Question 1

In the short run,there is a positive relationship between:

Accepted Answer

A) inflation and unemployment. 
B) inflation and real GDP. 
C) the actual price level and the aggregate quantity supplied. 
D) the actual price level and unemployment. 
E) the actual price level and consumption spending. 
A) inflation and unemployment. 
B) inflation and real GDP. 
C) the actual price level and the aggregate quantity supplied. 
D) the actual price level and unemployment. 
E) the actual price level and consumption spending.

Question 2

In the long run,a decrease in aggregate demand will lead to a(n):

Accepted Answer

A) decrease in price and output levels. 
B) increase in price and output levels. 
C) increase in the price level and a decrease in output. 
D) decrease in the price level and an increase in output. 
E) decrease in the price level and no change in output. 
A) decrease in price and output levels. 
B) increase in price and output levels. 
C) increase in the price level and a decrease in output. 
D) decrease in the price level and an increase in output. 
E) decrease in the price level and no change in output.

Question 3

Which of the following does not influence the position of the long-run aggregate supply curve?

Accepted Answer

A) The quantity of raw materials available for production 
B) The quantity of capital used in production 
C) The quality of the labor force 
D) The actual price level 
E) The size of the labor force 
A) The quantity of raw materials available for production 
B) The quantity of capital used in production 
C) The quality of the labor force 
D) The actual price level 
E) The size of the labor force

Question 4

An adverse supply shock would shift:

Accepted Answer

A) only the short-run aggregate supply curve outward. 
B) only the long-run aggregate supply curve outward. 
C) only the long-run aggregate supply curve inward. 
D) only the short-run aggregate supply curve inward. 
E) both the long-run and the short-run aggregate supply curves inward. 
A) only the short-run aggregate supply curve outward. 
B) only the long-run aggregate supply curve outward. 
C) only the long-run aggregate supply curve inward. 
D) only the short-run aggregate supply curve inward. 
E) both the long-run and the short-run aggregate supply curves inward.

Question 5

Suppose the real wage remains unchanged between Year 1 and Year 2 but the nominal wage increases from $20 to $24.Based on this information,we can conclude that the price level has:

Accepted Answer

A) increased by 20 percent. 
B) increased by 25 percent. 
C) remained unchanged. 
D) decreased by 10 percent. 
E) decreased by 20 percent. 
A) increased by 20 percent. 
B) increased by 25 percent. 
C) remained unchanged. 
D) decreased by 10 percent. 
E) decreased by 20 percent.

Question 6

An economy's potential level of output can be altered by changes in:

Accepted Answer

A) the actual price level. 
B) the expected price level. 
C) aggregate demand. 
D) real GDP. 
E) its stock of capital. 
A) the actual price level. 
B) the expected price level. 
C) aggregate demand. 
D) real GDP. 
E) its stock of capital.

Question 7

The figure below shows the short-run aggregate demand and supply curves of an economy.In this figure,the distance between Y1 and Y2 represents:

Accepted Answer

A) an expansionary gap. 
B) a recessionary gap. 
C) a cost-push inflation. 
D) the natural rate of unemployment. 
E) the full employment output. 
A) an expansionary gap. 
B) a recessionary gap. 
C) a cost-push inflation. 
D) the natural rate of unemployment. 
E) the full employment output.

Question 8

When actual output increases the potential output,_____.

Accepted Answer

A) more resources become unemployed. 
B) prices remain constant. 
C) prices tend to increase. 
D) nominal GDP decreases. 
E) resource prices decrease. 
A) more resources become unemployed. 
B) prices remain constant. 
C) prices tend to increase. 
D) nominal GDP decreases. 
E) resource prices decrease.

Question 9

An adverse supply shock generally decreases the price level and the real GDP.

Accepted Answer

A) True 
 B)False

Question 10

During a particular year,nominal wages increased by 4 percent but real wages declined by 2 percent.This implies that the price level increased by 6 percent.

Accepted Answer

A) True 
 B)False

Question 11

When the economy is at its potential output level,which of the following is true?

Accepted Answer

A) The price level is higher than that expected by workers. 
B) The nominal wage is equal to the real wage. 
C) The unemployment rate is about 14 percent. 
D) The economy is producing its maximum sustainable output. 
E) The actual price level is less than the expected price level. 
A) The price level is higher than that expected by workers. 
B) The nominal wage is equal to the real wage. 
C) The unemployment rate is about 14 percent. 
D) The economy is producing its maximum sustainable output. 
E) The actual price level is less than the expected price level.

