31) The quantity of real GDP supplied decreases if the price level ________ because it
________ proits.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) None of the above answers is correct because the AS curve is vertical so that the
quantity of real GDP supplied does not change when the price level changes.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
32) If proits are high because the price level rose,
A) it is likely the result of an increase in the real wage rate.
B) new businesses open and the quantity of real GDP supplied increases.
C) business failures rise and the quantity of real GDP supplied increases.
D) potential GDP must be decreasing.
E) the AS curve shifts leftward.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
33) When the price level rises, the quantity of real GDP supplied ________ because ________.
A) decreases; new businesses open
B) increases; new businesses open
C) decreases; businesses fail and have to shut their doors
D) increases; AS curve shifts rightward
E) increases; businesses fail and have to shut their doors
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: New
AACSB: Relective thinking
11
34) If the price level rises but the money wage rate does not, then irms will hire ________
labor and the quantity of real GDP supplied will ________.
A) more; increase
B) the same amount of; not change
C) less; decrease
D) more; not change
E) less; increase
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
35) It is proitable to hire more labor if the price level ________ and the money wage rate
________.
A) rises; falls
B) falls; rises
C) falls; does not change
D) does not change; rises
E) rises; rises by the same percentage
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
36) If the price level falls and the money wage rate does not change, some irms ________
and there is ________.
A) shut down; a leftward shift of the aggregate supply curve
B) start up; a rightward shift of the aggregate supply curve
C) shut down; a decrease in the quantity of real GDP supplied
D) shut down; a decrease in potential GDP
E) start up; an increase in potential GDP
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
12
37) When the price level rises and the money wage rate does not change,
A) the quantity of real GDP supplied increases as more businesses start up and potential
GDP does not change.
B) the quantity of real GDP supplied decreases as more businesses fail and potential GDP
does not change.
C) proits fall and more businesses fail.
D) existing businesses do not change their level of output.
E) the quantity of potential GDP increases because the quantity of real GDP supplied
increases.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
38) Moving along the aggregate supply curve,
A) the quantity of capital used increases.
B) only the price level changes.
C) technology advances.
D) the stock of human capital increases.
E) the real wage rate is constant.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
39) A rise in the price level produces a ________ the aggregate supply curve.
A) rightward shift of
B) movement downward along
C) leftward shift of
D) movement upward along
E) rightward shift of the aggregate supply curve and a movement downward along
Skill: Level 1: Deinition
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
13
40) A fall in the price level produces a ________ the aggregate supply curve.
A) rightward shift of
B) movement downward along
C) leftward shift of
D) movement upward along
E) rightward shift of the aggregate supply curve and a movement downward along
Skill: Level 1: Deinition
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
41) If the money wage rate does not change, a decrease in the price level will ________ the
real wage rate and ________ irms’ proit.
A) raise; decrease
B) raise; increase
C) lower; decrease
D) lower; increase
E) lower; not change
Skill: Level 1: Deinition
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
42) The money wage rate is constant when moving along
A) only the aggregate supply curve.
B) only the aggregate supply curve and the potential GDP line.
C) only the potential GDP line.
D) neither the aggregate supply curve nor the potential GDP line.
E) the aggregate supply curve, the potential GDP line, and the aggregate demand curve.
Skill: Level 1: Deinition
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
14
43) The aggregate supply curve slopes ________ because a ________ in the price level brings
a ________ in the real wage rate.
A) upward; rise; rise
B) downward; fall; rise
C) upward; rise; fall
D) upward; fall; fall
E) downward; rise; rise
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
44) Along the aggregate supply curve, the quantity of real GDP supplied increases when
the price level rises because
A) proits decrease.
B) the real wage rate falls.
C) the real wage rate rises.
D) the real wage rate and proits both fall.
E) the demand for the goods and services increases.
Skill: Level 1: Deinition
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
45) A fall in the price level brings a ________ in the real wage rate that ________ proits and
can lead to ________.
A) rise; reduces; irms going out of business
B) rise; reduces; new irms entering business
C) fall; increases; irms going out of business
D) rise; increases; new irms entering business
E) fall; decreases; new irms entering business
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
15
46) A rise in the price level brings a ________ in the real wage rate that ________ proits
which leads to ________ production.
