Question 1

Which combination of factors would most likely increase aggregate demand?

Accepted Answer

A)   An increase in household indebtedness and a decrease in net exports
B)   An increase in consumer wealth and a decrease in interest rates
C)   An increase in personal taxes and a decrease in government spending
D)   An increase in business taxes and a decrease in profit expectationsE) C) and D)
F) A) and D) B

Question 2

2 and output Q2 D)  At price level P1 and output Q1" class="answers-bank-image d-inline" rel="preload" > Refer to the graph above. The equilibrium for this economy is:

Accepted Answer

A)   At point a
B)   At point b
C)   At price level P2 and output Q2
D)   At price level P1 and output Q1E) B) and C)
F) A) and D)

Question 3

The aggregate demand curve or schedule shows the relationship between the total demand for output and the:

Accepted Answer

A)   Income level
B)   Interest rate
C)   Price level
D)   Real GDPE) None of the above
F) A) and C)

Question 4

Which would most likely increase aggregate supply?

Accepted Answer

A)   An increase in the prices of imported products
B)   An increase in productivity
C)   A decrease in business subsidies
D)   A decrease in personal income taxesE) A) and D)
F) B) and C) B

Question 5

A decrease in government spending will cause a(n) :

Accepted Answer

A)   Increase in the quantity of real output demanded
B)   Decrease in the quantity of real output demanded
C)   Decrease in aggregate demand
D)   Increase in aggregate demandE) B) and D)
F) None of the above

Question 6

1 shifts to AD2 would be consistent with what economic event in U.S. history? A)  Demand-pull inflation in the late 1960s B)  Cost-push inflation in the mid-1970s C)  Full-employment in the late 1990s D)  Recession in 2007-09" class="answers-bank-image d-inline" rel="preload" > Refer to the figure above. A shift from AD1 shifts to AD2 would be consistent with what economic event in U.S. history?

Accepted Answer

A)   Demand-pull inflation in the late 1960s
B)   Cost-push inflation in the mid-1970s
C)   Full-employment in the late 1990s
D)   Recession in 2007-09E) None of the above
F) C) and D)

Question 7

If the national incomes of our trading partners increase, then our:

Accepted Answer

A)   Aggregate demand decreases because C decreases
B)   Aggregate demand increases because C increases
C)   Aggregate demand decreases because net exports decrease
D)   Aggregate demand increases because net exports increaseE) A) and B)
F) A) and C)

Question 8

When the economy is experiencing demand-pull inflation, its real GDP tends to be rising.

Accepted Answer

A) True 
 B)False

Question 9

A fall in the prices of inputs will shift the aggregate:

Accepted Answer

A)   Demand curve leftward
B)   Demand curve rightward
C)   Supply curve rightward
D)   Supply curve leftwardE) C) and D)
F) B) and C)

Question 10

Cost-push inflation is characterized by a(n) :

Accepted Answer

A)   Increase in aggregate supply and a decrease in aggregate demand
B)   Increase in aggregate demand and no change in aggregate supply
C)   Decrease in aggregate supply and no change in aggregate demand
D)   Decrease in both aggregate supply and aggregate demandE) A) and B)
F) None of the above

Question 11

An increase in personal income tax rates will cause a(n) :

Accepted Answer

A)   Decrease (or shift left)  in aggregate demand
B)   Increase (or shift right)  in aggregate demand
C)   Decrease in the quantity of real output demanded (or movement up along A
D)  
D)   Increase in the quantity of real output demanded (or movement down along A
D)  E) B) and C)
F) C) and D)

Question 12

The foreign purchases, interest rate, and real-balances effects explain why the:

Accepted Answer

A)   Aggregate demand curve is downward-sloping
B)   Aggregate demand curve may shift to the left or right
C)   Economy will adjust towards equilibrium
D)   Aggregate expenditures schedule may shift up or downE) B) and D)
F) None of the above

Question 13

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 axisE) C) and D)
F) B) and C)

Question 14

An increase in the price level reduces the real value of financial assets with fixed money values and, as a result, the holders of these assets decrease their spending.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that an economy produces 2400 units of output, employing the 60 units of input, and the price of the input is $30 per unit. Refer to the information above. If productivity increased such that 3000 units are now produced with the quantity of inputs still equal to 60, then per-unit production costs would:

Accepted Answer

A)   Decrease and aggregate supply would decrease
B)   Decrease and aggregate supply would increase
C)   Increase and aggregate supply would decrease
D)   Remain unchanged and aggregate supply would remain unchangedE) B) and C)
F) A) and D)

Question 16

An increase in expected future income will:

Accepted Answer

A)   Increase aggregate demand and aggregate supply
B)   Decrease aggregate demand and aggregate supply
C)   Increase aggregate supply
D)   Increase aggregate demandE) B) and D)
F) A) and B)

Question 17

1 to AD2? A)  A decrease in the general price level B)  An increase in real interest rates C)  An increase in national incomes abroad D)  A decrease in the value of financial assets" class="answers-bank-image d-inline" rel="preload" > Refer to the graph above. Which of the following factors will shift AD1 to AD2?

