Question 1

Suppose that an economy produces 300 units of output, employing 50 units of input, and the price of the input is $9 per unit.The level of productivity and the per-unit cost of production are

Accepted Answer

A)  1.50 and $6.00, respectively.
B)  6 and $1.50, respectively.
C)  5 and $6.00, respectively.
D)  5 and $1.50, respectively.E) None of the above
F) B) and C)

Question 2

Other things equal, an improvement in productivity will

Accepted Answer

A)  increase the equilibrium price level.
B)  shift the aggregate supply curve to the left.
C)  shift the aggregate supply curve to the right.
D)  shift the aggregate demand curve to the left.E) None of the above
F) All of the above

Question 3

If the price of crude oil decreased, then this would most likely

Accepted Answer

A)  decrease aggregate supply in the U.S.
B)  increase aggregate supply in the U.S.
C)  increase aggregate demand in the U.S.
D)  decrease aggregate demand in the U.S.E) A) and C)
F) None of the above

Question 4

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 GDP.E) B) and D)
F) B) and C)

Question 5

If the price level increases in the United States relative to foreign countries, then American consumers will purchase more foreign goods and fewer U.S.goods.This statement describes

Accepted Answer

A)  the output effect.
B)  the foreign purchases effect.
C)  the real-balances effect.
D)  the shift-of-spending effect.E) B) and C)
F) None of the above

Question 6

The slope of the immediate-short-run aggregate supply curve is based on the assumption that

Accepted Answer

A)  both input and output prices are fixed.
B)  neither input nor output prices are fixed.
C)  input prices are flexible but output prices are fixed.
D)  input prices are fixed but output prices are flexible.Difficulty: 01 EasyE) A) and B)
F) All of the above

Question 7

An increase in aggregate expenditures resulting from a decrease in the price level is equivalent to a

Accepted Answer

A)  rightward shift of the aggregate demand curve.
B)  leftward shift of the aggregate demand curve.
C)  movement downward along a fixed aggregate demand curve.
D)  decrease in aggregate supply.E) C) and D)
F) None of the above

Question 8

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 C)
F) C) and D)

Question 9

Suppose that an economy produces 500 units of output.It takes 10 units of labor at $15 a unit and 4 units of capital at $50 a unit to produce this amount of output.The per unit cost of production is

Accepted Answer

A)  $1.42.
B)  $1.24.
C)  $0.70.
D)  $0.40.E) None of the above
F) C) and D)

Question 10

The labels for the axes of an aggregate supply curve should be

Accepted Answer

A)  real domestic output for the vertical axis and price level for the horizontal axis.
B)  real domestic output for the horizontal axis and price level for the vertical axis.
C)  real employment for the vertical axis and price level for the horizontal axis.
D)  aggregate demand for the vertical axis and real national output for the horizontal axis.E) None of the above
F) C) and D)

Question 11

Government actions that were taken in order to stimulate the economy during the Great Recession of 2007-09 included the following, except

Accepted Answer

A)  a significant reduction of interest rates to nearly zero.
B)  a large increase in transfer payments.
C)  an increase in the deficit spending of the government.
D)  a sharp increase in the natural rate of unemployment.E) C) and D)
F) None of the above

Question 12

An aggregate supply curve represents the relationship between the

Accepted Answer

A)  price level and the buying of real domestic output.
B)  price level and the production of real domestic output.
C)  real domestic output bought and the real domestic output sold.
D)  price level that producers are willing to accept and the price level buyers are willing to pay.E) B) and C)
F) C) and D)

Question 13

Productivity measures

Accepted Answer

A)  real output per unit of input.
B)  per-unit production costs.
C)  the changes in real wealth caused by price level changes.
D)  the amount of capital goods used per worker.E) A) and B)
F) B) and C)

Question 14

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

Question 15

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 demand.E) A) and D)
F) B) and C)

Question 16

A change in which one of the following factors would shift the aggregate supply curve in the short run?

Accepted Answer

A)  personal income taxes
B)  consumer spending
C)  government regulation
D)  profit expectations on investment projectsE) C) and D)
F) All of the above

Question 17

The version of aggregate supply that allows for changes in both product prices and resource prices is the

Accepted Answer

A)  immediate short run.
B)  short run.
C)  immediate long run.
D)  long run.E) A) and B)
F) All of the above

Question 18

In the aggregate demand-aggregate supply model, the economy's price level is assumed to be

Accepted Answer

A)  constant, just like in the aggregate expenditures model.
B)  variable, just like in the aggregate expenditures model.
C)  constant, unlike in the aggregate expenditures model.
D)  variable, unlike in the aggregate expenditures model.E) C) and D)
F) None of the above

Question 19

In an economy, it costs $1,500 to produce 2,000 units of output.If the costs increase to $2,500, then the per unit cost of production will have increased from

Accepted Answer

A)  $0.75 to $1.25.
B)  $0.75 to $1.00.
C)  $1.33 to $1.75.
D)  $0.80 to $1.33.E) A) and D)
F) B) and D)

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)  vertical.E) B) and D)
F) None of the above

Exam 32: Aggregate Demand and Aggregate Supply

Suppose that an economy produces 300 units of output, employing 50 units of input, and the price of the input is $9 per unit.The level of productivity and the per-unit cost of production are

Correct AnswerverifiedShow Answer

In an economy, it costs $1,500 to produce 2,000 units of output.If the costs increase to $2,500, then the per unit cost of production will have increased from

Correct AnswerverifiedShow Answer

Which combination of factors would most likely increase aggregate demand?

Correct AnswerverifiedShow Answer

The labels for the axes of an aggregate supply curve should be

Correct AnswerverifiedShow Answer

The slope of the immediate-short-run aggregate supply curve is based on the assumption that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that an economy produces 500 units of output.It takes 10 units of labor at $15 a unit and 4 units of capital at $50 a unit to produce this amount of output.The per unit cost of production is

Correct AnswerverifiedShow Answer

Productivity measures

Correct AnswerverifiedShow Answer

Government actions that were taken in order to stimulate the economy during the Great Recession of 2007-09 included the following, except

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve is

Correct AnswerverifiedShow Answer

In the aggregate demand-aggregate supply model, the economy's price level is assumed to be

Correct AnswerverifiedShow Answer

A change in which one of the following factors would shift the aggregate supply curve in the short run?

Correct AnswerverifiedShow Answer

The version of aggregate supply that allows for changes in both product prices and resource prices is the

Correct AnswerverifiedShow Answer

Which would most likely increase aggregate supply?

Correct AnswerverifiedShow Answer

If the price level increases in the United States relative to foreign countries, then American consumers will purchase more foreign goods and fewer U.S.goods.This statement describes

Correct AnswerverifiedShow Answer

Other things equal, an improvement in productivity will

Correct AnswerverifiedShow Answer

An increase in expected future income will

Correct AnswerverifiedShow Answer

An aggregate supply curve represents the relationship between the

Correct AnswerverifiedShow Answer

If the price of crude oil decreased, then this would most likely

Correct AnswerverifiedShow Answer

An increase in aggregate expenditures resulting from a decrease in the price level is equivalent to a

Correct AnswerverifiedShow Answer

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