83) All of the following, except one, will contribute to economic growth.

Which is the
exception?

A) Increased levels of human capital.

B) Higher prices.
C) Increases in the capital stock.
D) Technological change.
E) Increased quantities of natural resources.

84) What are the four components of aggregate demand?

A) Consumption, investment, government spending and net exports.

B) Consumption, investment, productivity and net exports.
C) Consumption, investment, productivity and human capital.
D) LAS, AD, AS and the GDP deflator.

85) What effect will an increase in the Canadian price level have on trade?

A) It will increase the volume of both Canadian exports and imports.

B) It will decrease the volume of both Canadian exports and imports.
C) It will increase the volume of Canadian exports but decrease the volume of imports.
D) It will decrease the volume of Canadian exports but increase the volume of imports.

86) What is the domestic effect of an increase in the incomes of a country's major
international trading partners?

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 A) The aggregate demand curve will shift to the right.
B) The aggregate demand curve will shift to the left.
C) The aggregate supply curve will shift to the right.
D) The aggregate supply curve will shift to the left.

87) What is the slope of the aggregate supply curve, according to neoclassical economists?

A) Vertical, because prices tend to be inflexible.

B) Vertical at the capacity level of output in the economy.
C) Horizontal, because wages are flexible.
D) Horizontal, because prices are flexible.

88)

Refer to the figure above to answer this question. If the economy was initially at point a, then
what would a movement to point b suggest?

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 A) The movement could be the result of an increase in aggregate demand.
B) The movement could be the result of a decrease in prices.
C) The movement could be the result of a decrease in wages.
D) It is a movement from one full-employment level of Real GDP to another.
E) The movement could be the result of expansionary monetary policy.

89) What is the shape of the AS curve according to Keynesians?

A) Vertical, because prices tend to be inflexible.

B) Vertical, at the level of LAS.
C) Horizontal, because wages are inflexible.
D) Downward-sloping, because wages are inflexible.

90) Which of the following will provide a macroeconomy with prospects for sustained
growth in the future?

A) Increases in actual GDP.

B) Increases in long-run aggregate supply.
C) Increases in aggregate demand.
D) Unemployment at its natural rate.
E) Efficient use of all resources.

91) Which of the following is true of the concept of economic capacity?

A) It is equal to actual GDP.

B) It is very expensive for an economy to produce at a higher level of output.
C) It is impossible for an economy to produce at a higher level of output.
D) It is the amount firms prefer to produce at any price level.
E) It will always increase over time.

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92) Which of the following will most likely lead to long-term economic growth?

A) A decrease in the interest rate.

B) A decrease in the price level.
C) An increase in consumer spending.
D) A decrease in the quantity of labour resources.
E) An increase in the quality of labour resources.

93) Which of the following statements about the AS curve is true?

A) Real wages are constant along an AS curve.

B) The curve becomes steeper as it approaches Potential GDP.
C) The AS curve will shift when the price level increases.
D) It is usually a straight line.
E) It is a function of aggregate demand.

94) Which of the following is the result of the price level increasing while resource costs
remain constant?

A) A movement up the aggregate supply curve.

B) A movement down the aggregate supply curve.
C) A shift to the right of the aggregate supply curve.
D) A shift to the left of the aggregate supply curve.
E) A shift to the right of the long-run aggregate supply curve.

95) Explain how the substitution effect will affect aggregate demand when the price level
decreases.

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 A) The substitution effect will cause aggregate demand to increase.
B) The substitution effect will cause aggregate demand to decrease.
C) There is no substitution effect as there's no substitute for all goods.
D) There's no substitution effect if incomes are also rising.
E) There is a substitution effect that is smaller than the income effect, so it's uncertain
what will happen to aggregate demand.

96) Which of the following is an example of the real-balances effect?

A) Workers are better able to negotiate a wage increase when the price level increases.
B) Nominal interest rates will increase when the price level increases.
C) Consumption decreases because products are more expensive when the price level
increases.
D) Consumption decreases when the price level increases, because future prices are
expected to fall.
E) The real value of savings will decrease when the price level increases.

97) Which component of aggregate demand is most likely to change as a result of the
interest-rate effect?

A) Consumption.
B) Investment.
C) Government spending.
D) Exports.
E) Imports.

98) All of the following, except one, will shift the aggregate the demand to the right. Which
is the exception?

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