A) rise; reduces; decreasing
B) rise; reduces; increasing
C) fall; increases; increasing
D) rise; increases; decreasing
E) fall; decreases; decreasing
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
47) A fall in the price level brings a ________ in the real wage rate that ________ proits
which leads to ________.
A) rise; reduces; irms restarting production
B) rise; reduces; irms temporarily shutting down
C) fall; increases; irms temporarily shutting down
D) rise; increases; irms restarting production
E) rise; increases; irms temporarily shutting down
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
48) Which of the following changes aggregate supply and shifts the aggregate supply
curve?
i. change in the price level
ii. change in potential GDP
iii. change in the money wage rate
A) i only
B) ii only
C) iii only
D) ii and iii
E) i, ii, and iii
Skill: Level 3: Using models
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
16
49) Changes in which of the following shifts the aggregate supply curve?
i. the price level
ii. the money wage rate
iii. potential GDP
A) i only
B) ii only
C) iii only
D) ii and iii
E) i, ii, and iii
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
50) An increase in the money wage rate ________ and an increase in the money prices of raw
materials ________.
A) shifts the AS curve rightward; shifts the AS curve rightward
B) shifts the AS curve leftward; shifts the AS curve leftward
C) shifts the AS curve rightward; shifts the AS curve leftward
D) shifts the AS curve leftward; shifts the AS curve rightward
E) shifts the AS curve leftward; does not shift the AS curve
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
51) Changes in which of the following do NOT shift the AS curve?
i. the price level
ii. potential GDP
iii. the money wage rate
A) i only
B) ii only
C) iii only
D) i and ii
E) i, ii, and iii
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
17
52) A change in the price level brings a ________ the aggregate supply curve, NOT a
________ the aggregate supply curve.
A) shift in; movement along
B) vertical displacement of; change in the slope of
C) movement along; shift in
D) change in the slope of; horizontal displacement of
E) shift in; change in the slope of
Skill: Level 1: Deinition
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
53) Which of the following changes aggregate supply and shifts the AS curve?
i. a change in the price of a major resource
ii. increases in the amount of capital
iii. a change in the money income of consumers
A) i only
B) ii only
C) iii only
D) i and ii
E) i, ii, and iii
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
54) If the costs of production decrease, there is
A) an increase in aggregate supply and the AS curve shifts rightward.
B) a decrease in aggregate supply and the AS curve shifts leftward.
C) an increase in the quantity of real GDP supplied and a movement up along the AS curve.
D) a decrease in the quantity of real GDP supplied and a movement down along the AS
curve.
E) an increase in aggregate supply and the AS curve shifts leftward.
Skill: Level 3: Using models
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
18
55) If the costs of production increase, there is
A) an increase in aggregate supply and the AS curve shifts rightward.
B) a decrease in aggregate supply and the AS curve shifts leftward.
C) an increase in the quantity of real GDP supplied and a movement up along the AS curve.
D) a decrease in the quantity of real GDP supplied and a movement down along the AS
curve.
E) a decrease in aggregate supply and the AS curve shifts rightward.
Skill: Level 3: Using models
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
56) Which of the following shifts the aggregate supply curve rightward?
i. The money wage rate rises.
ii. Potential GDP increases.
iii. Government expenditure on goods and services increases.
A) i only
B) ii only
C) iii only
D) ii and iii
E) i, ii, and iii
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
57) Which of the following best describes the efect on the aggregate supply curve if
political negotiations result in a substantial decrease in the price of oil?
A) The AS curve shifts rightward.
B) There is no change to the AS curve.
C) The AS curve does not shift but there is an upward movement along it.
D) The AS curve does not shift but there is a downward movement along it.
E) The AS curve shifts leftward.
Skill: Level 3: Using models
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
19
58) The aggregate supply curve shifts rightward when
A) potential GDP decreases.
B) the money wage rate falls.
C) income taxes increase.
D) government purchases increase.
E) the money wage rate rises.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
59) 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.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
60) A fall in the money wage rate ________ aggregate supply and ________.
A) decreases; shifts the AS curve rightward
B) increases; shifts the AS curve leftward
C) increases; shifts the AS curve rightward
D) decreases; shifts the AS curve leftward
E) does not change; does not shift the AS curve
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
20