61) An increase in the money wage rate leads to
A) an upward movement along the aggregate supply curve.
B) a downward movement along the aggregate supply curve.
C) a leftward shift of the aggregate supply curve.
D) a rightward shift of the aggregate supply curve.
E) a leftward shift of the aggregate demand curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
62) A rise in the money wage rate shifts the
A) AD curve rightward.
B) AD curve leftward.
C) AS curve rightward.
D) AS curve leftward.
E) potential GDP curve rightward.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
63) If the money wage rate increases, then the
A) aggregate supply curve shifts rightward.
B) potential GDP increases.
C) potential GDP decreases.
D) aggregate supply curve shifts leftward.
E) aggregate demand curve shifts leftward.
Skill: Level 3: Using models
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
21
64) ________ decreases aggregate supply.
A) An increase in potential GDP
B) An increase the quantity of capital
C) A rise in the price level
D) A rise in the money wage rate
E) A fall in the money wage rate
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
65) Which of the following shifts the aggregate supply curve leftward?
A) increase in potential GDP
B) increase in the money wage rate
C) increase in real GDP
D) decrease in the money price of oil
E) a fall in the price level
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
66) Which of the following statements is true?
A) An increase in potential GDP increases aggregate supply and shifts the AS curve
leftward.
B) A decrease in potential GDP decreases aggregate supply and shifts the AS curve
leftward.
C) An increase in the money wage rate shifts the AS curve rightward.
D) A fall in the price level shifts the AS curve leftward.
E) An increase in the money wage rate increases potential GDP.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
22
67) Which of the following shifts the aggregate supply curve leftward?
A) a decrease in potential GDP
B) a fall in the money wage rate
C) a decrease in the price level
D) a fall in the real wage rate
E) an increase in potential GDP
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
68) An increase in potential GDP ________ 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) has no efect on; does not shift the AS curve
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
69) If potential GDP increases, then the
A) aggregate supply curve shifts leftward.
B) aggregate supply curve shifts rightward.
C) real wage rate increases.
D) real wage rate falls.
E) aggregate demand curve shifts rightward.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
23
70) Which of the following shifts the aggregate supply curve rightward?
A) increase in potential GDP
B) increase in the money wage rate
C) increase in real GDP
D) increase in the money price of oil
E) increase in consumers’ incomes
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
71) If potential GDP increases,
A) aggregate supply does not change.
B) the quantity of aggregate supply decreases.
C) aggregate supply increases.
D) the price level rises.
E) the money wage rate must have fallen.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
72) When potential GDP increases, the potential GDP line ________, and the aggregate
supply curve ________.
A) shifts rightward; shifts rightward
B) shifts rightward; shifts leftward
C) shifts leftward; shifts rightward
D) shifts leftward; shifts leftward
E) shifts rightward; does not shift
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
24
73) An increase in ________ increases potential GDP and ________ aggregate supply.
A) technology; increases
B) technology; decreases
C) the money wage rate; increases
D) the money price of oil; decreases
E) the money wage rate; decreases
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
74) An increase in technology ________ potential GDP and ________ aggregate supply.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; does not change
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
75) A technological advance ________ potential GDP, ________ aggregate supply, and shifts
the aggregate supply curve ________.
A) increases; increases; leftward
B) decreases; decreases; leftward
C) increases; increases; rightward
D) decreases; increases; rightward
E) increases; decreases; leftward
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
76) The change in potential real GDP and aggregate supply shown in the graph above can
25
be a result of
A) an increase in the real wage rate.
B) an increase in the quantity of capital.
C) a decrease in the money wage rate.
D) a decrease in the money price of oil.
E) a fall in the price level.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
77) As the money wage rate increases,
A) potential GDP increases.
B) potential GDP decreases.
C) aggregate supply increases.
D) aggregate supply decreases.
E) aggregate supply and potential GDP do not change.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
78) The change relected in the above igure might be a result of
A) a decrease in the money wage rate.
