Question 1

The following table is for a particular country in which C is consumption expenditures,Ig is gross investment expenditures,G is government expenditures,X is exports,and M is imports.All figures are in billions of dollars.Each question is independent of the other questions.
 g is gross investment expenditures,G is government expenditures,X is exports,and M is imports.All figures are in billions of dollars.Each question is independent of the other questions.    -Refer to the above table.The wealth or real balances effect of changes in the price level is: A)  shown by columns (1) and (2) of the table. B)  shown by columns (1) and (5) of the table. C)  shown by columns (1) and (4) of the table. D)  not shown by the data in the table." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above table.The wealth or real balances effect of changes in the price level is:

Accepted Answer

A)   shown by columns (1) and (2) of the table.
B)   shown by columns (1) and (5) of the table.
C)   shown by columns (1) and (4) of the table.
D)   not shown by the data in the table.E) A) and C)
F) A) and D)

Question 2

An increase in imports (independently of a change in our price level)will increase both aggregate supply and aggregate demand.

Accepted Answer

A) True 
 B)False

Question 3

An increase in wealth from a substantial increase in stock prices will move the economy along the existing aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 4

The Canadian economy was able to achieve full employment with relative price level stability in the early 2000 because aggregate:

Accepted Answer

A)   demand increased.
B)   supply decreased.
C)   demand increased and aggregate supply increased.
D)   demand decreased and aggregate supply increased.E) B) and C)
F) A) and D)

Question 5

An economy is employing 2 units of capital,5 units of raw materials,and 8 units of labour to produce its total output of 640 units.Each unit of capital costs $10,each unit of raw materials,$4,and each unit of labour,$3.
-Refer to the above information.If the per unit price of raw materials rises from $4 to $8 and all else remains constant,the per unit cost of production will rise by about:

Accepted Answer

A)   100 percent.
B)   50 percent.
C)   40 percent.
D)   30 percent.E) All of the above
F) A) and B)

Question 6

-Which of the above diagrams best portrays the effects of declines in the prices of imported resources?

Accepted Answer

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

Question 7

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy.
 
-Refer to the above table.If the quantity of real domestic output demanded decreased by $500 and the quantity of real domestic output supplied increased by $500 at each price level,the new equilibrium price level and quantity of real domestic output would be:

Accepted Answer

A)   150 and $1500.
B)   150 and $2000.
C)   200 and $2000.
D)   250 and $2000.E) A) and B)
F) C) and D)

Question 8

How can an economy already at full-employment expand without igniting inflation? Explain.

Accepted Answer

If the economy is currently at full-empl...

Question 9

A n expected rise in the rate of inflation for consumer goods will:

Accepted Answer

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

Question 10

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

Question 11

An increase in household borrowing for consumption will:

Accepted Answer

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

Question 12

Explain the three reasons given for the downward slope of the aggregate demand curve.

Accepted Answer

The three reasons given are the real-bal...

Question 13

Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4.
-Refer to the information above,the level of productivity is:

Accepted Answer

A)   20
B)   10
C)   5
D)   2E) A) and C)
F) All of the above

Question 14

The long-run aggregate supply curve is vertical:

Accepted Answer

A)   because the rate of inflation is steady in the long run.
B)   because resource prices eventually catch up with product prices.
C)   because product prices always increase at a faster rate than resource prices.
D)   only when the money supply increases at the same rate as real GDP.E) None of the above
F) A) and B)

Question 15

Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4.
-The per unit cost of production in the economy described above is:

Accepted Answer

A)   $.50.
B)   $1
C)   $2
D)   $5E) None of the above
F) A) and D)

Question 16

An increase in investment 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.E) B) and C)
F) A) and D)

Question 17

Refer to the diagram below.Suppose that aggregate demand increased from AD1to AD2.For the price level to stay constant: 1to AD2.For the price level to stay constant:   A)  the aggregate supply curve would have to shift rightward. B)  the aggregate supply curve would have to shift leftward. C)  real domestic output would have to remain constant. D)  the aggregate supply curve would have to be vertical." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   the aggregate supply curve would have to shift rightward.
B)   the aggregate supply curve would have to shift leftward.
C)   real domestic output would have to remain constant.
D)   the aggregate supply curve would have to be vertical.E) B) and D)
F) B) and C)

Question 18

An increase in the aggregate expenditures schedule:

