Question : 13.5   Integrative Questions 1) An increase in the price level ________ : 1240534

13.5   Integrative Questions

1) An increase in the price level ________ the aggregate quantity supplied and ________ the aggregate quantity demanded.

A) increases; increases

B) increases; decreases

C) decreases; increases

D) decreases; decreases

E) does not change; decreases

2) The ________, the ________ is the quantity of real GDP supplied and the ________ is the quantity of real GDP demanded.

A) lower the price level; greater; smaller

B) higher the price level; greater; smaller

C) greater the demand for labor; smaller; greater

D) lower the supply of labor; greater; smaller

E) lower aggregate demand; greater; smaller

3) The aggregate supply curve shifts

A) rightward if potential GDP decreases.

B) rightward if the money wage rate falls.

C) rightward if the money wage rate rises.

D) leftward if potential GDP increases.

E) leftward if the aggregate demand curve shifts leftward.

4) During the late 1960s, U.S. defense spending increased as the United States fought in Vietnam. This increase in government expenditure on goods and services most likely created

A) a recessionary gap.

B) an inflationary gap.

C) a decrease in aggregate supply.

D) a decrease in aggregate demand because consumers’ expenditures decreased.

E) an increase in potential GDP.

5) A recession in the rest of the world means U.S.

A) aggregate supply decreases.

B) aggregate demand decreases.

C) potential GDP decreases.

D) exports increase.

E) potential GDP increases.

6) ________ increases potential GDP.

A) A decrease in the money wage rate

B) A recessionary gap

C) A recession

D) An increase in the amount of human capital

E) An increase in aggregate demand

7) Unemployment increases when

A) an inflationary gap is created.

B) potential GDP increases.

C) the government decreases its expenditure on goods and services.

D) aggregate demand increases.

E) aggregate supply increases.

8) In the late 1920s, the U.S. economy experienced a decrease in investment, which perhaps triggered the Great Depression. The decrease in investment

A) increased aggregate supply.

B) decreased aggregate supply.

C) increased aggregate demand.

D) decreased aggregate demand.

E) increased potential GDP.

9) When the macroeconomic equilibrium is such that real GDP exceeds potential real GDP, the economy is suffering from ________, and the government policy to eliminate this gap will ________ real GDP and ________ the price level.

A) an inflationary gap; increase; increase

B) a recessionary gap; decrease; decrease

C) an inflationary gap; increase; decrease

D) a recessionary gap; increase; decrease

E) an inflationary gap; decrease; decrease

10) When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from ________, and the government policy to eliminate this gap will ________ real GDP and ________ the price level.

A) a recessionary gap; decrease; decrease

B) an inflationary gap; increase; decrease

C) a recessionary gap; increase; increase

D) an inflationary gap; decrease; increase

E) a recessionary gap; decrease; increase