Question 1

2 to AE1resulting from the wealth, interest rate, and foreign trade effects would be depicted as: A) a movement from A to B along aggregate demand curve AD1. B) a movement from C to A along aggregate demand curve AD1. C) a shift of aggregate demand from AD1 to AD2. D) a shift of aggregate demand from AD2 to AD1." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagrams.A decline in aggregate expenditures from AE2 to AE1resulting from the wealth, interest rate, and foreign trade effects would be depicted as:

Accepted Answer

A)  a movement from A to B along aggregate demand curve AD1.
B)  a movement from C to A along aggregate demand curve AD1.
C)  a shift of aggregate demand from AD1 to AD2.
D)  a shift of aggregate demand from AD2 to AD1.

Question 2

2, then: A) aggregate demand is AD1. B) the equilibrium price level is P1. C) producers will supply output level Q1. D) the equilibrium price level is P2." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.If equilibrium real output is Q2, then:

Accepted Answer

A)  aggregate demand is AD1.
B)  the equilibrium price level is P1.
C)  producers will supply output level Q1.
D)  the equilibrium price level is P2.

Question 3

Other things being equal, if the national incomes of our major international lending partners were to rise, our:

Accepted Answer

A)  aggregate demand curve would shift to the right.
B)  aggregate supply curve would shift to the left.
C)  aggregate supply curve would shift to the right.
D)  aggregate demand curve would shift to the left.

Question 4

A decrease in per unit production costs will shift the aggregate supply curve leftward.

Accepted Answer

A) True 
 B)False

Question 5

A decrease in the price level in the aggregate expenditures model would:

Accepted Answer

A)  decrease aggregate expenditures and real GDP.
B)  increase aggregate expenditures and real GDP.
C)  decrease aggregate expenditures and increase real GDP.
D)  increase aggregate expenditures and decrease real GDP.

Question 6

If personal taxes were decreased and input productivity increased simultaneously, the equilibrium:

Accepted Answer

A)  output would rise.
B)  output would fall.
C)  price level would necessarily fall.
D)  price level would necessarily rise.

Question 7

An increase in government 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.

Question 8

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)  D

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Productivity is calculated by:

Accepted Answer

A)  dividing total output by total input.
B)  dividing total input by total output.
C)  multiplying total output by total input.
D)  adding total input to total output.

Question 11

Refer to the diagram given below. 2 and that the economy initially is operating at the full-employment level of output Qf.In the diagram, the long-run aggregate supply curve: A) is represented by AS2. B) is a vertical line extending from Qf upward through the points e, b, and d. C) may be either AS1, AS2, or AS3 depending on whether the price level is P1, P2, or P3. D) is a horizontal line extending from P2 rightward through points f, b, and g." 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 diagram, the long-run aggregate supply curve:

Accepted Answer

A)  is represented by AS2.
B)  is a vertical line extending from Qf upward through the points e, b, and d.
C)  may be either AS1, AS2, or AS3 depending on whether the price level is P1, P2, or P3.
D)  is a horizontal line extending from P2 rightward through points f, b, and g.

Question 12

Which of the diagrams below best portrays the effects of an increase in consumer spending?

Accepted Answer

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

Question 13

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy.  Refer to the above table.The equilibrium price level and quantity of real domestic output will be:

Accepted Answer

A)  150 and $1000.
B)  150 and $1500.
C)  200 and $2000.
D)  250 and $2500.

Question 14

Refer to the diagram given below. 2 and that the economy is initially operating at the full-employment level of output Qf.In the long run, an increase in the price level from P2 to P3 will: A) increase the real output from Qf to Q2. B) shift the aggregate supply curve from AS2 to AS1. C) decrease the real output from Q2 to Q1. D) not change the level of real output." 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 is initially operating at the full-employment level of output Qf.In the long run, an increase in the price level from P2 to P3 will:

Accepted Answer

A)  increase the real output from Qf to Q2.
B)  shift the aggregate supply curve from AS2 to AS1.
C)  decrease the real output from Q2 to Q1.
D)  not change the level of real output.

Question 15

The economy experiences an increase in the price level and a decrease in real domestic output.Which is a likely explanation?

Accepted Answer

A)  productivity has increased
B)  input prices have increased
C)  excess capacity has decreased
D)  government regulations have been reduced

Question 16

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 level

Question 17

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.

Question 18

1 because of an increase in aggregate demand, the: A) economy will move up along curve B and output will temporarily increase. B) long-run aggregate supply curve C will shift upward. C) short-run aggregate supply curve B will automatically shift to the right. D) economy's output first will decline, then increase, and finally return to Q1." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.If the price level rises above P1 because of an increase in aggregate demand, the:

Accepted Answer

A)  economy will move up along curve B and output will temporarily increase.
B)  long-run aggregate supply curve C will shift upward.
C)  short-run aggregate supply curve B will automatically shift to the right.
D)  economy's output first will decline, then increase, and finally return to Q1.

