Topic-9-Quiz - Answers for quiz a whole list PDF

Preview

Summary

Answers for quiz a whole list...

Description

What is the result of an increase in the price level? Select one: a. This will shift the aggregate demand curve to the left. b. This will shift the aggregate demand curve to the right. c. This will move the economy down along a stationary aggregate demand curve. d. This will move the economy up along a stationary aggregate demand curve. What is the result of a decrease in the price level? Select one: a. This will shift the aggregate demand curve to the left. b. This will shift the aggregate demand curve to the right. c. This will move the economy down along a stationary aggregate demand curve. d. This will move the economy up along a stationary aggregate demand curve.

Because of a supply shock, in the short run Select one: a. the aggregate supply curve shifts to the left. b. the price level falls. c. unemployment falls. d. equilibrium real GDP rises.

Which of the following is true in the long run? Select one: a. Unemployment is above its natural state b. Unemployment is below its natural rate c. LRAS and SRAS lie on the same line d. Real GDP = potential GDP

The short-run aggregate supply curve has a ________ slope because as prices of ________ rise, prices of ________ rise more slowly. Select one: a. positive; final goods and services; inputs b. vertical; final goods and services; inputs c. positive; inputs; final goods and services d. vertical; inputs; final goods and services

Which of the following is true of the short-run aggregate supply curve? Select one: a. It has a negative slope b. It has a vertical slope c. It has a positive slope d. It has a horizontal slope

The aggregate demand curve shows the relationship between the ________ and ________. Select one: a. inflation rate; quantity of real GDP demanded b. real interest rate; quantity of real GDP supplied c. nominal interest rate; quantity of real GDP demanded d. price level; quantity of real GDP demanded Which of the following is not a phase in the business cycle? Select one: a. Shutdown b. Trough c. Peak d. Expansion

When the price of oil rises unexpectedly, the price level ________ and the unemployment rate ________ in the short run. Select one: a. rises; falls b. rises; rises c. falls; falls d. falls; rises What happens when a recession ends? Select one: a. Firms increase the amount of borrowing b. Households decrease spending on durable goods c. The household sector decreases spending substantially d. Interest rates decrease

Which of the following is one of the explanations as to why the aggregate demand curve slopes downward? Select one: a. Increases in the price level lower the interest rate and decrease consumption spending. b. Increases in the price level lower the interest rate and decrease investment spending. c. Increases in Australia’s price level relative to the price level in other countries lowers net exports. d. Increases in the price level raise real wealth and lowers consumption spending.

How is the ‘inflation rate’ defined? Select one: a. The percentage decrease in the price level between time periods. b. The percentage change in the price level between time periods. c. The dollar increase in prices between time periods. d. The percentage change in real GDP during a year.

When does long-run macroeconomic equilibrium occur? Select one: a. When aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve. b. When aggregate demand equals short-run aggregate supply. c. When unemployment equals zero. d. When output is above potential GDP.

Which of the following is not a reason why the wages of workers and the prices of inputs rise more slowly than the prices of final goods and services? Select one: a. Contracts make prices and wages ‘sticky’. b. Firms are often slow to adjust wages. c. Menu costs make some prices sticky. d. Unions are successful in pushing up wages.

When does short-run macroeconomic equilibrium occur? Select one: a. When the price level is constant in the shortrun. b. When the equilibrium lies on the long-run supply curve. c. When aggregate demand and short-run supply intersect. d. The two criteria—that aggregate demand and short-run aggregate supply intersect and that the equilibrium lies on the long-run supply curve—must both be satisfied.

What is the result of an increase in the price level? Select one: a. It will shift the short-run aggregate supply curve to the left. b. It will shift the short-run aggregate supply curve to the right. c. It will move the economy down along a stationary short-run aggregate supply curve. d. It will move the economy up along a stationary short-run aggregate supply curve.

If workers expect the rate of inflation to rise from 4 per centto 6per cent next year, this should Select one: a. shift the short-run aggregate supply curve to the right. b. shift the short-run aggregate supply curve to the left. c. move the economy up along a stationary short-run aggregate supply curve. d. move the economy down along a stationary short-run aggregate supply curve.

What is the result if the economy receives an influx of new workers from immigration? Select one: a. The long-run aggregate supply curve will shift to the left. b. The long-run aggregate supply curve will shift to the right. c. The economy will move up along the long-run aggregate supply curve. d. The economy will move down along the long-run aggregate supply curve.

How does an increase in the price level in Australia relative to the price level of other countries affect the aggregate demand curve, ceteris paribus? Select one: a. This will move the economy up along a stationary aggregate demand curve. b. This will move the economy down along a stationary aggregate demand curve. c. This will shift the aggregate demand curve to the left. d. This will shift the aggregate demand curve to the right.

A period of expansion in the business cycle ends when Select one: a. real GDP is equal to potential GDP. b. the business cycle reaches its peak. c. the business cycle reaches its trough. d. real GDP is less than potential GDP.

During the expansion phase of the business cycle, Select one: a. production increases. b. employment decreases. c. income decreases. d. unemployment increases.

