Question 1

The foreign-trade effect causes the aggregate demand curve for an economy to:

Accepted Answer

A)  slope downward.
B)  slope upward.
C)  become flatter.
D)  becomes teeper.E) A) and D)
F) All of the above

Question 2

Other things equal, if the international value of the dollar were to depreciate, the:

Accepted Answer

A)  aggregate demand curve would remain fixed in place.
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.E) B) and C)
F) A) and B)

Question 3

The relationship between the aggregate demand curve and the aggregate expenditures model is shown in the fact that:

Accepted Answer

A)  a decrease in the price level shifts the aggregate expenditures schedule downward and decreases real GDP.
B)  a decrease in the price level shifts the aggregate expenditures schedule upward and increases real GDP.
C)  an increase in the price level shifts the aggregate expenditures schedule upward and increases real GDP.
D)  an increase in the price level shifts the aggregate expenditures schedule downward and increases real GDP.E) A) and B)
F) None of the above

Question 4

Wage contracts, efficiency wages, and the minimum wage are explanations for why:

Accepted Answer

A)  competition results in price wars.
B)  wages tend to be inflexible downward.
C)  the aggregate demand curve slopes downward.
D)  there is little support for the existence of a real-balances effect.E) A) and D)
F) B) and C)

Question 5

The aggregate demand curve can be derived from the aggregate expenditures model as indicated by the fact that:

Accepted Answer

A)  a decrease in the price level shifts the aggregate expenditures schedule downward and decreases real GDP.
B)  a decrease in the price level shifts the aggregate expenditures schedule upward and decreases real GDP.
C)  an increase in the price level shifts the aggregate expenditures schedule upward and increases real GDP.
D)  an increase in the price level shifts the aggregate expenditures schedule downward and decreases real GDP.E) All of the above
F) B) and D)

Question 6

Refer to the diagram given below. 1 and the price level decreases from P1, there should have been a: A) shift of the aggregate supply curve from AS1 to AS2. B) shift of the aggregate supply curve from AS1 to AS3. C) movement along the aggregate demand curve from e1 to e2. D) movement along the aggregate demand curve from e3 to e1." class="answers-bank-image d-inline" rel="preload" > When the real output increases from Q1 and the price level decreases from P1, there should have been a:

Accepted Answer

A)  shift of the aggregate supply curve from AS1 to AS2.
B)  shift of the aggregate supply curve from AS1 to AS3.
C)  movement along the aggregate demand curve from e1 to e2.
D)  movement along the aggregate demand curve from e3 to e1.E) B) and C)
F) All of the above

Question 7

Which of the above diagrams best portrays the effects of declines in the incomes of other major nations with whom we trade?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) A) and D)
F) A) and C)

Question 8

Refer to the diagram below.If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be: 0 and AS0, the equilibrium price level and level of real domestic output will be:   A) F and C, respectively. B) G and B, respectively. C) F and A, respectively. D) E and B, respectively." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  F and C, respectively.
B)  G and B, respectively.
C)  F and A, respectively.
D)  E and B, respectively.E) All of the above
F) C) and D)

Question 9

The foreign trade effect suggests that a decrease in the Canadian price level relative to other countries will:

Accepted Answer

A)  shift the aggregate demand curve leftward.
B)  shift the aggregate supply curve leftward.
C)  decrease Canadian exports and increase Canadian imports.
D)  increase Canadian exports and decrease Canadian imports.E) A) and B)
F) C) and D)

Question 10

An increase in net exports can be expected to shift the:

Accepted Answer

A)  aggregate expenditures curve upward and the aggregate demand curve rightward.
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 downward and the aggregate demand curve leftward.E) A) and B)
F) A) and C)

Question 11

Other things equal, an increase in productivity will shift the aggregate supply curve rightward.

