ECN 211 – Macroeconomics Exam
Questions and Answers 100%
Pass
Refer to the figure above. Suppose the economy is producing at point A. Which
of the following best describes the adjustment back to the natural level of output?
A) Wages and input prices rise and the new equilibrium is point B
B) Aggregate supply increases and in the new equilibrium is point D
C) Aggregate demand decreases and the new equilibrium is point D
D) The economy will not adjust back to the natural level in this case
E) Wages and input prices fall and the new equilibrium is point D - CORRECT
ANSWER-A) Wages and input prices rise and the new equilibrium is point B
Feedback: When the economy is producing at A, in order to adjust back to the
natural level of output, we need to shift the aggregate supply curve to the left.
,Moving from P2 to P3, the input prices increase. One of the factors in shifting the
short-run aggregate supply curve is the wage rate. If the wage rate increases, then
the natural output decreases, thus the AS curve shifts to the left.
Which of the following would not lead to a decrease in aggregate demand and a
leftward shift in the AD curve?
A) An increase in interest rate
B) An appreciation of the domestic currency
C) An increase in domestic price level
D) All of the above would increase aggregate demand and shift the AD curve
leftward
E) A decrease in housing prices - CORRECT ANSWER-C) An increase in
domestic price level
Feedback: The change in the price doesn't shift the aggregate demand curve;
instead, it causes movement along the curve
The short-run consequence of an increase in the personal income tax levied on
households is best described by graph
, A) B
B) E
C) A
D) C
E) D
F) F - CORRECT ANSWER-D) C
Feedback: If the income tax levied on households increases, the income of
consumers will decrease. Based on the wealthy effect, it affects the element of "C",
which is consumer spending. If the consumers' spending decreases, then the real
GDP also decreases. It affects the aggregate demand and has nothing to do with
the supply curve. As a result, the aggregate demand curve shifts to the left.
Refer to the figure above. Which of the following would cause a movement from
point B to C?
A) A decrease in the wage rate
B) An increase in value of household stock portfolios
C) An increase in the price of energy, an input in production
D) A decrease in the personal income tax rate
Questions and Answers 100%
Pass
Refer to the figure above. Suppose the economy is producing at point A. Which
of the following best describes the adjustment back to the natural level of output?
A) Wages and input prices rise and the new equilibrium is point B
B) Aggregate supply increases and in the new equilibrium is point D
C) Aggregate demand decreases and the new equilibrium is point D
D) The economy will not adjust back to the natural level in this case
E) Wages and input prices fall and the new equilibrium is point D - CORRECT
ANSWER-A) Wages and input prices rise and the new equilibrium is point B
Feedback: When the economy is producing at A, in order to adjust back to the
natural level of output, we need to shift the aggregate supply curve to the left.
,Moving from P2 to P3, the input prices increase. One of the factors in shifting the
short-run aggregate supply curve is the wage rate. If the wage rate increases, then
the natural output decreases, thus the AS curve shifts to the left.
Which of the following would not lead to a decrease in aggregate demand and a
leftward shift in the AD curve?
A) An increase in interest rate
B) An appreciation of the domestic currency
C) An increase in domestic price level
D) All of the above would increase aggregate demand and shift the AD curve
leftward
E) A decrease in housing prices - CORRECT ANSWER-C) An increase in
domestic price level
Feedback: The change in the price doesn't shift the aggregate demand curve;
instead, it causes movement along the curve
The short-run consequence of an increase in the personal income tax levied on
households is best described by graph
, A) B
B) E
C) A
D) C
E) D
F) F - CORRECT ANSWER-D) C
Feedback: If the income tax levied on households increases, the income of
consumers will decrease. Based on the wealthy effect, it affects the element of "C",
which is consumer spending. If the consumers' spending decreases, then the real
GDP also decreases. It affects the aggregate demand and has nothing to do with
the supply curve. As a result, the aggregate demand curve shifts to the left.
Refer to the figure above. Which of the following would cause a movement from
point B to C?
A) A decrease in the wage rate
B) An increase in value of household stock portfolios
C) An increase in the price of energy, an input in production
D) A decrease in the personal income tax rate
