Question 1

Figure 12.2
 
-Consider the economy described in Figure 12.2. At point C,

Accepted Answer

A)   businesses produce more than consumers want to spend.
B)   inventories deplete, which pushes the price up to its new equilibrium.
C)   inventories accumulate, which pushes the price down to its new equilibrium.
D)   real GDP is below its equilibrium level.
E)   the economy is in equilibrium.F) A) and D)
G) None of the above

Question 2

Assume that a large number of workers no longer depend on fixed labor contracts but instead tie their wages to cost of living adjustments. Other things equal, this implies that the slope of the long-run aggregate supply curve is relatively steep.

Accepted Answer

A) True 
 B)False

Question 3

Because demand-pull inflation is caused by an increase in the demand for output, economists say that this type of inflation is actually good for the economy.

Accepted Answer

A) True 
 B)False

Question 4

The short-run aggregate supply curve is

Accepted Answer

A)   a horizontal line.
B)   positively sloped.
C)   negatively sloped.
D)   a vertical line.
E)   a 45-degree line.F) C) and D)
G) All of the above

Question 5

Aggregate supply could increase due to all of the following except:

Accepted Answer

A)   an improvement in technology
B)   decrease in the price of resources
C)   optimistic producers' expectations
D)   increase in government spending
E)   none - all of these would cause aggregate supply to increaseF) B) and D)
G) C) and E)

Question 6

The aggregate demand curve

Accepted Answer

A)   shows total spending in which the economy will engage at alternative price levels.
B)   implies an inverse relationship between inflation and unemployment.
C)   is identical to the aggregate expenditures curve.
D)   has the same slope as a demand curve.
E)   relates relative prices to the quantity demanded of a particular good.F) A) and C)
G) All of the above

Question 7

In deriving the short-run aggregate supply curve, we assume that wages, rent, business profits, and interest are fixed.

Accepted Answer

A) True 
 B)False

Question 8

U.S. economic growth in the twenty-first century has been steady.

Accepted Answer

A) True 
 B)False

Question 9

In the mid-2000s, the world price of oil has been driven upward primarily due to an increase in demand.

Accepted Answer

A) True 
 B)False

Question 10

When aggregate supply increases, all of the following result except:

Accepted Answer

A)   equilibrium level of real GDP increases
B)   unemployment decreases
C)   the price level decreases
D)   cost-push inflation results
E)   none - all of these result when aggregate demand increasesF) C) and D)
G) B) and D)

Question 11

Which of the following statements is true?

Accepted Answer

A)   Aggregate demand and aggregate supply determine the equilibrium price and quantity of a single good.
B)   The aggregate demand curve indicates a positive relationship between the price level and GDP.
C)   The intersection of the aggregate demand and aggregate supply curves determines the equilibrium price and quantity.
D)   The intersection of the aggregate demand and aggregate supply curves determines the equilibrium price level and the equilibrium level of real GDP.
E)   Other things equal, a downward shift of the aggregate demand curve implies that the economy enters an expansionary phase.F) A) and B)
G) C) and D)

Question 12

The less vertical the aggregate supply curve, the

Accepted Answer

A)   faster the price level increases.
B)   higher the level of potential GDP.
C)   lower the profits earned by businesses.
D)   quicker wages adjust to price changes.
E)   slower wages adjust to price changes.F) C) and D)
G) A) and B)

Question 13

Net foreign producer demand, domestic household demand, and investment demand are factors influencing aggregate demand.

Accepted Answer

A) True 
 B)False

Question 14

-Refer to Table 12.2. Between year 1 and year 2, what happens to the U.S. aggregate demand curve?

Accepted Answer

A)   There is a movement to the right along the aggregate demand curve.
B)   The aggregate demand curve shifts to the right.
C)   There is a movement to the left along the aggregate demand curve.
D)   The aggregate demand curve shifts to the left.
E)   There is no movement along, or shift in any direction of, the aggregate demand curve.F) A) and B)
G) C) and D)

Question 15

Why is the long-run aggregate supply curve vertical at potential real GDP?

