Question 1

The figure above shows the aggregate demand curve.
-The aggregate demand curve in the figure above shifts rightward if

Accepted Answer

A)  potential GDP increases.
B)  the money wage rate falls.
C)  taxes are cut.
D)  government expenditure decreases.
E)  the Federal Reserve raises the interest rate.F) A) and B)
G) A) and C)

Question 2

When the price level rises there is a ________ the aggregate demand curve.

Accepted Answer

A)  rightward shift of
B)  movement down along
C)  leftward shift of
D)  movement up along
E)  rotation ofF) A) and B)
G) None of the above

Question 3

Moving along the aggregate supply curve,

Accepted Answer

A)  the quantity of capital used increases.
B)  only the price level changes.
C)  technology advances.
D)  the stock of human capital increases.
E)  the real wage rate is constant.F) D) and E)
G) A) and D)

Question 4

"The aggregate demand multiplier results in the aggregate demand curve shifting by more than any given initial change in expenditure." Is the previous statement correct or incorrect?

Accepted Answer

The statement is correct. The ...

Question 5

The figure above shows the aggregate demand curve.
-The aggregate demand curve in the figure above shifts rightward if

Accepted Answer

A)  potential GDP increases.
B)  the money wage rate falls.
C)  taxes are raised.
D)  government expenditure decreases.
E)  the Federal Reserve lowers the interest rate.F) B) and E)
G) A) and C)

Question 6

The aggregate supply curve shifts

Accepted Answer

A)  rightward if potential GDP decreases.
B)  rightward if the money wage rate falls.
C)  rightward if the money wage rate rises.
D)  leftward if potential GDP increases.
E)  leftward if the aggregate demand curve shifts leftward.F) None of the above
G) A) and E)

Question 7

Which of the following decreases aggregate demand and shifts the AD curve leftward?

Accepted Answer

A)  a tax cut
B)  a decrease in price level
C)  a decrease in government expenditures
D)  a decrease in the price of exported goods and services
E)  a decrease in potential GDPF) A) and D)
G) All of the above

Question 8

An increase in the quantity of money ________ aggregate demand and ________.

Accepted Answer

A)  increases; shifts the aggregate demand curve rightward
B)  increases; shifts the aggregate demand curve leftward
C)  decreases; shifts the aggregate demand curve rightward
D)  decreases; shifts the aggregate demand curve leftward
E)  increases; rotates the aggregate demand curve so it is steeperF) B) and E)
G) B) and C)

Question 9

When the price level rises and the money wage rate does not change,

Accepted Answer

A)  the quantity of real GDP supplied increases as more businesses start up and potential GDP does not change.
B)  the quantity of real GDP supplied decreases as more businesses fail and potential GDP does not change.
C)  profits fall and more businesses fail.
D)  existing businesses do not change their level of output.
E)  the quantity of potential GDP increases because the quantity of real GDP supplied increases.F) C) and E)
G) C) and D)

Question 10

What is the effect on the aggregate demand curve from an increase in the price level?
 In particular, does the aggregate demand curve shift leftward or rightward?

Accepted Answer

When the price level increases, there is...

Question 11

A change in the price level produces a ________ the aggregate demand curve. i. shift in
Ii. change in the slope of
Iii. movement along

Accepted Answer

A)  i only
B)  ii only
C)  iii only
D)  i and iii
E)  i and iiF) B) and D)
G) A) and E)

Question 12

If the price level rises but the money wage rate does not, then firms will hire ________ labor and the quantity of real GDP supplied will ________.

Accepted Answer

A)  more; increase
B)  the same amount of; not change
C)  less; decrease
D)  more; not change
E)  less; increaseF) A) and B)
G) A) and C)

Question 13

________ decreases aggregate supply.

Accepted Answer

A)  An increase in potential GDP
B)  An increase the quantity of capital
C)  A rise in the price level
D)  A rise in the money wage rate
E)  A fall in the money wage rateF) A) and B)
G) C) and D)

Question 14

If the price level doubles, it will

Accepted Answer

A)  increase the quantity of money.
B)  have no effect on the buying power of money.
C)  decrease the buying power of money.
D)  increase potential GDP.
E)  decrease potential GDP.F) A) and B)
G) B) and C)

Question 15

If oil prices increase, then in the short run, real GDP will ________ and the price level will ________.

