Question 1

The figure below shows equilibrium in an aggregate demand-aggregate supply model.In this figure,the shift from AS to AS' is likely to occur when:

Accepted Answer

A) the actual price level is higher than expected. 
B) the actual price level is lower than expected. 
C) the unemployment rate is lower than the natural rate. 
D) the actual output is more than the potential output. 
E) the aggregate demand curve intersects the short-run aggregate supply curve at the potential output. 
A) the actual price level is higher than expected. 
B) the actual price level is lower than expected. 
C) the unemployment rate is lower than the natural rate. 
D) the actual output is more than the potential output. 
E) the aggregate demand curve intersects the short-run aggregate supply curve at the potential output.

Question 2

Which of the following occurs when an expansionary gap is closed in the long run by the action of firms?

Accepted Answer

A) Output decreases,and the price level increases. 
B) Inflation decreases,and unemployment rises. 
C) Both the equilibrium output and the price level increase. 
D) Both the equilibrium output and the price level decrease. 
E) Inflation rises,and unemployment decreases 
A) Output decreases,and the price level increases. 
B) Inflation decreases,and unemployment rises. 
C) Both the equilibrium output and the price level increase. 
D) Both the equilibrium output and the price level decrease. 
E) Inflation rises,and unemployment decreases

Question 3

Which of these is not a beneficial supply shock?

Accepted Answer

A) An abundant harvest that increases food supplies 
B) The discovery of natural resources 
C) Reductions in business taxes 
D) Technological advances 
E) Establishment of the Occupational Safety and Health Administration (OSH
A)  
A) An abundant harvest that increases food supplies 
B) The discovery of natural resources 
C) Reductions in business taxes 
D) Technological advances 
E) Establishment of the Occupational Safety and Health Administration (OSH
A)

Question 4

Which of the following is most likely to increase long-run aggregate supply in an economy?

Accepted Answer

A) A decrease in the size of the labor force 
B) A deterioration in the quality of the labor force 
C) A reduction in the cost of using computers 
D) An increase in the price level 
E) An increase in aggregate demand 
A) A decrease in the size of the labor force 
B) A deterioration in the quality of the labor force 
C) A reduction in the cost of using computers 
D) An increase in the price level 
E) An increase in aggregate demand

Question 5

The international oil price hike by OPEC was an adverse supply shock faced by the U.S.in the 1970s.

Accepted Answer

A) True 
 B)False

Question 6

The figure given below depicts long-run equilibrium in the aggregate demand-aggregate supply model.Which of the following changes is depicted by the movement from Y1 to Y2?

Accepted Answer

A) An increase in long-run aggregate supply 
B) An increase in short-run aggregate supply 
C) A decrease in short-run aggregate supply 
D) A decrease in long-run aggregate supply 
E) An increase in the aggregate quantity demanded 
A) An increase in long-run aggregate supply 
B) An increase in short-run aggregate supply 
C) A decrease in short-run aggregate supply 
D) A decrease in long-run aggregate supply 
E) An increase in the aggregate quantity demanded

Question 7

The real wage is equal to the:

Accepted Answer

A) wage measured in terms of the quantity of goods and services it buys. 
B) wage measured in terms of the dollar value of the goods and services it buys. 
C) nominal wage net of taxes paid on wages. 
D) non-wage benefits received by workers. 
E) product of the nominal wage and the price level. 
A) wage measured in terms of the quantity of goods and services it buys. 
B) wage measured in terms of the dollar value of the goods and services it buys. 
C) nominal wage net of taxes paid on wages. 
D) non-wage benefits received by workers. 
E) product of the nominal wage and the price level.

Question 8

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.Which of these could have caused the movement shown in this figure?

Accepted Answer

A) A decrease in the size of the labor force 
B) An increase in the price level 
C) An increase in net investment 
D) An increase in autonomous consumption 
E) A decrease in autonomous consumption 
A) A decrease in the size of the labor force 
B) An increase in the price level 
C) An increase in net investment 
D) An increase in autonomous consumption 
E) A decrease in autonomous consumption

Question 9

Suppose an economy is initially in long-run equilibrium and it then experiences a supply shock in the form of exceptionally high energy prices.Which of these will be true in this economy?