Accepted Answer

A)   increases aggregate demand by the amount of the increase in aggregate expenditures only.
B)   increases aggregate demand by the amount of the initial increase in aggregate expenditures times the multiplier.
C)   decreases aggregate demand by the amount of the increase in aggregate expenditures.
D)   decreases aggregate demand by the amount of the initial increase in aggregate expenditures times the multiplier.E) B) and D)
F) A) and D)

Question 19

The real-balances effect suggests that a:

Accepted Answer

A)   lower price level will decrease the demand for money,decrease interest rates,and increase consumption and investment spending.
B)   lower price level will decrease the real value of many financial assets and therefore cause an increase in spending.
C)   lower price level will increase the real value of many financial assets and therefore cause an increase in spending.
D)   higher price level will increase the real value of many financial assets and therefore cause an increase in spending.E) A) and B)
F) All of the above

Question 20

Which effect best explains the downward slope of the aggregate demand curve?

Accepted Answer

A)   a multiplier effect
B)   an income effect
C)   a substitution effect
D)   an interest rate effectE) C) and D)
F) A) and B)

Exam 12: Aggregate Demand and Aggregate Supply

An increase in imports (independently of a change in our price level)will increase both aggregate supply and aggregate demand.

Correct Answer
verified

The Canadian economy was able to achieve full employment with relative price level stability in the early 2000 because aggregate:

Correct Answer
verified

How can an economy already at full-employment expand without igniting inflation? Explain.

Correct Answer
verified
If the economy is currently at full-empl...
View Answer

An increase in household borrowing for consumption will:

Correct Answer
verified

Explain the three reasons given for the downward slope of the aggregate demand curve.

Correct Answer
verified
The three reasons given are the real-bal...
View Answer

The real-balances effect suggests that a:

Correct Answer
verified

The long-run aggregate supply curve is vertical:

Correct Answer
verified

-Which of the above diagrams best portrays the effects of declines in the prices of imported resources?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

A n expected rise in the rate of inflation for consumer goods will:

Correct Answer
verified

Refer to the diagram below.Suppose that aggregate demand increased from AD₁to AD₂.For the price level to stay constant:

Correct Answer
verified

An increase in the aggregate expenditures schedule:

Correct Answer
verified

Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4. -Refer to the information above,the level of productivity is:

Correct Answer
verified

An increase in the price level in the aggregate expenditures model would:

Correct Answer
verified

Correct Answer
verified

An increase in wealth from a substantial increase in stock prices will move the economy along the existing aggregate demand curve.

Correct Answer
verified

Correct Answer
verified

Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4. -The per unit cost of production in the economy described above is:

Correct Answer
verified

Which effect best explains the downward slope of the aggregate demand curve?

Correct Answer
verified

Exam 12: Aggregate Demand and Aggregate Supply

An increase in imports (independently of a change in our price level)will increase both aggregate supply and aggregate demand.

Correct AnswerverifiedShow Answer

The Canadian economy was able to achieve full employment with relative price level stability in the early 2000 because aggregate:

Correct AnswerverifiedShow Answer

How can an economy already at full-employment expand without igniting inflation? Explain.

Correct AnswerverifiedIf the economy is currently at full-empl...View AnswerShow Answer

An increase in household borrowing for consumption will:

Correct AnswerverifiedShow Answer

Explain the three reasons given for the downward slope of the aggregate demand curve.

Correct AnswerverifiedThe three reasons given are the real-bal...View AnswerShow Answer

The real-balances effect suggests that a:

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve is vertical:

Correct AnswerverifiedShow Answer

-Which of the above diagrams best portrays the effects of declines in the prices of imported resources?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A n expected rise in the rate of inflation for consumer goods will:

Correct AnswerverifiedShow Answer

Refer to the diagram below.Suppose that aggregate demand increased from AD1to AD2.For the price level to stay constant:

Correct AnswerverifiedShow Answer

An increase in the aggregate expenditures schedule:

Correct AnswerverifiedShow Answer

Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4. -Refer to the information above,the level of productivity is:

Correct AnswerverifiedShow Answer

An increase in the price level in the aggregate expenditures model would:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in wealth from a substantial increase in stock prices will move the economy along the existing aggregate demand curve.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4. -The per unit cost of production in the economy described above is:

Correct AnswerverifiedShow Answer

Which effect best explains the downward slope of the aggregate demand curve?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified
If the economy is currently at full-empl...
View Answer

Correct Answer
verified

Correct Answer
verified
The three reasons given are the real-bal...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the diagram below.Suppose that aggregate demand increased from AD₁to AD₂.For the price level to stay constant:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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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