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ECON-1012-B-Introduction to Macroeconomics

ECON-1012-B-Introduction to Macroeconomics

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Short Description: A line graph of price level versus real G D P. Long Description: The vertical axis is labelled, price level (G D P deflator, 20 12 = 100) and ranges from 60 to 110 in increments of 10 with a kink near the origin. The horizontal axis is labelled, real G D P (billions of 20 12 dollars) and ranges from 450 to 700 in increments of 50 with a kink near the origin. The line for S A S is a concave up curve that slopes upward from the lower left corner to the upper right corner passing through the points (475, 60), (550, 70), and (600, 80). The line for A D slopes downward from the upper left corner to the lower right corner, passing through the points (550, 90), (600, 80), and (650, 70). The line for L A S is a vertical line from the point (550, 0) on the horizontal axis passing through the points (550, 70) and (550, 90).

Refer to Figure 10.3.2, which shows the AS-AD model. When this economy is in short-run macroeconomic equilibrium, which of the following situations occurs?

Equilibrium real GDP equals potential GDP.

Equilibrium real GDP exceeds potential GDP by $50 billion.

Equilibrium real GDP exceeds potential GDP by $25 billion.

Potential GDP exceeds equilibrium real GDP by $50 billion.

Potential GDP exceeds equilibrium real GDP by $25 billion.

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Which of the following situations arises when the actual unemployment rate is equal to the natural unemployment rate?

The short-run aggregate supply curve is vertical.

The inflation rate is zero.

The long-run aggregate supply curve is upward sloping.

The money wage rate will rise.

The economy is operating at potential GDP.

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Which of the following statements about the macroeconomy is not the idea of John Keynes?

Expectations are the most significant influence on aggregate demand.

Technological change is the most significant influence on both aggregate demand and aggregate supply.

To achieve and maintain full employment, active help from fiscal policy and monetary policy is required.

The money wage rate is extremely sticky in the downward direction so there is no automatic mechanism for eliminating a recessionary gap.

Expectations are based on "animal spirits."

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Short Description: A set of four graph of price level versus real G D P. Long Description: The vertical axis of each graph is labelled, price level and the horizontal axis is labelled, real G D P. The graph are as follows.(a) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D right to their point of intersection.(b) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D at their point of intersection. (c) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D left to their point of intersection.(d) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D left to their point of intersection.

Refer to Figure 10.3.3, which shows the AS-AD model in which an economy is in the short-run macroeconomic equilibrium in graph (b). How would you expect the government to respond to its current macroeconomic equilibrium?

Pursue trade policies that reduce exports.

Increase government expenditure.

Do nothing except maintain the current equilibrium.

Cut government expenditure.

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Which of the following events does not change short-run aggregate supply?

a change in the full-employment quantity of labour

technological change

a change in expected future profits

a change in the money wage rate

an increase in the quantity of capital

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Compare the size of the multiplier in the short run and the long run.

In the long run, the multiplier effect depends on potential GDP.

The multiplier effect is larger in the long run.

The multiplier effect is zero in the short run.

In the short run, there is no multiplier effect.

The multiplier effect is zero in the long run.

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Which of the following events shifts the aggregate demand curve leftward?

an increase in taxes

an increase in the money wage rate

an increase in expected inflation

an increase in the price level

a decrease in the interest rate

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If real GDP exceeds potential GDP in an economy, which of the following situations describes the economy's equilibrium?

in long-run equilibrium

in a recessionary equilibrium

in an above full-employment equilibrium

in a below full-employment equilibrium

not in a short-run macroeconomic equilibrium

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If Canadian firms build new pipelines across Alberta, which of the following events will occur?

The quantity of Canadian real GDP demanded increases.

The quantity of Canadian real GDP demanded decreases.

Canadian aggregate demand increases.

Canadian aggregate demand decreases.

No change occurs to either the quantity of Canadian real GDP demanded or to Canadian aggregate demand.

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If the price level is fixed, which of the following events determines the amount by which the AD curve shifts?

The change in aggregate expenditure.

The change in induced expenditure.

The change in autonomous expenditure and the multiplier.

The change in the price level.

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