Question 19

The interest-rate effect causes the aggregate demand curve for an economy to:

Accepted Answer

A)  slope downward.
B)  slope upward.
C)  become flatter.
D)  becomes teeper.

Question 20

Refer to the above diagram.At the equilibrium price and quantity:

Accepted Answer

A)  aggregate demand exceeds aggregate supply.
B)  the amount of real output demanded and supplied are equal.
C)  aggregate demand equals aggregate supply.
D)  aggregate supply exceeds aggregate demand.

Exam 12: Part B: Aggregate Demand and Aggregate Supply

Refer to the above diagram.If the price level rises above P₁ because of an increase in aggregate demand, the:

Correct Answer
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A decrease in per unit production costs will shift the aggregate supply curve leftward.

Correct Answer
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Correct Answer
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Depreciation of the dollar relative to foreign currencies will tend to increase net exports and aggregate demand.

Correct Answer
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If personal taxes were decreased and input productivity increased simultaneously, the equilibrium:

Correct Answer
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Which of the diagrams below best portrays the effects of an increase in consumer spending?

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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The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. Refer to the above table.The equilibrium price level and quantity of real domestic output will be:

Correct Answer
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Other things being equal, if the national incomes of our major international lending partners were to rise, our:

Correct Answer
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Refer to the above diagrams.A decline in aggregate expenditures from AE₂ to AE₁resulting from the wealth, interest rate, and foreign trade effects would be depicted as:

Correct Answer
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The economy experiences an increase in the price level and a decrease in real domestic output.Which is a likely explanation?

Correct Answer
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Productivity is calculated by:

Correct Answer
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Refer to the above diagram.If equilibrium real output is Q₂, then:

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

Correct Answer
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Refer to the diagram given 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 diagram, the long-run aggregate supply curve:

Correct Answer
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A decrease in the price level in the aggregate expenditures model would:

Correct Answer
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An increase in government spending can be expected to shift the:

Correct Answer
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The interest-rate effect causes the aggregate demand curve for an economy to:

Correct Answer
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Refer to the above diagram.At the equilibrium price and quantity:

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

Correct Answer
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Exam 12: Part B: Aggregate Demand and Aggregate Supply

Refer to the above diagram.If the price level rises above P1 because of an increase in aggregate demand, the:

Correct AnswerverifiedShow Answer

A decrease in per unit production costs will shift the aggregate supply curve leftward.

Correct AnswerverifiedShow Answer

Refer to the diagram given 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 is initially operating at the full-employment level of output Qf.In the long run, an increase in the price level from P2 to P3 will:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If personal taxes were decreased and input productivity increased simultaneously, the equilibrium:

Correct AnswerverifiedShow Answer

Which of the diagrams below best portrays the effects of an increase in consumer spending?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. Refer to the above table.The equilibrium price level and quantity of real domestic output will be:

Correct AnswerverifiedShow Answer

Other things being equal, if the national incomes of our major international lending partners were to rise, our:

Correct AnswerverifiedShow Answer

Refer to the above diagrams.A decline in aggregate expenditures from AE2 to AE1resulting from the wealth, interest rate, and foreign trade effects would be depicted as:

Correct AnswerverifiedShow Answer

The economy experiences an increase in the price level and a decrease in real domestic output.Which is a likely explanation?

Correct AnswerverifiedShow Answer

Productivity is calculated by:

Correct AnswerverifiedShow Answer

Refer to the above diagram.If equilibrium real output is Q2, then:

Correct AnswerverifiedShow Answer

The interest rate effect indicates that a(n) :

Correct AnswerverifiedShow Answer

Refer to the diagram given 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 diagram, the long-run aggregate supply curve:

Correct AnswerverifiedShow Answer

A decrease in the price level in the aggregate expenditures model would:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The interest-rate effect causes the aggregate demand curve for an economy to:

Correct AnswerverifiedShow Answer

Refer to the above diagram.At the equilibrium price and quantity:

Correct AnswerverifiedShow Answer

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

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Refer to the above diagram.If the price level rises above P₁ because of an increase in aggregate demand, the:

Correct Answer
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Refer to the above diagrams.A decline in aggregate expenditures from AE₂ to AE₁resulting from the wealth, interest rate, and foreign trade effects would be depicted as:

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Refer to the above diagram.If equilibrium real output is Q₂, then:

Correct Answer
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Refer to the diagram given 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 diagram, the long-run aggregate supply curve:

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