Aggregate Supply & Aggregate Demand

Question 1

When potential GDP increases

Accepted Answer

both LRAS & SRAS curves shift rightward

Question 2

The quantity of real GDP is the sum of

Accepted Answer

consumption expenditures, government purchasing, investment, net exports

Question 3

A rise in the money wage rate ___________ LRAS.

Accepted Answer

has no effect on

Question 4

The aggregate demand curve plots the quantity of _______ demanded against the ______ .

Accepted Answer

real GDP; price level

Question 5

A fall in the price level ______ the real value of money and ________ the interest rate.

Accepted Answer

increases;decreases

Question 6

The SRAS is the relationship between quantity of real GDP supplied &_________ remain constant.

Accepted Answer

prices of other resources, money wage rate, price level, potential GDP

Question 7

Lower interest rates cause

Accepted Answer

people to spend more, people to borrow more, real GDP demanded to increase

Question 8

When the international substitution effect causes a rise in price level

Accepted Answer

increases price of domestic goods relative to foreign goods, exports decrease, real GDP demanded decreases, imports increase

Question 9

A rise in the money wage rate ______SRAS & shifts the curve _______.

Accepted Answer

decreases; leftward

Question 10

The aggregate quantity of goods and services supplied depends on which of these factors

Accepted Answer

quantity of capital, technology, quantity of labor

Question 11

The higher the real wage rate, the ___________ the quantity of labor demanded.

Accepted Answer

smaller

Question 12

At the equilibrium wage rate the level of employment is

Accepted Answer

natural rate of unemployment

Question 13

A fall in foriegn exchange rates

Accepted Answer

decreases imports, increases aggregate demand, increases exports, lowers the price of domestic goods

Question 14

A change in the price level with an equal percentage change in the money wage causes

Accepted Answer

a movement along the LRAS curve

Question 15

How much will the wall cost?

Accepted Answer

REALLY -- this is not a good idea

Question 16

Monetary policy may include

Accepted Answer

charging higher interest rates, lower reserve ratios

Question 17

Potential GDP changes when there

Accepted Answer

is there is a change in the quantity of capital, are advances in technology, is a change in full employment quantity of labor

Question 18

The main influences on aggregate demand are

Accepted Answer

expectations, fiscal policy, world economy, monetary policy

Question 19

A change in the price level with no change in the money wage causes

Accepted Answer

movement along the SRAS curve

Question 20

Inflation occurs when the quantity of money ______ potential GDP.

Accepted Answer

grows faster than

Question 21

The long-run aggregate supply curve reflects the relationship between

Accepted Answer

potential GDP, the price level, the quantity of real GDP

Question 22

The higher the real wage rate the _______________ quantity of labor supplied.

Accepted Answer

greater

Question 23

Fiscal policy may include

Accepted Answer

increased government spending, spending cuts, tax cuts, deficit reductions

Question 24

A leftward shift of the Aggregate Demand curve is caused by

Accepted Answer

substitution effect, wealth effect

Question 25

When aggregate demand ___________, the AD curve shifts ________.

Accepted Answer

decreases; leftward, increases; rightward

Question 26

A rise in the price level with no change in costs causes companies to

Accepted Answer

incur higher marginal costs, increase production

Question 27

When aggregate demand _____, AD curve shifts _________.

Accepted Answer

increases; rightward, decreases; leftward

Aggregate Supply & Aggregate Demand

Questions 27

Aggregate Supply & Aggregate Demand

Questions 27