Exam (elaborations) TEST BANK FOR Macroeconomics 10th Edition CHAPTER 10-15 Michael Parkin, Luke Armstrong, Barbara Moore and Mark Rush
... [Show More]
Contents
Chapter 10 Aggregate Supply and Aggregate Demand ................................................................. 1
Chapter 11 Expenditure Multipliers: The Keynesian Model ...................................................... 131
Chapter 12 U.S. Inflation, Unemployment, and Business Cycle ................................................ 263
Chapter 13 Fiscal Policy .................................................................................................................. 386
Chapter 14 Monetary Policy ........................................................................................................... 458
Chapter 15 International Trade Policy .......................................................................................... 524
Part 1 Review ........................................................................................................................................ 576
Part 2 Review ........................................................................................................................................ 583
Part 3 Review ........................................................................................................................................ 586
Part 4 Review ........................................................................................................................................ 591
Part 5 Review ........................................................................................................................................ 597
Chapter 10
Aggregate Supply and Aggregate Demand
1 Aggregate Supply
1) The supply of real GDP is a function of
A) the total expenditures of consumers, investors and government.
B) the sum of wages, salaries, corporate profits, rents and interest.
C) only the state of technology.
D) the quantities of labor, capital and the state of technology.
Answer: D
Topic: Aggregate Supply Fundamentals
Skill: Conceptual
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
2) The quantity of real GDP supplied depends on the
A) level of aggregate demand.
B) quantity of capital, bonds, and stocks.
C) quantity of labor, the quantity of capital, and the state of technology.
D) price level, the unemployment rate, and the quantity of government expenditures on
goods and services.
Answer: C
Topic: Aggregate Supply Fundamentals
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
3) An aggregate supply curve depicts the relationship between
A) the price level and nominal GDP.
B) household expenditures and household income.
C) the price level and the aggregate quantity supplied.
D) the price level and the aggregate quantity demanded.
Answer: C
Topic: Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
4) In the macroeconomic short run,
A) actual real GDP may be less than or more than potential GDP.
B) the unemployment rate is zero.
C) by definition, the economy is always moving away from full employment.
D) actual real GDP always equals potential GDP.
Answer: A
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Modified 10th edition
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
2 Parkin · Macroeconomics, Tenth Edition
5) When talking about aggregate supply, it is necessary to
A) focus on the short run.
B) focus on the long run.
C) distinguish between long-run aggregate supply and short-run aggregate supply.
D) distinguish between long-run full employment and short-run full-employment.
Answer: C
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
6) We distinguish between the long-run aggregate supply curve and the short-run aggregate
supply curve. In the long run
A) technology is fixed but not in the short run.
B) the price level is constant but in the short run it fluctuates.
C) the aggregate supply curve is horizontal while in the short run it is upward sloping.
D) real GDP equals potential GDP.
Answer: D
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
7) In the macroeconomic long run,
A) GDP always is below potential GDP.
B) there is full employment with no unemployment.
C) output always is above potential GDP.
D) there is full employment and real GDP is equal to potential GDP.
Answer: D
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
8) In the macroeconomic long run,
A) real GDP equals potential GDP.
B) the economy is at full employment.
C) regardless of the price level, the economy is producing at potential GDP.
D) All of the above are correct.
Answer: D
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
Chapter 10 Aggregate Supply and Aggregate Demand 3
9) In the long-run
A) the aggregate supply curve is upward sloping.
B) real GDP is equal to potential GDP.
C) aggregate supply depends on the price level.
D) All of the above answers are correct.
Answer: B
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
10) The long-run aggregate supply (LAS) curve
A) has a positive slope.
B) has a negative slope.
C) is vertical.
D) is horizontal.
Answer: C
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
11) When the labor market is int full employment,
A) real GDP equals potential GDP.
B) the price level is stable.
C) the price level equals potential prices.
D) the SAS curve is horizontal.
Answer: A
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Modified 10th edition
AACSB: Reflective Thinking
12) The long-run aggregate supply curve is vertical because
A) at full employment prices are stable.
B) there is no cyclical inflation.
C) potential GDP is independent of the price level.
D) the money wage rate increases faster than the price level.
Answer: C
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
4 Parkin · Macroeconomics, Tenth Edition
13) The long-run aggregate supply curve is
A) horizontal at the full employment price level.
B) vertical at the full employment level of real GDP.
C) upward sloping because of the effects of price level changes on real GDP.
D) the same as the short-run aggregate supply curve.
Answer: B
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
14) Which of the following statements is TRUE?
A) The long-run aggregate supply curve is upward sloping.
B) The long-run aggregate demand curve is upward sloping.
C) The short-run aggregate supply curve is vertical.
D) The long-run aggregate supply curve is vertical.
Answer: D
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
15) The long-run aggregate supply curve is ________ because along it, as prices rise, the money
wage rate ________.
A) vertical; falls
B) vertical; rises
C) upward sloping; falls
D) upward sloping; stays constant
Answer: B
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
16) The long-run aggregate supply curve illustrates the
A) relationship of the price level and real GDP when the economy is at full employment.
