diagrams best portrays the effects of a dramatic increase in energy prices?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) A) and B)
F) A) and C)

Question 17

In terms of aggregate supply, the short run is a period in which:

Accepted Answer

A)  the price level is fixed.
B)  employment is fixed.
C)  real output is fixed.
D)  nominal wages and other input prices are fixed.E) All of the above
F) B) and D)

Question 18

The interest-rate and real-balances effects are important because they help explain:

Accepted Answer

A)  rightward and leftward shifts of the aggregate demand curve.
B)  why demand-management policy cannot be used effectively to curb stagflation.
C)  the shape of the aggregate demand curve.
D)  the shape of the aggregate supply curve.E) C) and D)
F) All of the above

Question 19

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.If the equilibrium level of real GDP is $43 billion in this country, its level of consumption will be: A) $18 billion. B) $20 billion. C) $22 billion. D) $26 billion." class="answers-bank-image d-inline" rel="preload" > Refer to the above table.If the equilibrium level of real GDP is $43 billion in this country, its level of consumption will be:

Accepted Answer

A)  $18 billion.
B)  $20 billion.
C)  $22 billion.
D)  $26 billion.E) A) and B)
F) B) and C)

Question 20

The foreign trade effect:

Accepted Answer

A)  shifts the aggregate demand curve rightward.
B)  shifts the aggregate demand curve leftward.
C)  shifts the aggregate supply curve rightward.
D)  none of these.E) None of the above
F) A) and B)

Exam 12: B: Aggregate Demand and Aggregate Supply

The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy: Suppose that the price of each input increased from $5 to $8.The per unit cost of production in the above economy would:

Correct Answer
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Refer to the diagram given below. Assume that the nominal wages of workers are initially set on the basis of the price level P₂ and that the economy is initially operating at the full-employment level of output Q_f.In the short run, demand-pull inflation could best be shown as:

Correct Answer
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Refer to the diagram below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P₂ and that the economy initially is operating at the full-employment level of output Q_f.In the short run, cost-push inflation could best be shown by a:

Correct Answer
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Refer to the above diagram.If the equilibrium price level is P₁, then:

Correct Answer
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Shifts in the aggregate supply curve are caused by changes in:

Correct Answer
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The foreign trade effect:

Correct Answer
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In which of the following sets of circumstances can we confidently expect inflation?

Correct Answer
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Correct Answer
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We would expect a decline in personal and corporate income taxes to:

Correct Answer
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The interest-rate and real-balances effects are important because they help explain:

Correct Answer
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Correct Answer
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Refer to the diagram below. Which of the following would shift the aggregate demand curve from AD₂ to AD₁?

Correct Answer
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A change in business taxes and regulation can affect input prices and aggregate supply.

Correct Answer
verified

In terms of aggregate supply, the short run is a period in which:

Correct Answer
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The factors which affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the:

Correct Answer
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The foreign trade effect suggests that a decrease in the Canadian price level relative to other countries will:

Correct Answer
verified

An increase in investment spending can be expected to shift the:

Correct Answer
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Which of the above diagrams best portrays the effects of a dramatic increase in energy prices?

Correct Answer
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Correct Answer
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The interest rate effect indicates that a(n) :

Correct Answer
verified

Exam 12: B: Aggregate Demand and Aggregate Supply

The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy: Suppose that the price of each input increased from $5 to $8.The per unit cost of production in the above economy would:

Correct AnswerverifiedShow Answer

Refer to the diagram given below. Assume that the nominal wages of workers are initially set on the basis of the price level P2 and that the economy is initially operating at the full-employment level of output Qf.In the short run, demand-pull inflation could best be shown as:

Correct AnswerverifiedShow Answer

Refer to the diagram below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P2 and that the economy initially is operating at the full-employment level of output Qf.In the short run, cost-push inflation could best be shown by a:

Correct AnswerverifiedShow Answer

Refer to the above diagram.If the equilibrium price level is P1, then:

Correct AnswerverifiedShow Answer

Shifts in the aggregate supply curve are caused by changes in:

Correct AnswerverifiedShow Answer

The foreign trade effect:

Correct AnswerverifiedShow Answer

In which of the following sets of circumstances can we confidently expect inflation?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

We would expect a decline in personal and corporate income taxes to:

Correct AnswerverifiedShow Answer

The interest-rate and real-balances effects are important because they help explain:

Correct AnswerverifiedShow Answer

Refer to the figure given below. In the above figure, AD1 and AS1 represent the original aggregate demand and aggregate supply curves, respectively.AD2 and AS2 show the new aggregate demand and aggregate supply curves.At the original equilibrium price and quantity, this economy is experiencing:

Correct AnswerverifiedShow Answer

Refer to the diagram below. Which of the following would shift the aggregate demand curve from AD2 to AD1?

Correct AnswerverifiedShow Answer

A change in business taxes and regulation can affect input prices and aggregate supply.

Correct AnswerverifiedShow Answer

In terms of aggregate supply, the short run is a period in which:

Correct AnswerverifiedShow Answer

The factors which affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the:

Correct AnswerverifiedShow Answer

The foreign trade effect suggests that a decrease in the Canadian price level relative to other countries will:

Correct AnswerverifiedShow Answer

An increase in investment spending can be expected to shift the:

Correct AnswerverifiedShow Answer

Which of the above diagrams best portrays the effects of a dramatic increase in energy prices?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The interest rate effect indicates that a(n) :

Correct AnswerverifiedShow Answer

Correct Answer
verified

Refer to the diagram given below. Assume that the nominal wages of workers are initially set on the basis of the price level P₂ and that the economy is initially operating at the full-employment level of output Q_f.In the short run, demand-pull inflation could best be shown as:

Correct Answer
verified

Refer to the diagram below. Assume that the nominal wages of workers in an economy are initially set on the basis of the price level P₂ and that the economy initially is operating at the full-employment level of output Q_f.In the short run, cost-push inflation could best be shown by a:

Correct Answer
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Refer to the above diagram.If the equilibrium price level is P₁, then:

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Refer to the diagram below. Which of the following would shift the aggregate demand curve from AD₂ to AD₁?

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