Question 1

The _{--------------------}the _{--------------------} is the quantity of real GDP supplied. A)greater the demand for labor; smaller B)higher the price level; greater C)lower the supply of labor; greater D)lower aggregate demand; greater E)lower the price level; greater

Accepted Answer

The quantity of real GDP supplied is positively related to the price level, meaning that as the price level increases, the quantity of real GDP supplied also increases.

Question 2

An increase in the price level _{--------------------}the aggregate quantity supplied and _{--------------------} the aggregate quantity demanded. A)decreases; decreases B)increases; decreases C)decreases; increases D)does not change; decreases E)increases; increases

Accepted Answer

An increase in the price level typically increases the aggregate quantity supplied because producers are willing to supply more at higher prices. However, it decreases the aggregate quantity demanded because consumers are less willing to buy goods and services at higher prices.

Question 3

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Based on the figure above, the aggregate demand curve will shift from AD0 to AD2 when
A)the price level rises.
B)the price level falls.
C)government expenditure decreases.
D)potential GDP increases.
E)the Federal Reserve lowers the interest rate.

Accepted Answer

The answer of

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Based on the figure above, the aggregate...

Question 4

A change in the price level produces a _{--------------------}the aggregate demand curve. I. shift in Ii. change in the slope of iii. movement along A)i and ii B)iii only C)i only D)ii only E)i and iii

Accepted Answer

A change in the price level results in a movement along the aggregate demand curve, not a shift or change in its slope.

Question 5

A technological advance _{--------------------} aggregate qsupply, shifting the aggregate supply curve _{--------------------} and potentially bringing the _{--------------------} phase of the business cycle. A)increases; leftward; expansion B)decreases; rightward; expansion C)decreases; leftward recession D)increases; rightward; expansion E)increases; rightward; recession

Accepted Answer

A technological advance typically increases aggregate supply, shifting the aggregate supply curve rightward, which can lead to an expansion phase in the business cycle.

Question 6

Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve?
A)a change in monetary policy
B)a change in government expenditures on goods and services
C)a change in expectations about the future
D)a change in foreign incomes
E)a change in the price level

Accepted Answer

A change in the price level results in a movement along the aggregate demand curve, while the other options would cause the curve to shift.

Question 7

The change reflected in the above figure might be a result of
A)a decrease in the money prices of resources other than labor.
B)an increase in the quantity of labor.
C)a fall in the price level.
D)a decrease in the quantity of capital.
E)a rise in the money wage rate.

Accepted Answer

The answer of

The change reflected in the above figure...

Question 8

When the price level rises and the money wage rate does not change,
A)existing businesses do not change their level of output.
B)the quantity of potential GDP increases because the quantity of real GDP supplied increases.
C)profits fall and more businesses fail.
D)the quantity of real GDP supplied increases as more businesses start up and potential GDP does not change.
E)the quantity of real GDP supplied decreases as more businesses fail and potential GDP does not change.

Accepted Answer

When the price level rises and the money wage rate does not change, businesses experience higher profits because their costs remain the same while their revenues increase. This incentivizes existing businesses to increase production and new businesses to start up, leading to an increase in the quantity of real GDP supplied, while potential GDP remains unchanged.

Question 9

A tax increase
A)increases the quantity of real GDP demanded and there is a movement down along the AD curve.
B)decreases aggregate demand and the AD curve shifts leftward.
C)decreases the quantity of real GDP demanded and there is a movement up along the AD curve.
D)does not shift or lead to a movement along the aggregate demand curve.
E)increases aggregate demand and the AD curve shifts rightward.

Accepted Answer

A tax increase reduces consumers' disposable income, leading to a decrease in consumption and overall aggregate demand, causing the AD curve to shift leftward.

Question 10

Demand-pull inflation starts with
A)a decrease in aggregate demand.
B)an increase in aggregate demand.
C)a decrease in aggregate supply.
D)an increase in aggregate supply.
E)an increase in potential GDP.

Accepted Answer

Demand-pull inflation occurs when there is an increase in aggregate demand, leading to higher prices as demand outstrips supply.

Question 11

Which of the following decreases aggregate demand and shifts the AD curve leftward?
A)a decrease in price level
B)a decrease in potential GDP
C)a decrease in the price of exported goods and services
D)a tax cut
E)a decrease in government expenditures

Accepted Answer

A decrease in government expenditures reduces overall spending in the economy, leading to a decrease in aggregate demand and a leftward shift of the AD curve.

Question 12

Which of the following is true?
A)At full employment, aggregate supply is equal to potential GDP.
B)Potential GDP increases as the price level increases.
C)Aggregate supply is another name for potential GDP.
D)The potential GDP line has a negative slope.
E)Potential GDP decreases as the price level increases.

Accepted Answer

At full employment, aggregate supply is equal to potential GDP because potential GDP represents the maximum output an economy can produce without causing inflation, which aligns with the concept of full employment.

Question 13

Cost-push inflation might initially result from
A)the use of new technology.
B)an increase in government expenditure.
C)an increase in the cost of resources.
D)an increase in the quantity of money.
E)a decrease in the quantity of money.

Accepted Answer

Cost-push inflation occurs when the overall price levels in an economy rise due to increases in the cost of wages and raw materials. An increase in the cost of resources directly contributes to this type of inflation.

Question 14

Which of the following factors could start a demand-pull inflation?
A)a decrease in the money wage rate
B)an increase in the quantity of money
C)an increase in tax rates
D)a decrease in government expenditure
E)an increase in the money wage rate

Accepted Answer

An increase in the quantity of money can lead to demand-pull inflation as it increases overall demand in the economy, potentially outpacing supply.

Question 15

When OPEC nearly tripled the price of oil in late 1973,
A)U.S. real GDP did not change although the price level rose.
B)both U.S. real GDP and the price level increased.
C)the U.S. price level fell because production became too expensive.
D)the U.S. price level rose and real GDP decreased.
E)U.S. real GDP increased as profits by oil producers increased.

Accepted Answer

The sharp increase in oil prices led to higher production costs, causing inflation (rise in price level) and a decrease in real GDP due to reduced economic activity.

Quiz 13: Aggregate Supply Ad Aggregate Demand

The --------------------the -------------------- is the quantity of real GDP supplied.

An increase in the price level --------------------the aggregate quantity supplied and -------------------- the aggregate quantity demanded.

- Based on the figure above, the aggregate demand curve will shift from AD0 to AD2 when

A change in the price level produces a --------------------the aggregate demand curve. I. shift in Ii. change in the slope of iii. movement along

A technological advance -------------------- aggregate qsupply, shifting the aggregate supply curve -------------------- and potentially bringing the -------------------- phase of the business cycle.

Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve?

The change reflected in the above figure might be a result of

When the price level rises and the money wage rate does not change,

A tax increase

Demand-pull inflation starts with

Which of the following decreases aggregate demand and shifts the AD curve leftward?

Which of the following is true?

Cost-push inflation might initially result from

Which of the following factors could start a demand-pull inflation?

When OPEC nearly tripled the price of oil in late 1973,

The _{--------------------}the _{--------------------} is the quantity of real GDP supplied.

An increase in the price level _{--------------------}the aggregate quantity supplied and _{--------------------} the aggregate quantity demanded.

A change in the price level produces a _{--------------------}the aggregate demand curve. I. shift in Ii. change in the slope of iii. movement along

A technological advance _{--------------------} aggregate qsupply, shifting the aggregate supply curve _{--------------------} and potentially bringing the _{--------------------} phase of the business cycle.