Question 1

Other things equal,appreciation of the dollar:

Accepted Answer

A)   increases aggregate demand in Canada and may increase aggregate supply by reducing the prices of imported resources.
B)   increases aggregate demand in Canada and may decrease aggregate supply by reducing the prices of imported resources.
C)   decreases aggregate demand in Canada and may increase aggregate supply by reducing the prices of imported resources.
D)   decreases aggregate demand in Canada and may reduce aggregate supply by increasing the prices of imported resources.E) All of the above
F) A) and C)

Question 2

2 and that the economy initially is operating at its full-employment level of output Qf.In terms of this diagram,the long-run aggregate supply curve: A)  is AS2. B)  is a vertical line extending from Qf upward through e,b,and d. C)  may be either AS1,AS2,or AS3 depending on whether the price level is P1,P2,or P3. D)  is a horizontal line extending from P2 rightward through f,b,and g." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf.In terms of this diagram,the long-run aggregate supply curve:

Accepted Answer

A)   is AS2.
B)   is a vertical line extending from Qf upward through e,b,and d.
C)   may be either AS1,AS2,or AS3 depending on whether the price level is P1,P2,or P3.
D)   is a horizontal line extending from P2 rightward through f,b,and g.E) B) and D)
F) B) and C)

Question 3

-Which of the above diagrams best portrays the effects of a substantial reduction in government spending?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and C)
F) None of the above

Question 4

Collective bargaining agreements that prohibit wage cuts for the duration of the contract contribute to:

Accepted Answer

A)   a wealth effect.
B)   a multiplier effect.
C)   an increase in aggregate supply.
D)   a price level that is inflexible downward.E) B) and C)
F) A) and D)

Question 5

A fall in real interest rates will reduce aggregate demand.

Accepted Answer

A) True 
 B)False

Question 6

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

Question 7

The factors which affect the amounts that consumers,businesses,government,and foreigners wish to purchase at each price level are the:

Accepted Answer

A)   wealth,interest rate,and foreign trade effects.
B)   determinants of aggregate supply.
C)   determinants of aggregate demand.
D)   sole determinants of the equilibrium price level and the equilibrium real output.E) B) and D)
F) None of the above

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) A) and B)

Question 9

Explain the relationship between the aggregate expenditures model in graph (A)below and the aggregate demand model in graph (B)below.In other words,explain how points 1,2,and 3 are related to points 1',2',and 3'.

Accepted Answer

Through the real-balances,interest-rate,...

Question 10

Suppose that nominal wages fall and productivity rises in a particular economy.Other things equal,the aggregate:

Accepted Answer

A)   demand curve will shift leftward.
B)   supply curve will shift rightward.
C)   supply curve will shift leftward.
D)   expenditures curve will shift downward.E) All of the above
F) A) and B)

Question 11

An increase in aggregate demand is most likely to be caused by a decrease in:

Accepted Answer

A)   the wealth of consumers.
B)   consumer confidence.
C)   business confidence.
D)   the tax rates on household income.E) A) and B)
F) A) and C)

Question 12

In terms of aggregate supply,the short run is a period in which:

Accepted Answer

A)   the price level is fixed.
B)   employment is fixed.
C)   real output is fixed.
D)   nominal wages and other input prices are fixed.E) None of the above
F) B) and C)

Question 13

The interest-rate effect is one of the determinants of aggregate demand.

Accepted Answer

A) True 
 B)False

Question 14

The interest rate effect indicates that a(n) :

Accepted Answer

A)   decrease in the price level will increase the demand for money,increase interest rates,and decrease consumption and investment spending.
B)   decrease in the price level will decrease the demand for money,decrease interest rates,and increase consumption and investment spending.
C)   increase in the price level will increase the demand for money,reduce interest rates,and decrease consumption and investment spending.
D)   increase in the supply of money will increase interest rates and decrease interest-sensitive consumption and investment spending.E) B) and D)
F) C) and D)

Question 15

Other things being equal,if world oil prices increased by 70 percent then the most likely effect would be to:

