Question 1

Everything else held constant, which of the following does not cause aggregate demand to increase?

Accepted Answer

A)   An increase in net exports
B)   An increase in government spending
C)   An increase in taxes
D)   An increase in consumer optimismE) A) and C)
F) A) and B)

Question 2

Suppose the economy is producing at the natural rate of output. Assuming a fixed natural rate of output and everything else held constant, the development of a new, more productive technology will cause ________ in the unemployment rate in the short run and ________ in the inflation rate in the short run.

Accepted Answer

A)   an increase; an increase
B)   a decrease; a decrease
C)   a decrease; an increase
D)   no change; no changeE) A) and C)
F) B) and C)

Question 3

What are the factors that can shift the aggregate demand curve to the right?

Accepted Answer

These factors are:
a. An increase in the...

Question 4

Everything else held constant, an increase in planned investment expenditure ________ aggregate ________.

Accepted Answer

A)   increases; demand
B)   decreases; demand
C)   decreases; supply
D)   increases; supplyE) A) and B)
F) C) and D)

Question 5

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the Chinese experience?

Accepted Answer

A)   The worldwide decline in demand led to a collapse of Chinese exports.
B)   Instead of relying solely on the economy's self-correcting mechanism, much more aggressive fiscal expansions than those of the U.S. (in addition to a substantial monetary easing)  served to shift the AD curve back to general equilibrium relatively quickly.
C)   The Chinese economy was better able than the U.S. economy to weather the financial crisis with output growth starting to grow earlier and more quickly than that of the U.S.
D)   All of the above.
E)   None of the above.F) All of the above
G) B) and E)

Question 6

Suppose the economy is producing at the natural rate of output. An open market sale of bonds by the Bank of Canada will cause ________ in real GDP in the short run and ________ in the inflation rate in the short run, everything else held constant.

Accepted Answer

A)   an increase; an increase
B)   a decrease; a decrease
C)   no change; an increase
D)   no change; a decreaseE) B) and D)
F) B) and C)

Question 7

Everything else held constant, a balanced budget increase in government spending (that is, an increase in government spending that is matched by an identical increase in net taxes)  will ________.

Accepted Answer

A)   increase aggregate demand, but not by as much as if just government spending increases
B)   increase aggregate demand by more than if just government spending increases
C)   not affect aggregate demand
D)   decrease aggregate demandE) A) and D)
F) A) and C)

Question 8

According to aggregate demand and supply analysis, the rising oil prices coupled with the subprime financial crisis in 2007-2008 caused the unemployment rate to ________ and the level of real aggregate output to ________.

Accepted Answer

A)   increase; increase
B)   increase; decrease
C)   decrease; increase
D)   decrease; decreaseE) C) and D)
F) B) and C)

Question 9

Everything else held constant, contractionary monetary policies will cause ________.

Accepted Answer

A)   the quantity of aggregate demand to increase
B)   the quantity of aggregate demand to decrease
C)   aggregate demand to increase
D)   aggregate demand to decreaseE) A) and C)
F) All of the above

Question 10

Everything else held constant, a decrease in government spending ________ aggregate ________.

Accepted Answer

A)   increases; demand
B)   decreases; demand
C)   decreases; supply
D)   increases; supplyE) A) and B)
F) None of the above

Question 11

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the United Kingdom's experience?

Accepted Answer

A)   The increase in the price of oil immediately shifted the AS curve to the left.
B)   The financial crisis did not take hold right away so the AD curve did not immediately shift.
C)   Eventually, the Lehman Brothers bankruptcy caused a negative demand shock leading to a further fall in output and an increase in the unemployment rate.
D)   All of the above.
E)   None of the above.F) B) and E)
G) D) and E)

Question 12

The financial crisis that began in August 2007 initially had ________ effect on China but caused exports to fall by ________ percent.

Accepted Answer

A)   no; 20
B)   a moderate; 20
C)   large; 20
D)   no; 1E) B) and C)
F) A) and C)

Question 13

During the 2007-2008 financial crisis, China's economic growth slowed from over ________ percent in the first half of 2008 to under ________ percent in the second half.