Accepted Answer

A) The short-run aggregate supply curve will shift leftward,and the long-run supply curve will shift rightward. 
B) The short-run aggregate supply curve and the long-run supply curve will shift rightward. 
C) The short-run aggregate supply curve will not shift,and the long-run aggregate supply curve will shift rightward. 
D) The short-run aggregate supply curve will shift rightward,but the long-run aggregate supply curve will not shift. 
E) The short-run aggregate supply curve and the long-run supply curve will shift leftward. 
A) The short-run aggregate supply curve will shift leftward,and the long-run supply curve will shift rightward. 
B) The short-run aggregate supply curve and the long-run supply curve will shift rightward. 
C) The short-run aggregate supply curve will not shift,and the long-run aggregate supply curve will shift rightward. 
D) The short-run aggregate supply curve will shift rightward,but the long-run aggregate supply curve will not shift. 
E) The short-run aggregate supply curve and the long-run supply curve will shift leftward.

Question 10

An expansionary gap is equal to:

Accepted Answer

A) real GDP minus nominal GDP. 
B) nominal GDP minus real GDP. 
C) the actual short-run output minus potential output. 
D) the actual price level minus expected price level. 
E) the actual long-run real GDP minus actual short-run disposable income. 
A) real GDP minus nominal GDP. 
B) nominal GDP minus real GDP. 
C) the actual short-run output minus potential output. 
D) the actual price level minus expected price level. 
E) the actual long-run real GDP minus actual short-run disposable income.

Question 11

In the long run,a leftward shift of the aggregate demand curve will lead to a(n):

Accepted Answer

A) increase in equilibrium output but will not change the price level in an economy. 
B) increase in the price level as well as the equilibrium output in an economy. 
C) decrease in the price level but will leave the equilibrium output unchanged in an economy. 
D) increase in the price level but will leave the equilibrium output unchanged in an economy. 
E) decrease in the price level as well as the equilibrium output in an economy. 
A) increase in equilibrium output but will not change the price level in an economy. 
B) increase in the price level as well as the equilibrium output in an economy. 
C) decrease in the price level but will leave the equilibrium output unchanged in an economy. 
D) increase in the price level but will leave the equilibrium output unchanged in an economy. 
E) decrease in the price level as well as the equilibrium output in an economy.

Question 12

Given the aggregate demand curve,an increase in the supply of a productive resource will:

Accepted Answer

A) increase output but leave prices unchanged. 
B) decrease both output and prices. 
C) increase the price level and decrease output. 
D) decrease the price level and increase output. 
E) increase the price level but leave output unchanged. 
A) increase output but leave prices unchanged. 
B) decrease both output and prices. 
C) increase the price level and decrease output. 
D) decrease the price level and increase output. 
E) increase the price level but leave output unchanged.

Question 13

The short-run aggregate supply curve:

Accepted Answer

A) is positively sloped. 
B) is negatively sloped. 
C) is a vertical line parallel to the price level axis. 
D) is a horizontal line parallel to the output axis. 
E) is a ray from the origin with slope exactly equal to 1. 
A) is positively sloped. 
B) is negatively sloped. 
C) is a vertical line parallel to the price level axis. 
D) is a horizontal line parallel to the output axis. 
E) is a ray from the origin with slope exactly equal to 1.

Question 14

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.In this figure,the distance between points Y1 and Y2 represents:

Accepted Answer

A) an expansionary gap. 
B) a recessionary gap. 
C) the potential output. 
D) seasonal unemployment. 
E) structural unemployment. 
A) an expansionary gap. 
B) a recessionary gap. 
C) the potential output. 
D) seasonal unemployment. 
E) structural unemployment.

Question 15

The figure given below depicts long-run equilibrium in the aggregate demand-aggregate supply model.The movement from Y1 to Y2in this figure could have been caused by a:

Accepted Answer

A) decrease in the size of the labor force. 
B) decrease in the price level. 
C) positive level of net investment. 
D) increase in autonomous consumption. 
E) decrease in autonomous consumption. 
A) decrease in the size of the labor force. 
B) decrease in the price level. 
C) positive level of net investment. 
D) increase in autonomous consumption. 
E) decrease in autonomous consumption.

Question 16

Which of these is an advantage of long-term contracts in resource markets?

Accepted Answer

A) Long-term contracts decrease the duration of recessionary gaps. 
B) Long-term contracts reduce unemployment below its natural rate. 
C) Long-term contracts help avoid recession in an economy. 
D) Long-term contracts increase the flexibility of nominal wages. 
E) Long-term contracts reduce the average cost of negotiation. 
A) Long-term contracts decrease the duration of recessionary gaps. 
B) Long-term contracts reduce unemployment below its natural rate. 
C) Long-term contracts help avoid recession in an economy. 
D) Long-term contracts increase the flexibility of nominal wages. 
E) Long-term contracts reduce the average cost of negotiation.