Accepted Answer

A) True 
 B)False

Question 12

If real output rises and the price level falls, this would likely be due to a:

Accepted Answer

A)  rightward shift of the aggregate demand curve.
B)  leftward shift of the aggregate demand curve.
C)  rightward shift of the aggregate supply curve.
D)  leftward shift of the aggregate supply curve.E) A) and B)
F) A) and C)

Question 13

A movement upward along an existing aggregate demand curve that changes the price level is equivalent to a(n) :

Accepted Answer

A)  decrease in aggregate demand.
B)  increase in aggregate demand.
C)  upward shift in the aggregate expenditures schedule.
D)  downward shift in the aggregate expenditures schedule.E) C) and D)
F) B) and C)

Question 14

All else equal, an increase in imports will shift the aggregate expenditures curve:

Accepted Answer

A)  upward and the aggregate demand curve rightward.
B)  upward and the aggregate demand curve leftward.
C)  downward and the aggregate demand curve rightward.
D)  downward and the aggregate demand curve leftward.E) A) and C)
F) A) and D)

Question 15

In which of the following sets of circumstances can we confidently expect inflation?

Accepted Answer

A)  aggregate supply and aggregate demand both increase
B)  aggregate supply and aggregate demand both decrease
C)  aggregate supply decreases and aggregate demand increases
D)  aggregate supply increases and aggregate demand decreasesE) B) and D)
F) A) and D)

Question 16

A rightward shift in the aggregate supply curve might best be explained by:

Accepted Answer

A)  an increase in business taxes.
B)  a decrease in productivity.
C)  an increase in nominal wages.
D)  a decrease in the price of imported resources.E) B) and C)
F) A) and D)

Question 17

The passage of new legislation requiring more extensive government regulation of business will most likely:

Accepted Answer

A)  increase aggregate demand.
B)  increase aggregate supply.
C)  decrease aggregate demand.
D)  decrease aggregate supply.E) A) and B)
F) All of the above

Question 18

The aggregate demand curve is:

Accepted Answer

A)  vertical if full employment exists.
B)  horizontal when there is considerable unemployment in the economy.
C)  downward sloping because of the interest-rate, real balances, and foreign trade effects.
D)  downward sloping because production costs decrease as real output increases.E) A) and B)
F) A) and C)

Question 19

The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy:  If the price of each input is $5, the per unit cost of production in the above economy is:

Accepted Answer

A)  $5
B)  $2.75.
C)  $2.50.
D)  $.40.E) B) and C)
F) A) and D)

Question 20

An expected decline in the prices of consumer goods will:

Accepted Answer

A)  decrease aggregate demand.
B)  increase the quantity of real domestic output demanded.
C)  increase aggregate demand.
D)  decrease the quantity of real domestic output demanded.E) B) and C)
F) B) and D)

Exam 12: Part B: Aggregate Demand and Aggregate Supply

The foreign-trade effect causes the aggregate demand curve for an economy to:

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A rightward shift in the aggregate supply curve might best be explained by:

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The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy: If the price of each input is $5, the per unit cost of production in the above economy is:

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The passage of new legislation requiring more extensive government regulation of business will most likely:

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Refer to the diagram below.If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be:

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Refer to the diagram given below. When the real output increases from Q1 and the price level decreases from P1, there should have been a:

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If real output rises and the price level falls, this would likely be due to a:

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The aggregate demand curve is:

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In which of the following sets of circumstances can we confidently expect inflation?

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All else equal, an increase in imports will shift the aggregate expenditures curve:

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The foreign trade effect suggests that a decrease in the Canadian price level relative to other countries will:

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An increase in net exports can be expected to shift the:

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Wage contracts, efficiency wages, and the minimum wage are explanations for why:

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An expected decline in the prices of consumer goods will:

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The relationship between the aggregate demand curve and the aggregate expenditures model is shown in the fact that:

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A movement upward along an existing aggregate demand curve that changes the price level is equivalent to a(n) :

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Other things equal, if the international value of the dollar were to depreciate, the:

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Which of the above diagrams best portrays the effects of declines in the incomes of other major nations with whom we trade?

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Other things equal, an increase in productivity will shift the aggregate supply curve rightward.

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The aggregate demand curve can be derived from the aggregate expenditures model as indicated by the fact that:

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Refer to the diagram below.If the initial aggregate demand and supply curves are AD₀ and AS₀, the equilibrium price level and level of real domestic output will be:

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Refer to the diagram given below. When the real output increases from Q₁ and the price level decreases from P₁, there should have been a:

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