Accepted Answer

A)   11; 5
B)   10; 6
C)   11; 2
D)   11; 10E) All of the above
F) A) and C)

Question 14

The short-run aggregate supply curve is upward sloping because in the short run, costs of many factors that go into producing goods and services are ________, meaning that the price for a unit of output will ________ relative to input prices and the profit per unit will rise.

Accepted Answer

A)   fixed; rise
B)   fixed; fall
C)   flexible; rise
D)   flexible; fallE) A) and B)
F) None of the above

Question 15

In the long run, following a combination of a negative demand shock and a temporary negative supply shock, ________.

Accepted Answer

A)   both inflation and output return to the original long-run equilibrium values
B)   inflation is permanently increased, while output returns to potential output
C)   output returns to potential output, while inflation may be higher or lower than its initial value
D)   inflation is permanently reduced, while output returns to potential output
E)   None of the above.F) A) and B)
G) A) and E)

Question 16

Suppose the Canadian economy is producing at the natural rate of output. A depreciation of the Canadian dollar will cause ________ in real GDP in the short run and ________ in the inflation rate in the short run, everything else held constant. (Assume the depreciation causes no effects in the supply side of the economy.)

Accepted Answer

A)   an increase; an increase
B)   a decrease; a decrease
C)   no change; an increase
D)   no change; a decreaseE) A) and D)
F) None of the above

Question 17

The downward slope of the aggregate demand curve is due to ________ and ________.

Accepted Answer

A)   planned investment spending; net exports
B)   planned investment spending; financial frictions
C)   net exports; financial frictions
D)   financial frictions; net transfersE) All of the above
F) B) and D)

Question 18

A favourable supply shock causes ________ to ________.

Accepted Answer

A)   aggregate demand; increase
B)   aggregate demand; decrease
C)   short-run aggregate supply; decrease
D)   short-run aggregate supply; increaseE) C) and D)
F) A) and B)

Question 19

The aggregate supply curve is ________.

Accepted Answer

A)   the total quantity of raw materials offered for sale at different prices
B)   the total quantity of final goods and services offered for sale at the current price level
C)   the total quantity of final goods and services offered for sale at different price levels
D)   the total quantity of intermediate and final goods and service offered for sale at different price levelsE) A) and C)
F) A) and B)

Question 20

The positively sloped short-run aggregate supply curve reflects the assumption that labour prices are ________.

Accepted Answer

A)   more flexible than output prices
B)   less flexible than output prices
C)   fixed in the long run
D)   perfectly flexible in both the short run and the long runE) None of the above
F) A) and B)

Exam 23: Aggregate Demand and Supply Analysis

The short-run aggregate supply curve is upward sloping because in the short run, costs of many factors that go into producing goods and services are , meaning that the price for a unit of output will relative to input prices and the profit per unit will rise.

Correct Answer
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The aggregate supply curve is ________.

Correct Answer
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Everything else held constant, contractionary monetary policies will cause ________.

Correct Answer
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Correct Answer
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Everything else held constant, a decrease in government spending aggregate .

Correct Answer
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In the long run, following a combination of a negative demand shock and a temporary negative supply shock, ________.

Correct Answer
verified

According to aggregate demand and supply analysis, the rising oil prices coupled with the subprime financial crisis in 2007-2008 caused the unemployment rate to and the level of real aggregate output to .

Correct Answer
verified

A favourable supply shock causes to .

Correct Answer
verified

The financial crisis that began in August 2007 initially had effect on China but caused exports to fall by percent.

Correct Answer
verified

The positively sloped short-run aggregate supply curve reflects the assumption that labour prices are ________.

Correct Answer
verified

Suppose the economy is producing at the natural rate of output. Assuming a fixed natural rate of output and everything else held constant, the development of a new, more productive technology will cause in the unemployment rate in the short run and in the inflation rate in the short run.

Correct Answer
verified

What are the factors that can shift the aggregate demand curve to the right?

Correct Answer
verified
These factors are:
a. An increase in the...
View Answer

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the Chinese experience?

Correct Answer
verified

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the United Kingdom's experience?

Correct Answer
verified

Suppose the economy is producing at the natural rate of output. An open market sale of bonds by the Bank of Canada will cause in real GDP in the short run and in the inflation rate in the short run, everything else held constant.

