Chapter 11 Quiz

7/18/2019 Chapter 11 Quiz

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AP ECONOMICS: CHAPTER 11 QUIZ

1. The aggregate demand curve:A. is upsloping because a higher price level is necessary to make production profitable as production costs rise.B. is downsloping because production costs decline as real output increases.C. shows the amount of expenditures required to induce the production of each possible level of

real output.D. shows the amount of real output that will be purchased at each possible price level.

2. The aggregate demand curve is:A. vertical if full employment exists.B. horizontal when there is considerable unemployment in the economy.C. downsloping because of the interest-rate, real-balances, and foreign purchases effects.D. downsloping because production costs decrease as real output rises.

3. The interest-rate effect suggests that:A. a decrease in the supply of money will increase interest rates and reduce interest-sensitive

consumption and investment spending.B. an increase in the price level will increase the demand for money, reduce interest rates, anddecrease consumption and investment spending.C. an increase in the price level will increase the demand for money, increase interest rates, anddecrease consumption and investment spending.D. an increase in the price level will decrease the demand for money, reduce interest rates, andincrease consumption and investment spending.

4. The foreign purchases effect suggests that an increase in the U.S. price level relative to othercountries will:A. increase the amount of U.S. real output purchased.

B. increase U.S. imports and decrease U.S. exports.C. increase both U.S. imports and U.S. exports.D. decrease both U.S. imports and U.S. exports.

5. The determinants of aggregate demand:A. explain why the aggregate demand curve is downsloping.B. explain shifts in the aggregate demand curve.C. demonstrate why real output and the price level are inversely related.D. include input prices and resource productivity.

6. Which one of the following would not shift the aggregate demand curve?

A. a change in the price levelB. depreciation of the international value of the dollarC. a decline in the interest rate at each possible price levelD. an increase in personal income tax rates



7. If investment increases by $10 billion and the economy's MPC is .8, the aggregate demandcurve will shift:A. leftward by $50 billion at each price level.B. rightward by $10 billion at each price level.C. rightward by $50 billion at each price level.D. leftward by $40 billion at each price level.

8. The aggregate supply curve:A. is explained by the interest rate, real-balances, and foreign purchases effects.B. gets steeper as the economy moves from the top of the curve to the bottom of the curve.C. shows the various amounts of real output that businesses will produce at each price level.D. is downsloping because real purchasing power increases as the price level falls.

9. In the above diagram, a shift from AS1 to AS3might be caused by a(n):A. increase in productivity.

B. increase in the prices of imported resources.C. decrease in the prices of domestic resources.D. decrease in business taxes.

10. In the above diagram, a shift from AS1 to AS2might be caused by a(n):A. stricter government regulations.B. increase in the prices of imported resources.C. decrease in the prices of domestic resources.D. increase in business taxes.

11. In the above diagram, a shift from AS3 to AS2might be caused by an increase in:A. business taxes and government regulation.B. the prices of imported resources.C. the prices of domestic resources.D. productivity.



12. In the above diagram, a shift from AS2 to AS3might be caused by a(n):A. decrease in interest rates.B. increase in business taxes and costly government regulation.C. decrease in the prices of domestic resources.D. decrease in the price level.

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. Answer the following question(s) on the basis of this information.

13. Refer to the above information. The level of productivity is:A. 20.B. 10.C. 5.D. 2.

14. The per unit cost of production in the economy described above is:A. $.50.B. $1.

C. $2.D. $5.

15. If aggregate demand decreases, and as a result, real output and employment decline but the price level remains unchanged, it is most likely that:A. the money supply has declined.B. the price level is inflexible downward and a recession has occurred.C. cost-push inflation has occurred.D. productivity has declined.



16. Refer to the above table. Which of the following schedules constitutes aggregate demand inthis country?

A.

B.

C.

D.

17. Refer to the above table. If equilibrium real GDP is $31 billion, the equilibrium price levelwill be:A. 128.

B. 125.C. 122.D. 119.

18. Refer to the above table. If the amounts of GDP supplied at the price levels shown (indescending order) are $27, $25, $22, $18, and $13, the equilibrium price level will be:A. 128.B. 125.C. 122.D. 119.

19. Prices and wages tend to be:A. flexible both upward and downward.B. inflexible both upward and downward.C. flexible downward, but inflexible upward.D. flexible upward, but inflexible downward.

20. Given a fixed upsloping AS curve, a rightward shift of the AD curve will:A. cause cost push inflation.B. increase real output but not the price level.C. increase the price level but not real output.D. increase both the price level and real output.



KEY:

1. D2. C3. C4. B5. B6. A

7. C8. C9. B10. C11. D12. B13. D14. C15. B16. A17. C18. B19. D20. D

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Chapter 11 Quiz