Question 1

In the short run, the aggregate supply curve reacts to:

Accepted Answer

A)   price changes.
B)   wage warfare.
C)   cartels.
D)   price ceilings.E) None of the above
F) A) and B)

Question 2

An economy in which output has decreased and prices have decreased would suggest a:

Accepted Answer

A)   decrease in aggregate demand.
B)   increase in aggregate demand.
C)   decrease in short-run aggregate supply.
D)   increase in short-run aggregate supply.E) C) and D)
F) A) and B)

Question 3

An increase in the level of immigration into a nation would cause the:

Accepted Answer

A)   long-run aggregate supply curve to shift to the right.
B)   long-run aggregate supply curve to shift to the left.
C)   short-run aggregate supply curve to shift to the left.
D)   long-run aggregate supply to remain fixed.E) B) and C)
F) A) and D)

Question 4

The aggregate supply and aggregate demand model is used to explain:

Accepted Answer

A)   how individual markets affect other markets.
B)   how entire markets operate, not just each individual seller within a market.
C)   the market price determined by all buyers and all sellers interacting in a market.
D)   how output, prices, and employment are tied together in a single economic equilibriumE) A) and B)
F) All of the above

Question 5

An aggregate supply curve that slopes upward must be:

Accepted Answer

A)   a short-run curve.
B)   a long-run curve.
C)   an individual firm's supply curve.
D)   an individual industry's supply curve.E) B) and D)
F) B) and C)

Question 6

Firms are willing to change the aggregate quantity of output supplied based on price in:

Accepted Answer

A)   the short run only.
B)   the long run only.
C)   both the short and long run.
D)   Price does not affect the quantity that firms supply.E) B) and D)
F) A) and B)

Question 7

In the long run, if the prices of goods and services paid by consumers increase the long-run aggregate:

Accepted Answer

A)   supply will increase.
B)   supply will decrease.
C)   supply will stay the same.
D)   demand will increase.E) None of the above
F) B) and D)

Question 8

If the economy is in a recession, and the government increases its spending to bring the economy back to its long-run equilibrium, the long-run level of output will:

Accepted Answer

A)   return, with higher prices.
B)   return, as will the original price level.
C)   return, with lower prices.
D)   increase, with higher prices.E) A) and D)
F) A) and C)

Question 9

An increase in the price level causes government spending to:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain unaffected.
D)   increase in social welfare spending only.E) A) and C)
F) A) and B)

Question 10

If the aggregate demand curve shifts in the short run moving the economy out of long-run equilibrium:

Accepted Answer

A)   the short-run aggregate supply curve will shift to bring it back into long-run equilibrium.
B)   the aggregate demand curve will eventually shift back once expectations are taken into account.
C)   inflation will always occur.
D)   we will move along the short-run aggregate supply curve back to equilibrium.E) A) and D)
F) All of the above

Question 11

If you were told the MPC was = 0.75 and the government engaged in a spending increase of $400B, then the change in GDP would be:

Accepted Answer

A)   $400B.
B)   $1600B.
C)   $300B
D)   $1200BE) A) and C)
F) C) and D)

Question 12

In the macroeconomy, demand-side shifts change:

Accepted Answer

A)   only the price level in the long run, while output eventually returns to its long-run potential level.
B)   only the output level in the long run, while prices eventually return to their long-run potential levels.
C)   aggregate demand only, which eventually shifts back in the long run.
D)   aggregate demand only, which is why the price level remains unaffected in the long run.E) B) and D)
F) B) and C)

Question 13

The downward sloping aggregate demand curve can be explained in part through the:

Accepted Answer

A)   wealth effect.
B)   negative relationship between the price level and net exports.
C)   negative relationship between the price level and investment spending.
D)   All of these are true.E) None of the above
F) A) and B)

Question 14

Increases in the overall price level:

Accepted Answer

A)   result in an increase people's dollar-denominated wealth.
B)   mean that a given number of dollars can buy as much in terms of real goods and services as before.
C)   tends to cause people to increase their consumption.
D)   reduce people's real wealth.E) None of the above
F) B) and C)

Question 15

A year-long drought that destroys most of the summer's crops would be considered a:

Accepted Answer

A)   short-run supply shock.
B)   long-run supply shock.
C)   short-run demand shock.
D)   long-run demand shock.E) All of the above
F) B) and D)

Question 16

Sticky wages cause the:

Accepted Answer

A)   short-run aggregate supply curve to slope upward.
B)   short-run aggregate supply curve to slope downward.
C)   long-run aggregate supply curve to slope upward.
D)   long-run aggregate supply curve to slope downward.E) None of the above
F) A) and B)

Question 17

A positive temporary supply side shock will:

Accepted Answer

A)   increase the price level in the long run.
B)   decrease the price level in the long run.
C)   increase the level of potential output in the long run.
D)   have no effect in the long run.E) B) and C)
F) A) and D)

Question 18

Which of the following would likely cause aggregate demand to shift to the right?

Accepted Answer

A)   Increased income taxes
B)   Increased firm confidence
C)   Decreased government spending
D)   Increase in the aggregate price level.E) B) and D)
F) None of the above

Question 19

The aggregate supply curve is:

Accepted Answer

A)   the relationship between the overall price level and total production by firms.
B)   downward-sloping.
C)   the sum total of the production of all the firms in the economy for every given demand level.
D)   the sum total of the production of all the firms in the economy for every level of profit.E) A) and B)
F) None of the above

Question 20

In the macroeconomic model of aggregate supply and aggregate demand, quantity is:

Accepted Answer

A)   represented by GDP.
B)   the measure of the value of all goods and services produced by the economy.
C)   a measure of total output.
D)   All of these are true.E) A) and C)
F) A) and D)

Exam 12: Aggregate Demand and Aggregate Supply

If the aggregate demand curve shifts in the short run moving the economy out of long-run equilibrium:

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In the short run, the aggregate supply curve reacts to:

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An economy in which output has decreased and prices have decreased would suggest a:

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Firms are willing to change the aggregate quantity of output supplied based on price in:

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Which of the following would likely cause aggregate demand to shift to the right?

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If the economy is in a recession, and the government increases its spending to bring the economy back to its long-run equilibrium, the long-run level of output will:

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In the macroeconomy, demand-side shifts change:

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A positive temporary supply side shock will:

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The aggregate supply curve is:

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The downward sloping aggregate demand curve can be explained in part through the:

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If you were told the MPC was = 0.75 and the government engaged in a spending increase of $400B, then the change in GDP would be:

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Sticky wages cause the:

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In the macroeconomic model of aggregate supply and aggregate demand, quantity is:

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An increase in the price level causes government spending to:

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A year-long drought that destroys most of the summer's crops would be considered a:

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An increase in the level of immigration into a nation would cause the:

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Increases in the overall price level:

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In the long run, if the prices of goods and services paid by consumers increase the long-run aggregate:

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The aggregate supply and aggregate demand model is used to explain:

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An aggregate supply curve that slopes upward must be:

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