Accepted Answer

A)   A decrease in the general price level
B)   An increase in real interest rates
C)   An increase in national incomes abroad
D)   A decrease in the value of financial assetsE) B) and C)
F) None of the above

Question 18

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 purchasedE) B) and D)
F) B) and C) C

Question 19

If the dollar appreciates in value relative to foreign currencies:

Accepted Answer

A)   Aggregate demand decreases because C decreases
B)   Aggregate demand increases because C increases
C)   Aggregate demand decreases because net exports decrease
D)   Aggregate demand increases because net exports increaseE) B) and D)
F) None of the above

Question 20

The long-run aggregate supply curve is:

Accepted Answer

A)   Upward-sloping and becomes steeper at output levels above the full-employment output
B)   Upward-sloping and becomes flatter at output levels above the full-employment output
C)   Horizontal
D)   VerticalE) A) and B)
F) A) and C)

Exam 12: Aggregate Demand and Aggregate Supply

Which combination of factors would most likely increase aggregate demand?

Correct Answer
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B

Refer to the graph above. The equilibrium for this economy is:

Correct Answer
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The aggregate demand curve or schedule shows the relationship between the total demand for output and the:

Correct Answer
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Which would most likely increase aggregate supply?

Correct Answer
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B

A decrease in government spending will cause a(n) :

Correct Answer
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Refer to the figure above. A shift from AD₁ shifts to AD₂ would be consistent with what economic event in U.S. history?

Correct Answer
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If the national incomes of our trading partners increase, then our:

Correct Answer
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When the economy is experiencing demand-pull inflation, its real GDP tends to be rising.

Correct Answer
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A fall in the prices of inputs will shift the aggregate:

Correct Answer
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Cost-push inflation is characterized by a(n) :

Correct Answer
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An increase in personal income tax rates will cause a(n) :

Correct Answer
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The foreign purchases, interest rate, and real-balances effects explain why the:

Correct Answer
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The labels for the axes of the aggregate demand graph should be:

Correct Answer
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An increase in the price level reduces the real value of financial assets with fixed money values and, as a result, the holders of these assets decrease their spending.

Correct Answer
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Correct Answer
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An increase in expected future income will:

Correct Answer
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Refer to the graph above. Which of the following factors will shift AD₁ to AD₂?

Correct Answer
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The short-run aggregate supply curve shows the:

Correct Answer
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C

If the dollar appreciates in value relative to foreign currencies:

Correct Answer
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The long-run aggregate supply curve is:

Correct Answer
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Exam 12: Aggregate Demand and Aggregate Supply

Which combination of factors would most likely increase aggregate demand?

Correct AnswerverifiedB

Refer to the graph above. The equilibrium for this economy is:

Correct AnswerverifiedShow Answer

The aggregate demand curve or schedule shows the relationship between the total demand for output and the:

Correct AnswerverifiedShow Answer

Which would most likely increase aggregate supply?

Correct AnswerverifiedB

A decrease in government spending will cause a(n) :

Correct AnswerverifiedShow Answer

Refer to the figure above. A shift from AD1 shifts to AD2 would be consistent with what economic event in U.S. history?

Correct AnswerverifiedShow Answer

If the national incomes of our trading partners increase, then our:

Correct AnswerverifiedShow Answer

When the economy is experiencing demand-pull inflation, its real GDP tends to be rising.

Correct AnswerverifiedShow Answer

A fall in the prices of inputs will shift the aggregate:

Correct AnswerverifiedShow Answer

Cost-push inflation is characterized by a(n) :

Correct AnswerverifiedShow Answer

An increase in personal income tax rates will cause a(n) :

Correct AnswerverifiedShow Answer

The foreign purchases, interest rate, and real-balances effects explain why the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in the price level reduces the real value of financial assets with fixed money values and, as a result, the holders of these assets decrease their spending.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in expected future income will:

Correct AnswerverifiedShow Answer

Refer to the graph above. Which of the following factors will shift AD1 to AD2?

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve shows the:

Correct AnswerverifiedC

If the dollar appreciates in value relative to foreign currencies:

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve is:

Correct AnswerverifiedShow Answer

Correct Answer
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B

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B

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Refer to the figure above. A shift from AD₁ shifts to AD₂ would be consistent with what economic event in U.S. history?

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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Correct Answer
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Refer to the graph above. Which of the following factors will shift AD₁ to AD₂?

Correct Answer
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C

Correct Answer
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Correct Answer
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