Accepted Answer

A)   Resource costs adjust fully to price changes.
B)   Producers' profits are increasing at this point.
C)   Unemployment equals zero.
D)   There is a very strong relationship between further price changes and output produced.
E)   Production costs are at the lowest level possible.F) A) and B)
G) A) and C)

Question 16

The short-run aggregate supply curve will not shift to the left if

Accepted Answer

A)   there is a significant decrease in worker productivity.
B)   workers on fixed-wage contracts expect higher inflation.
C)   the price of raw materials increases.
D)   the price of capital goods rises.
E)   wages rise in anticipation of higher prices.F) D) and E)
G) B) and E)

Question 17

All of the following lead to a change in aggregate expenditures except a change in

Accepted Answer

A)   exchange rates.
B)   the foreign price level.
C)   domestic wealth.
D)   the price of apples.
E)   interest rates.F) All of the above
G) C) and D)

Exam 12: Macroeconomic Equilibrium: Aggregate Demand and Supply

Figure 12.2 -Consider the economy described in Figure 12.2. At point C,

Correct Answer
verified

In the mid-2000s, the world price of oil has been driven upward primarily due to an increase in demand.

Correct Answer
verified

Why is the long-run aggregate supply curve vertical at potential real GDP?

Correct Answer
verified

Assume that a large number of workers no longer depend on fixed labor contracts but instead tie their wages to cost of living adjustments. Other things equal, this implies that the slope of the long-run aggregate supply curve is relatively steep.

Correct Answer
verified

The short-run aggregate supply curve is

Correct Answer
verified

Because demand-pull inflation is caused by an increase in the demand for output, economists say that this type of inflation is actually good for the economy.

Correct Answer
verified

Net foreign producer demand, domestic household demand, and investment demand are factors influencing aggregate demand.

Correct Answer
verified

In deriving the short-run aggregate supply curve, we assume that wages, rent, business profits, and interest are fixed.

Correct Answer
verified

The aggregate demand curve

Correct Answer
verified

U.S. economic growth in the twenty-first century has been steady.

Correct Answer
verified

All of the following lead to a change in aggregate expenditures except a change in

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

-Refer to Table 12.2. Between year 1 and year 2, what happens to the U.S. aggregate demand curve?

Correct Answer
verified

The less vertical the aggregate supply curve, the

Correct Answer
verified

Aggregate supply could increase due to all of the following except:

Correct Answer
verified

The short-run aggregate supply curve will not shift to the left if

Correct Answer
verified

When aggregate supply increases, all of the following result except:

Correct Answer
verified

Exam 12: Macroeconomic Equilibrium: Aggregate Demand and Supply

Figure 12.2 -Consider the economy described in Figure 12.2. At point C,

Correct AnswerverifiedShow Answer

In the mid-2000s, the world price of oil has been driven upward primarily due to an increase in demand.

Correct AnswerverifiedShow Answer

Why is the long-run aggregate supply curve vertical at potential real GDP?

Correct AnswerverifiedShow Answer

Assume that a large number of workers no longer depend on fixed labor contracts but instead tie their wages to cost of living adjustments. Other things equal, this implies that the slope of the long-run aggregate supply curve is relatively steep.

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve is

Correct AnswerverifiedShow Answer

Because demand-pull inflation is caused by an increase in the demand for output, economists say that this type of inflation is actually good for the economy.

Correct AnswerverifiedShow Answer

Net foreign producer demand, domestic household demand, and investment demand are factors influencing aggregate demand.

Correct AnswerverifiedShow Answer

In deriving the short-run aggregate supply curve, we assume that wages, rent, business profits, and interest are fixed.

Correct AnswerverifiedShow Answer

The aggregate demand curve

Correct AnswerverifiedShow Answer

U.S. economic growth in the twenty-first century has been steady.

Correct AnswerverifiedShow Answer

All of the following lead to a change in aggregate expenditures except a change in

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

-Refer to Table 12.2. Between year 1 and year 2, what happens to the U.S. aggregate demand curve?

Correct AnswerverifiedShow Answer

The less vertical the aggregate supply curve, the

Correct AnswerverifiedShow Answer

Aggregate supply could increase due to all of the following except:

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve will not shift to the left if

Correct AnswerverifiedShow Answer

When aggregate supply increases, all of the following result except:

Correct AnswerverifiedShow Answer

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