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________. Select one: a. raises; recession; lowers; expansion b. raises; expansion; raises; recession c. lowers; expansion; lowers; recession d. lowers; recession; raises; expansion

What is the level of real GDP called in the long run? Select one: a. Frictional GDP b. Short-run GDP c. Potential GDP d. Low capacity GDP What is another term for ‘potential GDP’? Select one: a. Realised GDP b. Unemployment GDP c. Full-employment GDP d. Balanced-budget GDP

Along a short-run aggregate supply curve, a decrease in the price level causes Select one: a. firms to increase their production levels, as the lower prices will increase consumer demand. b. no change in output to occur, as at the macroeconomic level, the price level does not affect supply. c. firms to reduce their production levels. d. production levels to rise as the price of inputs becomes cheaper.

Which of the following is true of a long-run aggregate supply curve? Select one: a. It is downward sloping when prices are falling and upward sloping when prices are rising. b. It is upward sloping due to the effects of changes in the price level on production. c. It is the same as the short-run aggregate supply curve at full-employment equilibrium. d. It is vertical at the full employment level of output.

The distinction between the short-run and long-run aggregate supply curve is necessary because in the long run Select one: a. technology is fixed, but in the short run it changes. b. changes in the price level do not affect the level of real GDP but do in the short run. c. the aggregate supply curve is horizontal, but in the short run it is upward sloping. d. the price level is constant, but in the short run it fluctuates.

If Australia’s economic growth rate is slower relative to other countries’ economic growth rates, this will Select one: a. move the economy up along a stationary aggregate demand curve. b. move the economy down along a stationary aggregate demand curve. c. shift the aggregate demand curve to the left. d. shift the aggregate demand curve to the right.

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result, the Select one: a. long-run aggregate supply curve will shift to the right. b. long-run aggregate supply curve will shift to the left. c. economy will move up along the long-run aggregate supply curve. d. economy will move down along the long-run aggregate supply curve.

________ of unemployment during ________ make it easier for workers to ________ wages. Select one: a. High levels; a recession; accept lower b. Low levels; an expansion; accept lower c. Low levels; a recession; negotiate higher d. High levels; an expansion; negotiate higher

If the Australian dollar increases in value relative to other currencies, how does this affect the aggregate demand curve, ceteris paribus? Select one: a. This will move the economy up along a stationary aggregate demand curve. b. This will move the economy down along a stationary aggregate demand curve. c. This will shift the aggregate demand curve to the left. d. This will shift the aggregate demand curve to the right.

The long-run aggregate supply curve shows the relationship between the ________ and ________. Select one: a. inflation rate; quantity of real GDP demanded b. real interest rate; quantity of real GDP supplied c. nominal interest rate; quantity of real GDP supplied d. price level; quantity of real GDP supplied

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply? Select one: a. Potential GDP increases continuously. b. Aggregate demand shifts to the right during most periods. c. Aggregate supply shifts to the right except during periods when workers and firms expect higher wages. d. Aggregate demand and potential GDP decrease continuously.

A(n) ________ comes to an end with a business cycle ________. Select one: a. recession; peak b. recession; trough c. expansion; trough d. expansion; phase If more workers leave Australia to seek out better opportunities in another country than new workers arriving into Australia, then this will Select one: a. shift the short-run aggregate supply curve of Australia to the left. b. shift the short-run aggregate supply curve of Australia to the right. c. move the Australian economy up along a stationary short-run aggregate supply curve. d. move the Australian economy down along a stationary short-run aggregate supply curve.

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP? Select one: a. output will increase b. prices will decline c. unemployment will decline d. aggregate supply will shift to the left

A ‘technical recession’ is defined as Select one: a. one year of negative economic growth. b. six months of negative economic growth. c. a contraction in the economic growth rate from 5per cent to 3per cent. d. a period of rising prices.

Workers expect the rate of inflation to fall from 5per cent to 2per cent next year. As a result, this should Select one: a. shift the short-run aggregate supply curve to the right. b. shift the short-run aggregate supply curve to the left. c. move the economy up along a stationary short-run aggregate supply curve. d. move the economy. own along a stationary short-run aggregate supply curve.

Which of the following would not be considered a positive addition to household wealth? Select one: a. The equity that homeowners have in their own homes b. 1000 shares in Qantas Airlines c. A credit card balance d. The balance in a savings account

In Figure 15.2, given the economy is at point A in year 1 and point B in year 2, what is the growth rate in real GDP between those two years? Select one: a. 2.5per cent b. 7.3per cent c. 8.0per cent d. 10.0per cent

Suppose the economy is at point A in Figure 15.1. If consumer spending increases in the economy, where will the eventual long-run equilibrium be? Select one: a. A b. B c. C d. D

If potential GDP is equal to $1800 billion, what does the long-run aggregate supply curve look like? Select one: a. It is a horizontal line at $1800 billion of GDP. b. It is a vertical line at $1800 billion of GDP. c. It is a vertical line at a level of GDP below $1800 billion GDP. d. It is a vertical line at a level of GDP above $1800 billion.

