Question 1

What will an increase in the price level result in?

Accepted Answer

A)  a decrease short-run aggregate supply
B)  an increase in the quantity of real GDP supplied, but not an increase in short-run aggregate supply
C)  a decrease in the quantity of real GDP supplied, but not a decrease in short-run aggregate supply
D)  an increase short-run aggregate supplyE) All of the above
F) A) and B)

Question 2

In the Keynesian AE model,if the autonomous components of consumption,investment,government spending,and net export spending total $200 billion and the MPC is 0.8,under what circumstances will unplanned changes in inventory be zero?

Accepted Answer

A)  when output is $160 billion
B)  when output is $250 billion
C)  when output is $1000 billion
D)  when output is $1600 billionE) B) and D)
F) C) and D)

Question 3

What impact will a permanent decrease in the supply of a major input have on real output?

Accepted Answer

A)  It will increase real output in both the short run and the long run.
B)  It will increase real output in the short run but not in the long run.
C)  It will decrease real output in the short run but not the long run.
D)  It will decrease real output in both the short run and the long run.E) All of the above
F) B) and D)

Question 4

If there was no profit effect or misperception effect in the short run,how would the SRAS and LRAS curve be drawn?

Accepted Answer

A)  The SRAS and the LRAS would both be vertical.
B)  The SRAS would be vertical and the LRAS would be upward sloping.
C)  The SRAS would be upward sloping and the LRAS would be vertical.
D)  The SRAS and LRAS would both be upward sloping.E) C) and D)
F) None of the above

Question 5

Other things being equal,under what circumstances will the short-run aggregate supply curve shift to the left?

Accepted Answer

A)  if energy prices fall
B)  if there is a short-term increase in input prices
C)  if technology and productivity increase in the nation
D)  if the capital stock of the nation increasesE) All of the above
F) B) and C)

Question 6

What would happen to the price level,real output,and unemployment in the short run if world oil prices rose sharply?

Accepted Answer

The price level would increase...

Question 7

Which of the following statements about the short-run aggregate supply curve is most accurate?

Accepted Answer

A)  It shifts only when the LRAS shifts in the same direction.
B)  It is not as steeply sloped as the LRAS.
C)  It normally has a slope of zero, meaning the curve is horizontal.
D)  It normally slopes upward to the right because the costs of labour and other inputs are relatively fixed in the short run.E) None of the above
F) A) and D)

Question 8

In the Keynesian model,which of the following is NOT a determinant of autonomous consumption?

Accepted Answer

A)  real wealth
B)  real income
C)  household debt
D)  interest ratesE) None of the above
F) All of the above

Question 9

Which of the following could set off a round of demand-pull inflation?

Accepted Answer

A)  an increase in imports
B)  an increase in the money supply
C)  an increase in real wages
D)  an increase in taxesE) B) and D)
F) A) and D)

Question 10

In the Keynesian AE model,if the autonomous components of consumption,investment,government spending,and net export spending initially total $200 billion,and the MPS is 0.2,by how much will equilibrium output change if governments increase their spending by $5 billion?

Accepted Answer

A)  by $1 billion
B)  by $5 billion
C)  by $10 billion
D)  by $25 billionE) B) and D)
F) B) and C)

Question 11

In the short run,what is the result of an increase in the price level?

Accepted Answer

A)  Output prices will not change relative to input prices.
B)  Output prices will rise relative to input prices.
C)  Output prices could either rise or fall relative to input prices.
D)  Output prices will fall relative to input prices.E) B) and C)
F) A) and D)

Question 12

What happens to unemployment and real output during the market adjustment from an inflationary gap?

Accepted Answer

A)  Unemployment increases and real output increases.
B)  Unemployment increases and real output decreases.
C)  Unemployment decreases and real output increases.
D)  Unemployment decreases and real output decreases.E) None of the above
F) All of the above

Question 13

A disaster that destroys a large part of current agricultural output will not change LRAS,while a disaster that destroys the capital stock in a major city will reduce LRAS.

Accepted Answer

A) True 
 B)False

Question 14

What is the term for inflation that occurs due to a decrease in aggregate supply?

Accepted Answer

A)  hyperinflation
B)  cost-push inflation
C)  inflationary push
D)  demand-pull inflationE) A) and B)
F) C) and D)

Question 15

Which of the following could be expected to shift the short-run aggregate supply curve leftward?

Accepted Answer

A)  wage increases with corresponding increases in labour productivity
B)  a decrease in the price of oil
C)  a natural disaster
D)  an increase in interest rates affecting the cost of capitalE) A) and C)
F) C) and D)

Question 16

If wheat prices rose by 12 percent when producers thought other prices were rising by 15 percent,what is the effect on wheat output?

