Question 1

The immediate-short-run aggregate supply curve is

Accepted Answer

A)   vertical.
B)   horizontal.
C)   upward-sloping.
D)   downward-sloping.E) A) and D)
F) A) and B)

Question 2

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

Accepted Answer

A)   an increase in stock prices that increases consumer wealth
B)   increased fear that a recession will cause workers to lose their jobs
C)   an increase in personal income tax rates
D)   a reduction in household borrowing because of tighter lending practicesE) B) and C)
F) All of the above

Question 3

The U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because

Accepted Answer

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

Question 4

Which of the following events would most likely reduce aggregate demand?

Accepted Answer

A)   a reduction in the amount of existing capital stock
B)   a reduction in business and personal tax rates
C)   an increase in expected returns on investment
D)   an increase in real interest ratesE) A) and B)
F) B) and C)

Question 5

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   B and C.E) A) and B)
F) None of the above

Question 6

Other things equal, a reduction in personal and business taxes can be expected to

Accepted Answer

A)   increase aggregate demand and decrease aggregate supply.
B)   increase both aggregate demand and aggregate supply.
C)   decrease both aggregate demand and aggregate supply.
D)   decrease aggregate demand and increase aggregate supply.E) C) and D)
F) A) and B)

Question 7

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) B) and D)
F) None of the above

Question 8

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) A) and D)
F) A) and C)

Question 9

Suppose that technological advancements stimulate $20 billion in additional investment spending. If the MPC = 0.6, how much will the change in investment increase aggregate demand?

Accepted Answer

A)   $12 billion
B)   $20 billion
C)   $33.3 billion
D)   $50 billionE) A) and C)
F) None of the above

Question 10

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

Accepted Answer

A)   decrease aggregate expenditures and shift the AD curve to the left.
B)   increase aggregate expenditures and shift the AD curve to the right.
C)   decrease aggregate expenditures but would not shift the AD curve.
D)   increase aggregate expenditures but would not shift the AD curve.E) A) and D)
F) C) and D)

Question 11

In deriving the aggregate demand curve from the aggregate expenditures model, we note that

Accepted Answer

A)   the real-balances effect is irrelevant to both models.
B)   a change in the price level will have no impact on the aggregate expenditures schedule.
C)   an increase (decrease)  in the price level shifts the aggregate expenditures schedule upward (downward) .
D)   an increase (decrease)  in the price level shifts the aggregate expenditures schedule downward (upward) .E) None of the above
F) B) and D)

Question 12

Accepted Answer

A)   increase and real domestic output will increase.
B)   decrease and real domestic output will increase.
C)   increase and real domestic output will decrease.
D)   decrease and real domestic output will decrease.E) A) and B)
F) A) and C)

Question 13

An increase in productivity will

Accepted Answer

A)   increase aggregate demand.
B)   increase aggregate supply.
C)   increase aggregate supply and aggregate demand.
D)   decrease aggregate supply and aggregate demand.E) B) and D)
F) A) and D)

Question 14

Refer to the graph, which shows an aggregate demand curve. If the price level decreases from 200 to 100, the real output demanded will

Accepted Answer

A)   increase by $800 billion.
B)   increase by $200 billion.
C)   decrease by $600 billion.
D)   decrease by $200 billion.E) None of the above
F) B) and D)

Question 15

Identify the two basic factors that affect investment spending. How does a change in investment
spending affect aggregate demand?

Accepted Answer

The two basic factors that affect invest...

Question 16

Amount of Real Output  Demanded  Price Level (Index Value)   Amount of Real Output  Supplied $200300$500300250450400200400500150300600100200\begin{array} { | c | c | c | } \hline \begin{array} { c } 	ext { Amount of Real Output } \	ext { Demanded }\end{array} & 	ext { Price Level (Index Value)  } & \begin{array} { c } 	ext { Amount of Real Output } \	ext { Supplied }\end{array} \\hline \$ 200 & 300 & \$ 500 \\hline 300 & 250 & 450 \\hline 400 & 200 & 400 \\hline 500 & 150 & 300 \\hline 600 & 100 & 200 \\hline\end{array} Amount of Real Output  Demanded ​$200300400500600​ Price Level (Index Value)  300250200150100​ Amount of Real Output  Supplied ​$500450400300200​​  The table gives aggregate demand and supply schedules for a hypothetical economy. If the amount of real output demanded at each price level falls by $200, the equilibrium price level and
Equilibrium level of real domestic output will fall to