Correct Answer
verified

Everything else held constant, an increase in planned investment expenditure aggregate .

Correct Answer
verified

Everything else held constant, a balanced budget increase in government spending (that is, an increase in government spending that is matched by an identical increase in net taxes) will ________.

Correct Answer
verified

The downward slope of the aggregate demand curve is due to and .

Correct Answer
verified

During the 2007-2008 financial crisis, China's economic growth slowed from over percent in the first half of 2008 to under percent in the second half.

Correct Answer
verified

Everything else held constant, which of the following does not cause aggregate demand to increase?

Correct Answer
verified

Exam 23: Aggregate Demand and Supply Analysis

The short-run aggregate supply curve is upward sloping because in the short run, costs of many factors that go into producing goods and services are ________, meaning that the price for a unit of output will ________ relative to input prices and the profit per unit will rise.

Correct AnswerverifiedShow Answer

The aggregate supply curve is ________.

Correct AnswerverifiedShow Answer

Everything else held constant, contractionary monetary policies will cause ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Everything else held constant, a decrease in government spending ________ aggregate ________.

Correct AnswerverifiedShow Answer

In the long run, following a combination of a negative demand shock and a temporary negative supply shock, ________.

Correct AnswerverifiedShow Answer

According to aggregate demand and supply analysis, the rising oil prices coupled with the subprime financial crisis in 2007-2008 caused the unemployment rate to ________ and the level of real aggregate output to ________.

Correct AnswerverifiedShow Answer

A favourable supply shock causes ________ to ________.

Correct AnswerverifiedShow Answer

The financial crisis that began in August 2007 initially had ________ effect on China but caused exports to fall by ________ percent.

Correct AnswerverifiedShow Answer

The positively sloped short-run aggregate supply curve reflects the assumption that labour prices are ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What are the factors that can shift the aggregate demand curve to the right?

Correct AnswerverifiedThese factors are:a. An increase in the...View AnswerShow Answer

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the Chinese experience?

Correct AnswerverifiedShow Answer

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the United Kingdom's experience?

Correct AnswerverifiedShow Answer

Suppose the economy is producing at the natural rate of output. An open market sale of bonds by the Bank of Canada will cause ________ in real GDP in the short run and ________ in the inflation rate in the short run, everything else held constant.

Correct AnswerverifiedShow Answer

Everything else held constant, an increase in planned investment expenditure ________ aggregate ________.

Correct AnswerverifiedShow Answer

Everything else held constant, a balanced budget increase in government spending (that is, an increase in government spending that is matched by an identical increase in net taxes) will ________.

Correct AnswerverifiedShow Answer

The downward slope of the aggregate demand curve is due to ________ and ________.

Correct AnswerverifiedShow Answer

During the 2007-2008 financial crisis, China's economic growth slowed from over ________ percent in the first half of 2008 to under ________ percent in the second half.

Correct AnswerverifiedShow Answer

Everything else held constant, which of the following does not cause aggregate demand to increase?

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve is upward sloping because in the short run, costs of many factors that go into producing goods and services are , meaning that the price for a unit of output will relative to input prices and the profit per unit will rise.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Everything else held constant, a decrease in government spending aggregate .

Correct Answer
verified

Correct Answer
verified

According to aggregate demand and supply analysis, the rising oil prices coupled with the subprime financial crisis in 2007-2008 caused the unemployment rate to and the level of real aggregate output to .

Correct Answer
verified

A favourable supply shock causes to .

Correct Answer
verified

The financial crisis that began in August 2007 initially had effect on China but caused exports to fall by percent.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
These factors are:
a. An increase in the...
View Answer

Correct Answer
verified

Correct Answer
verified

Suppose the economy is producing at the natural rate of output. An open market sale of bonds by the Bank of Canada will cause in real GDP in the short run and in the inflation rate in the short run, everything else held constant.

Correct Answer
verified

Everything else held constant, an increase in planned investment expenditure aggregate .

Correct Answer
verified

Correct Answer
verified

The downward slope of the aggregate demand curve is due to and .

Correct Answer
verified

During the 2007-2008 financial crisis, China's economic growth slowed from over percent in the first half of 2008 to under percent in the second half.

Correct Answer
verified

Correct Answer
verified