B) relationship of aggregate supply and aggregate demand.
C) amount of products producers offer at various prices when money wages and other
resource prices do not change.
D) surpluses, shortages and equilibrium level of GDP.
Answer: A
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Modified 10th edition
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
Chapter 10 Aggregate Supply and Aggregate Demand 5
17) The long-run aggregate supply curve is the relationship between the quantity of real GDP
supplied and ________ when ________.
A) the price level; real GDP equals potential GDP
B) real GDP demanded; the wage rate is constant
C) the price level; real GDP equals nominal GDP
D) real GDP demanded; the price level does not change
Answer: A
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
18) When the price level rises, the long-run aggregate supply curve ________.
A) shifts rightward
B) does not shift
C) slopes upward
D) shifts leftward
Answer: B
Topic: Long-Run Aggregate Supply Curve
Skill: Conceptual
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
19) For movements along the long-run aggregate supply curve,
A) potential GDP is dependent on the price level.
B) the prices of goods and services change while the prices of productive resources hold
steady.
C) the price level and the money wage rate change by the same percentage.
D) All of the above are correct.
Answer: C
Topic: Long-Run Aggregate Supply
Skill: Conceptual
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
20) The long-run aggregate supply curve shows the
A) maximum GDP the nation will ever produce.
B) full-employment level of real GDP.
C) level of real GDP associated with a constant price level.
D) level of output at which real GDP equals nominal GDP.
Answer: B
Topic: Long-Run Aggregate Supply
Skill: Conceptual
Question history: Modified 10th edition
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
6 Parkin · Macroeconomics, Tenth Edition
21) Which of the following is true about the long-run aggregate supply curve?
A) It is vertical at the level of potential GDP.
B) It shows the relationship between the price level and real GDP when the economy is at full
employment.
C) It does not shift in response to temporary changes in aggregate demand.
D) All of the above are true.
Answer: D
Topic: Long-Run Aggregate Supply
Skill: Conceptual
Question history: Modified 10th edition
AACSB: Reflective Thinking
22) Which of the following events will increase long-run aggregate supply?
A) an increase in the interest rate
B) an increase in resource prices
C) a decrease in expected profit
D) an advance in technology
Answer: D
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
Chapter 10 Aggregate Supply and Aggregate Demand 7
23) The curve labeled A in the above figure is a
A) short-run aggregate demand curve.
B) short-run aggregate supply curve.
C) long-run aggregate demand curve.
D) long-run aggregate supply curve.
Answer: D
Topic: Long-Run Aggregate Supply
Skill: Analytical
Question history: Previous edition, Chapter 10
AACSB: Analytical Skills
24) The curve labeled A in the above figure will shift rightward when
A) the price level falls.
B) technology increases.
C) population falls.
D) the price level rises.
Answer: B
Topic: Changes in Aggregate Supply, Technology
Skill: Analytical
Question history: Previous edition, Chapter 10
AACSB: Analytical Skills
Copyright © 2012 Pearson Education, Inc.
8 Parkin · Macroeconomics, Tenth Edition
25) The short-run aggregate supply curve
A) shows what each producer is willing and able to produce at each level of income holding
constant potential GDP and all resource prices.
B) shows the relationship between aggregate production and the price level holding constant
potential GDP and all resource prices.
C) becomes vertical if there is excess production capacity within the economy.
D) shows a negative relationship between the price level and real national income holding
constant potential GDP and all resource prices.
Answer: B
Topic: Short-Run Aggregate Supply
Skill: Recognition
Question history: Modified 10th edition
AACSB: Reflective Thinking
26) The short-run aggregate supply curve
A) is vertical.
B) has a negative slope.
C) has a positive slope.
D) is horizontal.
Answer: C
Topic: Short-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
27) The short-run aggregate supply curve is upward sloping because in the short run the
A) money wage rate changes but the price level does not.
B) price level changes but the money wage rate does not.
C) both the money wage rate and the price level change.
D) neither the money wage rate nor the price level can change.
Answer: B
Topic: Short-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
28) The positive relationship between short-run aggregate supply and the price level indicates that,
in the short run,
A) firms produce more output as the price level falls.
B) firms produce more output as the price level rises.
C) the money wage rate increases when moving along the short-run aggregate supply curve.
D) lower price levels are more profitable for firms.
Answer: B
Topic: Short-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
Chapter 10 Aggregate Supply and Aggregate Demand 9
29) Moving upward along the SAS results in a ________ in the price level and ________ in real GDP.
A) rise; an increase
B) rise; a decrease
C) fall; an increase
D) fall; a decrease
Answer: A
Topic: Short-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
30) The short-run aggregate supply curve is upward sloping because
A) a lower price level creates a wealth effect.
B) lower taxes motivate people to work more.
C) money wage rates do not immediately change when the price level changes.
D) most business firms operate with long-term contracts for output [Show Less]