Accepted Answer

A)   shift the aggregate demand curve right.
B)   shift the aggregate supply curve right.
C)   shift the aggregate supply curve left.
D)   shift the aggregate demand curve right and the aggregate supply curve left.E) None of the above
F) All of the above

Question 16

If the dollar price of foreign currencies falls (that is,the dollar appreciates) ,we would expect:

Accepted Answer

A)   aggregate demand to decrease and aggregate supply to increase.
B)   both aggregate demand and aggregate supply to decrease.
C)   both aggregate demand and aggregate supply to increase.
D)   aggregate demand to increase and aggregate supply to decrease.E) B) and D)
F) None of the above

Question 17

A decrease in per unit production costs will shift the aggregate supply curve leftward.

Accepted Answer

A) True 
 B)False

Question 18

Is the downward price inflexibility applicable to today's economy? Why or why not?

Accepted Answer

Some economists give many reasons for th...

Question 19

Other things equal,the short-run aggregate supply curve shifts positions when:

Accepted Answer

A)   the price level changes.
B)   the rate of inflation changes.
C)   input prices change.
D)   aggregate demand changes.E) B) and D)
F) C) and D)

Question 20

In terms of aggregate supply,the difference between the long run and the short run is that in the long run:

Accepted Answer

A)   the price level is variable.
B)   employment is variable.
C)   real output is variable.
D)   nominal wages and other input prices are variable.E) A) and B)
F) A) and C)

Exam 12: Aggregate Demand and Aggregate Supply

In terms of aggregate supply,the difference between the long run and the short run is that in the long run:

Correct AnswerverifiedShow Answer

If the dollar price of foreign currencies falls (that is,the dollar appreciates) ,we would expect:

Correct AnswerverifiedShow Answer

A decrease in per unit production costs will shift the aggregate supply curve leftward.

Correct AnswerverifiedShow Answer

The interest-rate effect is one of the determinants of aggregate demand.

Correct AnswerverifiedShow Answer

The interest rate effect indicates that a(n) :

Correct AnswerverifiedShow Answer

A fall in real interest rates will reduce aggregate demand.

Correct AnswerverifiedShow Answer

The factors which affect the amounts that consumers,businesses,government,and foreigners wish to purchase at each price level are the:

Correct AnswerverifiedShow Answer

Explain the relationship between the aggregate expenditures model in graph (A)below and the aggregate demand model in graph (B)below.In other words,explain how points 1,2,and 3 are related to points 1',2',and 3'.

Correct AnswerverifiedThrough the real-balances,interest-rate,...View AnswerShow Answer

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:

Correct AnswerverifiedShow Answer

Suppose that nominal wages fall and productivity rises in a particular economy.Other things equal,the aggregate:

Correct AnswerverifiedShow Answer

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf.In terms of this diagram,the long-run aggregate supply curve:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

-Which of the above diagrams best portrays the effects of a substantial reduction in government spending?

Correct AnswerverifiedShow Answer

Other things equal,appreciation of the dollar:

Correct AnswerverifiedShow Answer

Other things equal,the short-run aggregate supply curve shifts positions when:

Correct AnswerverifiedShow Answer

In terms of aggregate supply,the short run is a period in which:

Correct AnswerverifiedShow Answer

Other things being equal,if world oil prices increased by 70 percent then the most likely effect would be to:

Correct AnswerverifiedShow Answer

An increase in aggregate demand is most likely to be caused by a decrease in:

Correct AnswerverifiedShow Answer

Is the downward price inflexibility applicable to today's economy? Why or why not?

Correct AnswerverifiedSome economists give many reasons for th...View AnswerShow Answer

Collective bargaining agreements that prohibit wage cuts for the duration of the contract contribute to:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Through the real-balances,interest-rate,...
View Answer

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:

Correct Answer
verified

Correct Answer
verified

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In terms of this diagram,the long-run aggregate supply curve:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Some economists give many reasons for th...
View Answer

Correct Answer
verified