### Macroeconomics Practice Test - 10: Aggregate Supply, Aggregate Demand and Inflation

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1. When the aggregate supply schedule is positively sloped, continous increases in the nominal money supply, ceteris paribus, result in

1. No change in the price level and proportional increases in real output

2. No change in real output and proportional increases in the price level

3. An increase in the price level and real output

4. An increase in the price level and a decrease in real output

2. The Phillips curve shows

1. An inverse relationship between the real and nominal wage

2. An inverse relationship between the rate of inflation and the rate of unemployment

3. A positive relationship between the nominal wage and the rate of unemployment

4. A positive relationship between the rate of inflation and the nominal wage

3. The dynamic aggregate demand schedule shifts rightward when there is an increase in

1. The expected rate of inflation, ceteris paribus

2. The growth rate of the nominal money supply, ceteris paribus

3. The income tax rate, ceteris paribus

4. The inflatin rate, ceteris paribus

4. The equation for dynamic aggregate demand is $$y = {y_{ - 1}} + \beta \left( {M - \pi } \right) + \alpha f$$ Dynamic aggregate demand shifts to the

1. Right when $${y_{ - 1}}$$ increases, ceteris paribus

2. Right when $$\pi$$ increases, ceteris paribus

3. Right when $$\mathop M\limits^ \cdot$$ decreases, ceteris paribus

4. Left when $$\pi$$ decreases, ceteris paribus

5. Dynamic aggregate supply is

1. Positively sloped when $${\pi ^e} = f\left( {{\pi _{ - 1}}} \right)$$

2. Positively sloped when $$gW = f\left( \pi \right)$$

3. Vertical when $$gW = f\left( {{\pi _{ - 1}}} \right)$$

4. Vertical when $$gW = f\left( {{\pi ^e}} \right)$$

6. The equation for dynamic aggregate supply is $$\pi = {\pi ^e} + \lambda \left( {y - {y_e}} \right).$$ Dynamic aggregate supply shifts leftward, when

1. There is an increase in y, ceteris paribus

2. There is an increase in $${\pi ^e},$$ ceteris paribus

3. There is an increase in $$\pi ,$$ ceteris paribus

4. There is a decrease in $$\lambda ,$$ ceteris paribus

7. An economy is in inflationary equilibrium. An increase in the groth rate of the nominal money supply shifts

1. DAD rightward, establishing equilibrium at a higher rate of inflation and level of output

2. DAD and DAS rightward, establishing equilibrium at a higher rate of inflation and level of output

3. DAD and DAS leftward with a new equilibrium established at a future period at a higher rate of inflation and level of output

4. DAD to the right and DAS to the left with a new equilibrium established at a future period at a higher rate of inflation and no change in output

8. An economy is in inflationary equilibrium. A sustained increase in government spending shifts

1. DAD rightward for one period
3. DAD and DAS rightward permanently
4. DAD rightward, and a new equilibrium is established after successive periods at a higher rate of inflation

9. Disinflationary demand-management policies:

1. Achieve a lower rate of inflation without causing a decrease in output

2. Reduce output but have no initial effect on the inflation rate

3. Require an increase in government spending

4. Require a reduction in the growth rate of the nominal money supply

10. The economy is in inflationary equilibrium. A reduction in

1. Government spending permanently lowers the economy's rate of inflation

2. Nominal money supply growth lowers the inflation rate with no effect on output in the short run

3. Nominal money supply growth lowers the inflation rate and the level of output in the short run

4. Government spending lowers the rate of inflation with no effect on output in the short run