Accepted Answer

A)  increase; rise
B)  increase; fall
C)  decrease; rise
D)  decrease; fall
E)  not change; riseF) B) and E)
G) A) and E)

Question 16

Real GDP definitely increases if

Accepted Answer

A)  both the AD curve and the AS curve shift rightward.
B)  both the AD curve and AS curve shift leftward.
C)  the AD curve shifts leftward and the AS curve shifts rightward.
D)  the AS curve shifts leftward and the AD curve does not shift.
E)  potential GDP decreases so that real GDP exceeds potential GDP.F) B) and E)
G) A) and B)

Question 17

Which of the following decreases aggregate demand and shifts the AD curve leftward?

Accepted Answer

A)  a tax cut
B)  an interest rate hike
C)  an increase in quantity of money
D)  an increase in government expenditures on goods and services
E)  a decrease in potential GDPF) A) and B)
G) A) and E)

Question 18

Which of the following shifts the aggregate demand curve leftward?

Accepted Answer

A)  a decrease in government expenditure on goods and services
B)  an increase in the price level
C)  a tax cut
D)  an increase in foreign income
E)  a decrease in the price levelF) B) and D)
G) A) and B)

Question 19

Demand-pull inflation results from continually increasing the quantity of money, which leads to a continually

Accepted Answer

A)  decreasing potential GDP.
B)  increasing potential GDP.
C)  increasing aggregate supply.
D)  decreasing aggregate demand.
E)  increasing aggregate demand.F) C) and E)
G) A) and D)

Question 20

In a demand-pull inflation, if the Fed stops expanding the quantity of money,

Accepted Answer

A)  a cost-push inflation will occur.
B)  government expenditure will cause the demand-pull inflation to continue.
C)  a deflation will occur.
D)  the demand-pull inflation ends.
E)  None of the above answers is correct.F) B) and C)
G) A) and D)

Exam 19: Aggregate Supply and Aggregate Demand

Real GDP definitely increases if

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________ decreases aggregate supply.

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In a demand-pull inflation, if the Fed stops expanding the quantity of money,

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If oil prices increase, then in the short run, real GDP will ________ and the price level will ________.

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Which of the following shifts the aggregate demand curve leftward?

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The figure above shows the aggregate demand curve. -The aggregate demand curve in the figure above shifts rightward if

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The aggregate supply curve shifts

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If the price level doubles, it will

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When the price level rises and the money wage rate does not change,

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Which of the following decreases aggregate demand and shifts the AD curve leftward?

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"The aggregate demand multiplier results in the aggregate demand curve shifting by more than any given initial change in expenditure." Is the previous statement correct or incorrect?

Correct AnswerverifiedThe statement is correct. The ...View AnswerShow Answer

If the price level rises but the money wage rate does not, then firms will hire ________ labor and the quantity of real GDP supplied will ________.

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An increase in the quantity of money ________ aggregate demand and ________.

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Which of the following decreases aggregate demand and shifts the AD curve leftward?

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What is the effect on the aggregate demand curve from an increase in the price level? In particular, does the aggregate demand curve shift leftward or rightward?

Correct AnswerverifiedWhen the price level increases, there is...View AnswerShow Answer

Demand-pull inflation results from continually increasing the quantity of money, which leads to a continually

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Moving along the aggregate supply curve,

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The figure above shows the aggregate demand curve. -The aggregate demand curve in the figure above shifts rightward if

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A change in the price level produces a ________ the aggregate demand curve. i. shift in Ii. change in the slope of Iii. movement along

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When the price level rises there is a ________ the aggregate demand curve.

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If oil prices increase, then in the short run, real GDP will and the price level will .

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The statement is correct. The ...
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If the price level rises but the money wage rate does not, then firms will hire labor and the quantity of real GDP supplied will .

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An increase in the quantity of money aggregate demand and .

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When the price level increases, there is...
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