Transcript Parkin_Macro_9e_clicker_ch10

Chapter 10: Aggregate Supply and Aggregate
Demand
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
Consider a BMW automobile plant. If the price
of BMWs increase by 10 percent and the
money wage rate and other costs ________,
there will be ________.
A. increase by 10 percent; an increase in
BMWs profits
B. do not change; an increase in BMW’s
production and profit
C. increase by 10 percent; an increase in
BMWs production
D. do not change; no change in production
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
The aggregate supply/aggregate demand
model is used to help understand all of the
following EXCEPT
A. inflation.
B. business cycle fluctuations.
C. the aggregate value of stock traded in the
stock market.
D. growth of potential GDP.
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
If the price level in Great Britain increases from
102 to 105 (holding all else constant), real
wealth ________ and there is a movement
________ along Great Britain’s aggregate
demand curve.
A.
B.
C.
D.
decreases; upward
increases; upward
decreases; downward
increases; downward
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
As world economies start to recover from the
2008 financial crisis and firms expect profits to
increase,
A. the price level in the U.S. will decrease as
firms increase investment.
B. the U.S. short-run aggregate supply curve
immediately will shift rightward.
C. investment will increase and there will be a
movement up along the aggregate demand
curve.
D. both investment and aggregate demand will
increase.
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
Inflation occurs over time as a result of
A. long-run aggregate supply increasing faster
than aggregate demand.
B. long-run aggregate supply increasing faster
than short-run aggregate supply.
C. decreases in aggregate demand.
D. aggregate demand increasing faster than
long-run aggregate supply.
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
An above full-employment equilibrium occurs
when
A. aggregate demand decreases while neither
the short-run nor long-run aggregate supply
changes.
B. short-run aggregate supply decreases while
neither aggregate demand nor long –run
aggregate supply changes.
C. the equilibrium level of real GDP is greater
than potential GDP.
D. the equilibrium level of real GDP is less than
potential GDP.
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
In the long-run equilibrium, an increase in the
quantity of capital leads to
A. an increase in the equilibrium price level and
an increase in equilibrium real GDP.
B. a decrease in the equilibrium price level and
an increase in equilibrium real GDP.
C. a decrease in the equilibrium price level, but
no change in equilibrium real GDP.
D. no change in the equilibrium price level, but
an increase in equilibrium real GDP.
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
Suppose that the economy begins at a long-run
equilibrium. Which of the following raises the
price level and decrease real GDP in the short
run?
A. a decrease in the quantity of money
B. an increase in the price of oil that decreases
aggregate supply
C. an increase in the stock of capital that
increases aggregate supply
D. an increase in government expenditures
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
In 2008, Japan’s economy suffered as world
economies slowed. If authorities in Japan
followed the monetarist viewpoint, ________ to
bring the economy back to full employment.
A. taxes would be decreased and the money
supply should be increased
B. nothing should be done
C. aggregate supply would shift leftward
D. the money supply would be kept growing at
a steady pace
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
In 2008, Germany passed a stimulus package
of $29 billion as its economy slowed. This policy
action follows the ________ to restore full
employment.
A. Keynesian viewpoint that supports increases
in federal government expenditure
B. Keynesian viewpoint that supports increases
in the money supply
C. monetarist viewpoint that supports increases
in expenditure by the federal government
D. new classical viewpoint that discourages the
use of expenditure by the federal
government
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.