The wealth effect occurs when the price level falls, causing the Select one: a. real value of household wealth to fall. b. nominal value of household wealth to fall. c. nominal value of household wealth to rise. d. real value of household wealth to rise.

What do the ‘aggregate demand’ and ‘aggregate supply’ models help explain? Select one: a. Long-run economic growth b. Short-run fluctuations in real GDP and the price level c. Price fluctuations in an individual market d. Output fluctuations in an individual market

As the economy nears the end of an expansion, interest rates usually ________ and wages rise more ________ than prices.

Select one: a. rise; rapidly b. rise; slowly c. fall; rapidly d. fall; slowly

Workers and firms both expect that prices will be 4per cent higher next year than they are this year. As a result Select one: a. workers will be willing to take lower wages next year. b. the purchasing power of wages will rise if wages increase by 4per cent. c. the short-run aggregate supply curve will shift to the left as wages increase. d. aggregate demand will increase by 4per cent. What happens if technological change occurs in the economy? Select one: a. The long-run aggregate supply curve will shift to the left. b. The long-run aggregate supply curve will shift to the right. c. The economy will move up along the long-run aggregate supply curve. d. The economy will move down along the long-run aggregate supply curve. Why might the short-run aggregate supply curve shift to the right in the long run, following a decrease in aggregate demand? Select one: a. Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. b. Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. c. Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. d. Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices. Why does the short-run aggregate supply curve shift to the left in the long run, following an increase in aggregate demand? Select one: a. Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. b. Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. c. Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. d. Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.

What is the slope of the long-run aggregate supply curve? Select one: a. Negative slope b. Steep but positive slope c. Vertical slope d. Flat slope

Rational expectations means that workers and firms form their expectations using Select one: a. all the information available to them. b. only information from the past. c. only information provided to them by the government. d. only information gathered from random sources.

The result of lower personal income taxes is Select one: a. a decrease in aggregate demand. b. a decrease in disposable income. c. an increase in aggregate demand. d. an increase in transfer payments.

Changes in the price level Select one: a. increase the level of aggregate supply in the long run. b. decrease the level of aggregate supply in the long run. c. do not affect the level of aggregate supply in the long run. d. increase the level of aggregate supply in the long run only at very high levels of output.

The impact of a natural disaster on consumers in the economy can make them very pessimistic about their future incomes. How would an increase in pessimism affect the aggregate demand curve? Select one: a. This will move the economy up along a stationary aggregate demand curve. b. This will move the economy down along a stationary aggregate demand curve. c. This will shift the aggregate demand curve to the left. d. This will shift the aggregate demand curve to the right. During an expansion, how do inflation and unemployment typically change? Select one: a. Inflation and unemployment both rise b. Inflation and unemployment both fall c. Inflation falls and unemployment rises d. Inflation rises and unemployment falls What does the slope of the aggregate demand curve indicate? Select one: a. That a decrease in the price level leads to a higher level of aggregate spending. b. That a decrease in the price level leads to a higher level of aggregate supply. c. That a decrease in the price level leads to a lower level of aggregate spending. d. That an increase in the price level leads to a higher level of aggregate spending

An ‘economic contraction’ begins with a/an ________ in spending by firms on capital goods and a/an ________ in spending on durable goods by households. Select one: a. increase; decrease b. increase; increase c. decrease; increase d. decrease; decrease

How do changes in income tax policies affect aggregate demand? Select one: a. Higher taxes increase disposable income, consumption and aggregate demand. b. Higher taxes reduce disposable income, consumption and aggregate demand. c. Higher taxes increase corporate investment and aggregate demand. d. Higher taxes increase aggregate supply and thus increase aggregate demand as well.

The international-trade effect states that, ceteris paribus, an increase in the price level will Select one: a. increase net exports. b. decrease net exports. c. increase exports. d. decrease imports.

A ‘recession’ is often defined as Select one: a. two consecutive quarters experiencing a decline in the economic growth rate. b. two consecutive quarters of declining nominal GDP. c. a significant decline in activity visible in industrial production, employment, real income, and wholesale/retail trade lasting more than a few months. d. a significant decline in inflation and unemployment lasting more than a few months.

Which of the points in Figure 15.1 are possible short-run equilibriums but not long-run equilibriums? Select one: a. A and B b. A and C c. C and D d. B and D

Which of the following is considered a ‘supply shock’? Select one: a. The increasing investment in the economy causing the capital stock to rise b. An unexpected large increase in the price of natural gas c. A decline in wages d. An improvement in technology

When the price level in Australia rises relative to the price level of other countries, ceteris paribus, ________ will rise, ________ will fall, and ________ will fall. Select one: a. imports; exports; net exports b. exports; imports; net exports c. net exports; exports; imports d. net exports; imports; exports

Which of the following is an assumption of the basis (static) aggregate demand and aggregate supply model? Select one: a. Potential GDP increases continuously. b. The economy does not experience continuing inflation. c. The economy does not experience long-r...