Question 17

An expansionary gap in the short-run results in:

Accepted Answer

A) lower resource prices in the long run. 
B) unemployment in the long run. 
C) a recessionary gap in the long run. 
D) cost-push inflation in the long run. 
E) demand-pull inflation in the long run. 
A) lower resource prices in the long run. 
B) unemployment in the long run. 
C) a recessionary gap in the long run. 
D) cost-push inflation in the long run. 
E) demand-pull inflation in the long run.

Question 18

The slope of the short-run aggregate supply curve depends on how sharply:

Accepted Answer

A) the marginal cost of production rises as real GDP expands. 
B) the average cost of production rises as real GDP expands. 
C) real GDP increases as the price level rises. 
D) nominal GDP increases as the price level rises. 
E) product prices change as the price level rises. 
A) the marginal cost of production rises as real GDP expands. 
B) the average cost of production rises as real GDP expands. 
C) real GDP increases as the price level rises. 
D) nominal GDP increases as the price level rises. 
E) product prices change as the price level rises.

Question 19

The nominal cost per unit of output rises when production is pushed beyond an economy's potential output.

Accepted Answer

A) True 
 B)False

Question 20

Wage rates are typically flexible upward but "sticky" downward.

Accepted Answer

A) True 
 B)False

The figure below shows equilibrium in an aggregate demand-aggregate supply model.In this figure,the shift from AS to AS' is likely to occur when:

Which of the following occurs when an expansionary gap is closed in the long run by the action of firms?

Which of these is not a beneficial supply shock?

Which of the following is most likely to increase long-run aggregate supply in an economy?

The international oil price hike by OPEC was an adverse supply shock faced by the U.S.in the 1970s.

The figure given below depicts long-run equilibrium in the aggregate demand-aggregate supply model.Which of the following changes is depicted by the movement from Y1 to Y2?

The real wage is equal to the:

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.Which of these could have caused the movement shown in this figure?

Suppose an economy is initially in long-run equilibrium and it then experiences a supply shock in the form of exceptionally high energy prices.Which of these will be true in this economy?

An expansionary gap is equal to:

In the long run,a leftward shift of the aggregate demand curve will lead to a(n):

Given the aggregate demand curve,an increase in the supply of a productive resource will:

The short-run aggregate supply curve:

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.In this figure,the distance between points Y1 and Y2 represents:

The figure given below depicts long-run equilibrium in the aggregate demand-aggregate supply model.The movement from Y1 to Y2in this figure could have been caused by a:

Which of these is an advantage of long-term contracts in resource markets?

An expansionary gap in the short-run results in:

The slope of the short-run aggregate supply curve depends on how sharply:

The nominal cost per unit of output rises when production is pushed beyond an economy's potential output.

Wage rates are typically flexible upward but "sticky" downward.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 10: Aggregate Supply

The figure below shows equilibrium in an aggregate demand-aggregate supply model.In this figure,the shift from AS to AS' is likely to occur when:

Which of the following occurs when an expansionary gap is closed in the long run by the action of firms?

Which of these is not a beneficial supply shock?

Which of the following is most likely to increase long-run aggregate supply in an economy?

The international oil price hike by OPEC was an adverse supply shock faced by the U.S.in the 1970s.

The figure given below depicts long-run equilibrium in the aggregate demand-aggregate supply model.Which of the following changes is depicted by the movement from Y1 to Y2?

The real wage is equal to the:

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.Which of these could have caused the movement shown in this figure?

Suppose an economy is initially in long-run equilibrium and it then experiences a supply shock in the form of exceptionally high energy prices.Which of these will be true in this economy?

An expansionary gap is equal to:

In the long run,a leftward shift of the aggregate demand curve will lead to a(n):

Given the aggregate demand curve,an increase in the supply of a productive resource will:

The short-run aggregate supply curve:

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.In this figure,the distance between points Y1 and Y2 represents:

The figure given below depicts long-run equilibrium in the aggregate demand-aggregate supply model.The movement from Y1 to Y2in this figure could have been caused by a:

Which of these is an advantage of long-term contracts in resource markets?

An expansionary gap in the short-run results in:

The slope of the short-run aggregate supply curve depends on how sharply:

The nominal cost per unit of output rises when production is pushed beyond an economy's potential output.

Wage rates are typically flexible upward but "sticky" downward.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters