Week 5 - Quiz Review Question Preview (ID: 28808)


This Should Help You Review For The Week 5 Quiz. It Covers Aggregate Demand And Aggregate Supply. TEACHERS: click here for quick copy question ID numbers.

A decrease in net exports will cause a(n):
a) Decrease in aggregate demand
b) Increase in aggregate demand
c) Increase in aggregate supply
d) Decrease in aggregate supply

Wage contracts, efficiency wages, and the minimum wage are explanations for why:
a) Competition results in price wars
b) Wages tend to be inflexible downward
c) The aggregate demand curve slopes downward
d) There is little support for the existence of a real-balances effect

The magnification of small changes in spending into larger changes in output and income is produced by:
a) The average propensity to consume
b) The average propensity to save
c) The multiplier effect
d) Saving

Cost-push inflation occurs because of a:
a) Rightward shift in the aggregate demand curve
b) Leftward shift in the aggregate demand curve
c) Rightward shift in the aggregate supply curve
d) Leftward shift in the aggregate supply curve

The long-run aggregate supply curve is:
a) Vertical
b) Horizontal
c) Upsloping
d) Downsloping

The vertical slope of the long-run aggregate supply curve is based on the assumption that:
a) Nominal wages and other resource costs do respond to price level changes
b) Nominal wages and other resource costs do not respond to price level changes
c) Nominal wages are greater than real wages
d) Nominal wages are less than real wages

If Congress raised taxes on businesses, this action would:
a) Increase per-unit production costs and thus increase aggregate demand
b) Increase per-unit production costs and thus increase aggregate supply
c) Increase per-unit production costs and thus decrease aggregate supply
d) Increase aggregate demand and increase aggregate supply

An increase in productivity will:
a) Increase aggregate demand
b) Increase aggregate supply
c) Increase aggregate supply and aggregate demand
d) Decrease aggregate supply and aggregate demand

If the prices of imported resources increase, then this event would most likely:
a) Decrease aggregate supply
b) Increase aggregate supply
c) Increase aggregate demand
d) Decrease aggregate demand

The labels for the axes of an aggregate supply curve should be:
a) Real domestic output for the vertical axis and price level for the horizontal axis
b) Real employment for the vertical axis and price level for the horizontal axis
c) Real domestic output for the horizontal axis and price level for the vertical axis
d) Aggregate demand for the vertical axis and real national output for the horizontal axis

An aggregate supply curve represents the relationship between the:
a) Price level and the buying of real domestic output
b) Price level and the production of real domestic output
c) Real domestic output bought and the real domestic output sold
d) Price level that producers are willing to accept and the price level buyers are willing to pay

Which set of events would most likely decrease aggregate demand?
a) A reduction in the excess capital of the existing capital stock
b) A reduction in business and personal tax rates
c) An increase in investment spending
d) An increase in personal income tax rates

An increase in government spending will cause a(n):
a) Increase in aggregate demand
b) Increase in aggregate supply
c) Decrease in aggregate demand
d) Decrease in aggregate supply

An increase in aggregate demand is most likely to be caused by a decrease in:
a) the tax rates on household income.
b) the wealth of consumers.
c) consumer confidence.
d) expected future prices.

A decline in the quantity of real output demanded along the aggregate demand curve is a result of a(n):
a) Decrease in the level of income
b) Increase in the price level
c) Increase in the level of income
d) Decrease in the price level

The aggregate demand curve is the relationship between the:
a) Price level and the sales of producers
b) Price level and the purchasing of real domestic output
c) Price level and the distribution of real domestic output
d) Real domestic output bought and the real domestic output sold

The labels for the axes of the aggregate demand graph should be:
a) Quantity of a product on the vertical axis and the price of a product on the horizontal axis
b) Price of a product on the vertical axis and quantity of a product on the horizontal axis
c) Real domestic output on the vertical axis and the price level on the horizontal axis
d) Real domestic output on the horizontal axis and the price level on the vertical axis

An aggregate supply curve shows the:
a) Level of real domestic output which will be produced at each possible price level
b) Level of real domestic output which will be purchased at each possible price level
c) Price level at which real domestic output will be purchased
d) Price level at which real domestic output will be in equilibrium

Which would be one of the factors that increase aggregate demand?
a) An increase in personal income tax rates
b) An increase in the productivity of labor
c) An increase in consumer wealth
d) An increase in real interest rates

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