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29 Aggregate Supply and Aggregate Demand CLICKER QUESTIONS 2

Checkpoint 29.1 Checkpoint 29.2 Checkpoint 29.3 Question 1 Question 4

Question 1 CHECKPOINT 29.1 When the price level falls, ____________. aggregate supply increases, but potential GDP does not change the quantity of real GDP supplied increases aggregate supply decreases, but potential GDP does not change the quantity of real GDP supplied decreases potential GDP and aggregate supply decrease Answer: D

Question 2 CHECKPOINT 29.1 When potential GDP increases, _______. the AS curve shifts rightward there is a movement up along the AS curve the AS curve shifts leftward there is a movement down along the AS curve there is neither a movement along nor a shift in the AS curve Answer: A

Question 3 CHECKPOINT 29.1 If the money wage rate rises, _______. the AS curve shifts rightward the quantity of real GDP supplied increases the AS curve shifts leftward the quantity of real GDP supplied decreases neither the quantity of real GDP supplied nor aggregate supply change Answer: C

CHECKPOINT 29.2 Question 4 The change in aggregate demand illustrated in the figure could have arisen because ____. the quantity of money increased foreign incomes decreased the government raised taxes the price level fell firms expected profit to fall in the future Answer: A

CHECKPOINT 29.2 Question 5 A change in any of the following factors except ____ changes aggregate demand. expectations about the future the money wage rate monetary and fiscal policy foreign income the foreign exchange rate Answer: B

CHECKPOINT 29.2 Question 6 When investment increases, the ____ in aggregate demand is ____ the change in investment. increase; greater than increase; smaller than increase; the same as decrease; the same as decrease; greater than Answer: C

CHECKPOINT 29.3 Question 7 If the quantity of real GDP supplied equals the quantity of real GDP demanded, then __________. nominal GDP must equal real GDP real GDP must equal potential GDP real GDP must be greater than potential GDP real GDP might be greater than, equal to, or less than potential GDP real GDP must be less than potential GDP Answer: D

CHECKPOINT 29.3 Question 8 If the economy is at full employment when investment increases, aggregate demand ____ and the economy is ________ of the business cycle. decreases; in the expansion phase increases; in the recession phase decreases; in the recession phase increases; moving toward the peak decreases; moving toward the trough Answer: D

CHECKPOINT 29.3 Question 9 The economy is at full employment. If aggregate demand increases, ______ gap arises. To adjust toward full employment, _____. an inflationary; the AS curve shifts leftward as the money wage rate rises an inflationary; the AD curve shifts leftward as prices rise an inflationary; potential GDP increases to close the gap a recessionary; the AS curve shifts leftward as the money wage rate falls a recessionary; the AS curve shifts leftward as the money wage rate rises Answer: A

CHECKPOINT 29.3 Question 10 If the price of oil rises, the _______, the price level ______, and real GDP _______. AD curve shifts rightward; rises; increases AS curve shifts leftward; rises; decreases AD curve and the AS curve shift leftward; rises; decreases AD curve and the AS curve shift rightward; rises; decreases AS curve shifts leftward; rises; increases Answer: B