Accepted Answer

A)   250 and $200, respectively.
B)   200 and $300, respectively.
C)   150 and $300, respectively.
D)   150 and $200, respectively. E) All of the above
F) A) and C)

Question 17

Accepted Answer

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

Question 18

A rightward shift in the aggregate supply curve is best explained by an increase in

Accepted Answer

A)   business taxes.
B)   productivity.
C)   nominal wages.
D)   the price of imported resources.E) A) and B)
F) A) and C)

Question 19

If Congress passed new laws signiﬁcantly increasing the regulation of business, this action would tend to

Accepted Answer

A)   increase per-unit production costs and shift the aggregate supply curve to the left.
B)   increase per-unit production costs and shift the aggregate supply curve to the right.
C)   increase per-unit production costs and shift the aggregate demand curve to the left.
D)   decrease per-unit production costs and shift the aggregate supply curve to the leftE) A) and B)
F) A) and C)

Question 20

Demand-pull inﬂation is illustrated in the short run aggregate supply-aggregate demand model as a shift of aggregate

Accepted Answer

A)   supply to the right.
B)   supply to the left.
C)   demand to the right.
D)   demand to the left.E) None of the above
F) B) and C)

Exam 12: Aggregate Demand and Aggregate Supply

Correct Answer
verified

Correct Answer
verified

Other things equal, a reduction in personal and business taxes can be expected to

Correct Answer
verified

In deriving the aggregate demand curve from the aggregate expenditures model, we note that

Correct Answer
verified

Productivity measures

Correct Answer
verified

Suppose that technological advancements stimulate $20 billion in additional investment spending. If the MPC = 0.6, how much will the change in investment increase aggregate demand?

Correct Answer
verified

Which of the following events would most likely reduce aggregate demand?

Correct Answer
verified

An increase in productivity will

Correct Answer
verified

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 Answer
verified

The immediate-short-run aggregate supply curve is

Correct Answer
verified

Demand-pull inﬂation is illustrated in the short run aggregate supply-aggregate demand model as a shift of aggregate

Correct Answer
verified

The U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because

Correct Answer
verified

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

Correct Answer
verified

A rightward shift in the aggregate supply curve is best explained by an increase in

Correct Answer
verified

If Congress passed new laws signiﬁcantly increasing the regulation of business, this action would tend to

Correct Answer
verified

Correct Answer
verified

Refer to the graph, which shows an aggregate demand curve. If the price level decreases from 200 to 100, the real output demanded will

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Identify the two basic factors that affect investment spending. How does a change in investment spending affect aggregate demand?

Correct Answer
verified
The two basic factors that affect invest...
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Exam 12: Aggregate Demand and Aggregate Supply

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Other things equal, a reduction in personal and business taxes can be expected to

Correct AnswerverifiedShow Answer

In deriving the aggregate demand curve from the aggregate expenditures model, we note that

Correct AnswerverifiedShow Answer

Productivity measures

Correct AnswerverifiedShow Answer

Suppose that technological advancements stimulate $20 billion in additional investment spending. If the MPC = 0.6, how much will the change in investment increase aggregate demand?

Correct AnswerverifiedShow Answer

Which of the following events would most likely reduce aggregate demand?

Correct AnswerverifiedShow Answer

An increase in productivity will

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

The immediate-short-run aggregate supply curve is

Correct AnswerverifiedShow Answer

Demand-pull inﬂation is illustrated in the short run aggregate supply-aggregate demand model as a shift of aggregate

Correct AnswerverifiedShow Answer

The U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A rightward shift in the aggregate supply curve is best explained by an increase in

Correct AnswerverifiedShow Answer

If Congress passed new laws signiﬁcantly increasing the regulation of business, this action would tend to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the graph, which shows an aggregate demand curve. If the price level decreases from 200 to 100, the real output demanded will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Identify the two basic factors that affect investment spending. How does a change in investment spending affect aggregate demand?

Correct AnswerverifiedThe two basic factors that affect invest...View AnswerShow Answer

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The two basic factors that affect invest...
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