Question : 13.3   Explaining Economic Trends and Fluctuations 1) Macroeconomic equilibrium occurs : 1238118

13.3   Explaining Economic Trends and Fluctuations

1) Macroeconomic equilibrium occurs when

A) there is no inflation.

B) real GDP is equal to potential GDP.

C) the aggregate quantity demanded is equal to the aggregate quantity supplied.

D) the economy is fully employed.

E) the price level equals the potential price level.

2) A macroeconomic equilibrium occurs when the

A) quantity of real GDP demanded is greater than the quantity of real GDP supplied.

B) quantity of real GDP demanded is less than the quantity of real GDP supplied.

C) quantity of real GDP demanded equals the quantity of real GDP supplied even if they are not equal to potential GDP.

D) quantity of real GDP demanded equals the quantity of real GDP supplied and both equal potential GDP.

E) None of the above answers is correct.

3) If the economy is at macroeconomic equilibrium, then real GDP

A) must equal potential GDP.

B) must be less than potential GDP.

C) must be great than potential GDP.

D) might be equal to, greater than, or less than potential GDP

E) cannot be compared to potential GDP.

4) According to the AS-AD model,

A) the aggregate quantity supplied is typically greater than the aggregate quantity demanded, thereby leading to unemployment.

B) the equilibrium is where the AS curve crosses the AD curve, but the amount of real GDP at this point is not always equal to potential GDP.

C) the aggregate quantity demanded is typically greater than the aggregate quantity supplied, thereby leading to inflation.

D) the AS curve is always equal to potential GDP.

E) changes in the amount of potential GDP is the only factor that shifts both the aggregate supply curve and the aggregate demand curve.

5) In its macroeconomic equilibrium, the economy can be producing at

i.below full employment.

ii.full employment.

iii. above full employment.

A) i only

B) ii only

C) iii only

D) i or ii

E) i, ii, or iii

6) When the quantity of real GDP demanded exceeds the quantity of real GDP supplied, firms

A) increase production and prices.

B) decrease production and prices.

C) increase production and lower prices.

D) decrease production and increase prices.

E) do not change production because aggregate demand and potential GDP will adjust.

7) If the quantity of real GDP demanded is less than the quantity of real GDP supplied, then

A) the economy must be producing at potential GDP.

B) the price level falls and firms decrease production.

C) the price level falls and firms increase production.

D) the price level rises to restore the macroeconomic equilibrium.

E) aggregate demand changes to restore the equilibrium.

8) If the quantity of real GDP demanded is greater than the quantity of real GDP supplied, then

A) the economy must be producing at potential GDP.

B) the price level falls and firms decrease production.

C) the price level rises and firms increase production.

D) the price level falls to restore the macroeconomic equilibrium.

E) aggregate demand changes to restore equilibrium.

9) If real GDP is greater than potential GDP, then to restore equilibrium, ________ and the price level ________.

A) the aggregate demand curve shifts leftward; rises

B) the aggregate demand curve shifts rightward; falls

C) the aggregate supply curve shifts leftward; rises

D) the aggregate supply curve shifts rightward; falls

E) potential GDP increases; falls

10) If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP more than potential GDP, there is

A) a recessionary gap.

B) an inflationary gap.

C) a falling price level.

D) a rising real GDP.

E) a below-full employment equilibrium.