CHAPTER 24 MACROECONOMICS
EXAM 2025 QUESTIONS AND ANSWERS
If the price level of what firms produce is rising across an economy, but the costs of production
are constant, then: - ANS higher profits will induce expanded production.
Melanie decided to save 20% of her annual earnings for 10 years so she would have a down
payment for a house. After 5 years, what change in the economy would cause an increase in
the purchasing power of the funds she has managed to save? - ANS deflation
When the economy of a country is operating close to its full capacity: - ANS cyclical
unemployment is close to zero.
Changes in the price level of the different components of aggregate demand are reflected in
the AD/ASAD/AS macroeconomic model by a ________________________. - ANS downward
sloping AD curve
As the aggregate price level in an economy rises, ____________________. - ANS interest
rates increase
What is the equilibrium output? - ANS Occurs when the aggregate demand and supply are
equal at the same price level
Aggregate supply curves are ________________________ for low levels of output, and
____________________________ for high levels of output. - ANS relatively flat; relatively
steep
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, In an AD/ASAD/AS diagram, __________________________ could explain a rise in cyclical
unemployment? - ANS a shift to the left in either AS or AD
When an economy's output increases and the price level decreases, the _________ curve has
shifted to the ____________. - ANS AS; right
The graph refers to a significant increase in individual income taxes, taking them to their
highest level in 50 years. Which of the following is likely to result? - ANS the economy will
experience lower economic growth
Potential GDP in the U.S. will be unaffected by ____________________. - ANS the
unemployment rate
Which of the following will have the greatest influence on the slope of the demand curve in a
single market model? - ANS substitute goods
Whether the economy is in a recession is illustrated in the AD/AS model by how close the
_____________________ is to the potential GDP line. - ANS equilibrium
The graph reflects a significant increase in world oil prices. What will the impact on aggregate
supply most likely lead to? - ANS an increase in input prices
Say's Law argues that a given ____________________ must create an equivalent
________________________ somewhere else in the economy. - ANS value of supply; value
of demand
_______________________ happens when the economy is producing at its potential and
unemployment is at the natural rate of unemployment. - ANS Full employment GDP
2 COPYRIGHT © 2025 SIRJOEL ALL RIGHTS RESERVED
EXAM 2025 QUESTIONS AND ANSWERS
If the price level of what firms produce is rising across an economy, but the costs of production
are constant, then: - ANS higher profits will induce expanded production.
Melanie decided to save 20% of her annual earnings for 10 years so she would have a down
payment for a house. After 5 years, what change in the economy would cause an increase in
the purchasing power of the funds she has managed to save? - ANS deflation
When the economy of a country is operating close to its full capacity: - ANS cyclical
unemployment is close to zero.
Changes in the price level of the different components of aggregate demand are reflected in
the AD/ASAD/AS macroeconomic model by a ________________________. - ANS downward
sloping AD curve
As the aggregate price level in an economy rises, ____________________. - ANS interest
rates increase
What is the equilibrium output? - ANS Occurs when the aggregate demand and supply are
equal at the same price level
Aggregate supply curves are ________________________ for low levels of output, and
____________________________ for high levels of output. - ANS relatively flat; relatively
steep
1 COPYRIGHT © 2025 SIRJOEL ALL RIGHTS RESERVED
, In an AD/ASAD/AS diagram, __________________________ could explain a rise in cyclical
unemployment? - ANS a shift to the left in either AS or AD
When an economy's output increases and the price level decreases, the _________ curve has
shifted to the ____________. - ANS AS; right
The graph refers to a significant increase in individual income taxes, taking them to their
highest level in 50 years. Which of the following is likely to result? - ANS the economy will
experience lower economic growth
Potential GDP in the U.S. will be unaffected by ____________________. - ANS the
unemployment rate
Which of the following will have the greatest influence on the slope of the demand curve in a
single market model? - ANS substitute goods
Whether the economy is in a recession is illustrated in the AD/AS model by how close the
_____________________ is to the potential GDP line. - ANS equilibrium
The graph reflects a significant increase in world oil prices. What will the impact on aggregate
supply most likely lead to? - ANS an increase in input prices
Say's Law argues that a given ____________________ must create an equivalent
________________________ somewhere else in the economy. - ANS value of supply; value
of demand
_______________________ happens when the economy is producing at its potential and
unemployment is at the natural rate of unemployment. - ANS Full employment GDP
2 COPYRIGHT © 2025 SIRJOEL ALL RIGHTS RESERVED