Accepted Answer

A)  We could not predict the likely change in wheat output that would result.
B)  It would tend to rise as a result.
C)  It would tend to remain unchanged as a result.
D)  It would tend to fall as a result.E) B) and C)
F) A) and B)

Question 17

If employers win major wage concessions in many industries,how will this affect short-run aggregate supply?

Accepted Answer

A)  It will shift right (an increase in aggregate supply) .
B)  It will shift left (an increase in aggregate supply) .
C)  It will shift left (a decrease in aggregate supply) .
D)  It will shift right (a decrease in aggregate supply) .E) A) and B)
F) A) and C)

Question 18

Figure 9-4
 
-Refer to Figure 9-4.Which of the following best describes what is happening to inventories at Y₀?

Accepted Answer

A)  Inventories are unexpectedly rising, and firms will reduce prices.
B)  Inventories are unexpectedly falling, and firms will reduce output.
C)  Inventories are unexpectedly rising, and firms will reduce output.
D)  Inventories are unexpectedly rising, and firms will increase output.E) All of the above
F) A) and D)

Question 19

Which of the following statements about the aggregate supply curve is most accurate?

Accepted Answer

A)  It is typically flat for levels of output lower than the full-employment level.
B)  It is a schedule showing the relationship between the price level and the quantity of nominal GDP supplied.
C)  It is derived from product prices.
D)  It is typically upward sloping.E) B) and C)
F) A) and B)

Question 20

Figure 9-3
 
-Refer to Figure 9-3.This graph depicts a shift of aggregate demand from AD₀ to AD₁.Which of the following has NOT occurred in this situation?

Accepted Answer

A)  The real gross domestic product has decreased.
B)  The economy represented here is in recession.
C)  The new, short-run equilibrium is at point E0.
D)  The price level has decreased.E) B) and D)
F) A) and C)

Exam 9: Aggregate Supply and Macroeconomic Equilibrium

If there was no profit effect or misperception effect in the short run,how would the SRAS and LRAS curve be drawn?

Correct AnswerverifiedShow Answer

What would happen to the price level,real output,and unemployment in the short run if world oil prices rose sharply?

Correct AnswerverifiedThe price level would increase...View AnswerShow Answer

Figure 9-3 -Refer to Figure 9-3.This graph depicts a shift of aggregate demand from AD₀ to AD₁.Which of the following has NOT occurred in this situation?

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Which of the following could set off a round of demand-pull inflation?

Correct AnswerverifiedShow Answer

What will an increase in the price level result in?

Correct AnswerverifiedShow Answer

A disaster that destroys a large part of current agricultural output will not change LRAS,while a disaster that destroys the capital stock in a major city will reduce LRAS.

Correct AnswerverifiedShow Answer

In the Keynesian AE model,if the autonomous components of consumption,investment,government spending,and net export spending total $200 billion and the MPC is 0.8,under what circumstances will unplanned changes in inventory be zero?

Correct AnswerverifiedShow Answer

If employers win major wage concessions in many industries,how will this affect short-run aggregate supply?

Correct AnswerverifiedShow Answer

Figure 9-4 -Refer to Figure 9-4.Which of the following best describes what is happening to inventories at Y₀?

Correct AnswerverifiedShow Answer

In the short run,what is the result of an increase in the price level?

Correct AnswerverifiedShow Answer

Which of the following statements about the aggregate supply curve is most accurate?

Correct AnswerverifiedShow Answer

What is the term for inflation that occurs due to a decrease in aggregate supply?

Correct AnswerverifiedShow Answer

Other things being equal,under what circumstances will the short-run aggregate supply curve shift to the left?

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If wheat prices rose by 12 percent when producers thought other prices were rising by 15 percent,what is the effect on wheat output?

Correct AnswerverifiedShow Answer

What impact will a permanent decrease in the supply of a major input have on real output?

Correct AnswerverifiedShow Answer

What happens to unemployment and real output during the market adjustment from an inflationary gap?

Correct AnswerverifiedShow Answer

Which of the following statements about the short-run aggregate supply curve is most accurate?

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In the Keynesian model,which of the following is NOT a determinant of autonomous consumption?

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Which of the following could be expected to shift the short-run aggregate supply curve leftward?

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In the Keynesian AE model,if the autonomous components of consumption,investment,government spending,and net export spending initially total $200 billion,and the MPS is 0.2,by how much will equilibrium output change if governments increase their spending by $5 billion?

Correct AnswerverifiedShow Answer

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The price level would increase...
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