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| 1 | |
If aggregate demand and aggregate supply both decrease: |
| | A) | real GDP and the price level will both fall |
| | B) | real GDP will fall and the price level will decrease |
| | C) | the price level will fall but real GDP may either increase or decrease |
| | D) | real GDP will fall but the price level may or may not increase |
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| 2 | |
A firm may pay an above-market efficiency wage: |
| | A) | to relieve a surplus in the labor market |
| | B) | to improve work effort and reduce production costs |
| | C) | to improve work effort, even though the higher wage increases production costs |
| | D) | to compensate workers for high risk on the job |
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| 3 | |
An increase in the price level will: |
| | A) | increase net exports |
| | B) | reduce the value of household debt and increase investment |
| | C) | increase production costs and reduce aggregate supply |
| | D) | reduce the purchasing power of household wealth and reduce consumption |
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| 4 | |
Answer the next question using the following graph:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073273082/384258/quiz10a_4.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (7.0K)</a>]]>
Refer to the graph. The shift from AD1 to AD2 may have been caused by: |
| | A) | a reduction in the price level |
| | B) | a reduction in aggregate supply |
| | C) | a decline in personal taxes |
| | D) | a decrease in government spending |
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| 5 | |
Answer the next question using the following graph:
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073273082/384258/quiz10a_4.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (7.0K)</a>]]>
Refer to the graph. Suppose aggregate demand falls from AD1 to AD2. Initially, this will cause output to: |
| | A) | fall to Q2 and the price level to P2 |
| | B) | fall to Q2 but the price level to remain at P1 |
| | C) | fall to Q3 but the price level to remain at P1 |
| | D) | remain unchanged but the price level will fall to P2 |
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| 6 | |
Answer the next question using the following diagrams.
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Which of the above diagrams best portrays the effects of a significant decrease in energy prices? |
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
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| 7 | |
The short-run aggregate supply curve: |
| | A) | assumes that wages and salaries fully match any change in the price level |
| | B) | is vertical at the full-employment level of output |
| | C) | shows the amount of real output supplied at various price levels |
| | D) | becomes increasingly flatter as output expands |
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| 8 | |
Other things equal, depreciation of the dollar will: |
| | A) | increase U.S. aggregate demand by increasing net exports |
| | B) | decrease U.S. aggregate demand by reducing net exports |
| | C) | increase U.S. aggregate supply by increasing the price of exported resources |
| | D) | increase U.S. aggregate supply by reducing the price of imported resources |
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| 9 | |
If there is a high cost to firms of changing prices and communicating these changes to customers: |
| | A) | the aggregate supply curve will be relatively steep |
| | B) | the aggregate demand curve will be relatively steep |
| | C) | the price level will adjust rapidly to changes in aggregate supply |
| | D) | the price level may remain constant when aggregate demand decreases |
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| 10 | |
Changes in the value of stocks and bonds shift the economy's aggregate demand curve. |
| | A) | True |
| | B) | False |
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