B) a decrease in the real wage rate.
C) an increase in the money wage rate.
D) an increase in the real wage rate.
E) a rise in the price level.
Skill: Level 3: Using models
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
26
79) The change relected in the above igure might be a result of
A) a decrease in the quantity of capital.
B) an increase in the quantity of labor.
C) a rise in the money wage rate.
D) a decrease in the money prices of resources other than labor.
E) a fall in the price level.
Skill: Level 3: Using models
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
80) Moving along the potential GDP line, the money wage rate changes by the same
percentage as the change in the price level so that the real wage rate
A) increases.
B) decreases.
C) stays at the full-employment equilibrium level.
D) might either increase or decrease.
E) stays the same, though not necessarily at the full-employment equilibrium level.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
27
81) The aggregate supply curve is
A) upward sloping.
B) downward sloping.
C) a vertical line.
D) a horizontal line.
E) U-shaped.
Skill: Level 1: Deinition
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
82) When the price level falls,
A) the AS curve shifts rightward but the potential GDP line does not shift.
B) there is a movement upward along the AS curve.
C) the AS curve shifts leftward but the potential GDP line does not shift.
D) there is a movement downward along the AS curve.
E) both the potential GDP line and the AS curve shift leftward.
Skill: Level 1: Deinition
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
83) As the price level rises relative to costs and the real wage rate falls, proits ________ and
the number of irms in business ________.
A) increase; increases
B) increase; decreases
C) decrease; increases
D) decrease; decreases
E) do not change; do not change
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Relective thinking
28
84) When potential GDP increases,
A) the AS curve shifts rightward.
B) there is a movement up along the AS curve.
C) the AS curve shifts leftward.
D) there is a movement down along the AS curve.
E) there is neither a movement along nor a shift in the AS curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
85) If the money wage rate rises,
A) the AS curve shifts rightward.
B) there is a movement up along the AS curve.
C) the AS curve shifts leftward.
D) there is a movement down along the AS curve.
E) there is neither a movement along or a shift in the AS curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.1
Status: Old
AACSB: Analytical thinking
13.2 Aggregate Demand
1) A rise in the price level
A) decreases aggregate demand.
B) increases aggregate demand.
C) decreases the quantity of real GDP demanded.
D) increases the quantity of real GDP demanded.
E) has no efect on aggregate demand or on the quantity of real GDP demanded.
Skill: Level 1: Deinition
Section: Checkpoint 13.2
Status: Old
AACSB: Relective thinking
29
2) Which of the following statements is correct?
A) The price level does not afect the level of real GDP demanded.
B) The lower the price level, the greater the quantity of real GDP demanded.
C) The lower the price level, the more the aggregate demand curve shifts rightward.
D) The lower the price level, the more the aggregate demand curve shifts leftward.
E) The higher the price level, the more the aggregate demand curve shifts rightward.
Skill: Level 2: Using deinitions
Section: Checkpoint 13.2
Status: Old
AACSB: Relective thinking
3) The AD curve is a graph depicting the
A) relationship between the price level and the quantity of real GDP supplied.
B) business cycle during expansions and recessions.
C) relationship between the price level and the quantity of real GDP demanded.
D) relationship between the price level and potential GDP.
E) relationship between the aggregate quantity of real GDP demanded and the aggregate
quantity of real GDP supplied.
Skill: Level 1: Deinition
Section: Checkpoint 13.2
Status: Old
AACSB: Relective thinking
4) The aggregate demand curve illustrates the relationship between
A) the price level and the quantity of goods demanded by households, irms, government,
and foreigners.
B) the real wage rate and the hours of labor demanded by irms.
C) the price level and the potential quantity demanded of real GDP.
D) the price level and the quantity of goods supplied by irms.
E) the price level and the potential demand for real GDP.
Skill: Level 1: Deinition
Section: Checkpoint 13.2
Status: Old
AACSB: Relective thinking
30