Question 12

The fact that some resource prices are fixed by contracts help explain why firms:

Accepted Answer

A) increase output in the short run when the price level increases. 
B) keep production levels constant in the short run when the price level decreases. 
C) sell output in the short run at fixed prices. 
D) increase output in the long run when the price level increases. 
E) decrease production when nominal wages fall in the long run. 
A) increase output in the short run when the price level increases. 
B) keep production levels constant in the short run when the price level decreases. 
C) sell output in the short run at fixed prices. 
D) increase output in the long run when the price level increases. 
E) decrease production when nominal wages fall in the long run.

Question 13

The figure below shows the short-run aggregate demand and supply curves of an economy.If the economy is currently producing at Y2,long-run equilibrium will most likely be established by a(n):

Accepted Answer

A) increase in short-run aggregate supply. 
B) decrease in short-run aggregate supply. 
C) decrease in potential output. 
D) increase in potential output. 
E) rightward shift of the aggregate demand curve. 
A) increase in short-run aggregate supply. 
B) decrease in short-run aggregate supply. 
C) decrease in potential output. 
D) increase in potential output. 
E) rightward shift of the aggregate demand curve.

Question 14

The figure below shows the determination of the equilibrium price level and real GDP in an aggregate demand-aggregate supply model.The movement shown in this figure is most likely to be caused by:

Accepted Answer

A) a decrease in the real wage. 
B) an increase in the economy's capital stock. 
C) the actions of a labor union. 
D) a decrease in consumer spending. 
E) an increase in labor productivity. 
A) a decrease in the real wage. 
B) an increase in the economy's capital stock. 
C) the actions of a labor union. 
D) a decrease in consumer spending. 
E) an increase in labor productivity.

Question 15

Stagflation is defined as:

Accepted Answer

A) decreased output accompanied by a higher price level. 
B) decreased output accompanied by a lower price level. 
C) increased output accompanied by a lower price level. 
D) increased output accompanied by a higher price level. 
E) stagnation in the rate of inflation. 
A) decreased output accompanied by a higher price level. 
B) decreased output accompanied by a lower price level. 
C) increased output accompanied by a lower price level. 
D) increased output accompanied by a higher price level. 
E) stagnation in the rate of inflation.

Question 16

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is currently producing Y1 level of output,_____.

Accepted Answer

A) potential output is less than actual output. 
B) there is zero unemployment. 
C) the price level will rise eventually. 
D) aggregate supply will fall to restore equilibrium. 
E) the actual unemployment rate is more than the natural rate. 
A) potential output is less than actual output. 
B) there is zero unemployment. 
C) the price level will rise eventually. 
D) aggregate supply will fall to restore equilibrium. 
E) the actual unemployment rate is more than the natural rate.

Question 17

If the price level increases by 5 percent and the nominal wage increases by 3.5 percent,the real wage will decrease by 1.5 percent.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is most likely to cause the long-run aggregate supply curve to shift rightward?

Accepted Answer

A) A rise in energy prices 
B) A drop in the actual price level 
C) An increase in the demand for leisure hours 
D) An increase in the level of investment spending that is less than the depreciation of the capital stock 
E) A technological breakthrough with widespread practical applications 
A) A rise in energy prices 
B) A drop in the actual price level 
C) An increase in the demand for leisure hours 
D) An increase in the level of investment spending that is less than the depreciation of the capital stock 
E) A technological breakthrough with widespread practical applications

Question 19

Which of the following if true would suggest that an expansionary gap exists in an economy?

Accepted Answer

A) Rapid inflation during a period when plant capacity utilization is below average​ 
B) A steady price level coupled with a 5 percent unemployment rate 
C) An unemployment rate below its natural rate and an unexpected increase in the consumer price index 
D) Sluggish growth in the rate of inflation and an exceptional increase in the Dow Jones average 
E) A modest increase in the number of new unemployment claims and a lower than expected price level 
A) Rapid inflation during a period when plant capacity utilization is below average​ 
B) A steady price level coupled with a 5 percent unemployment rate 
C) An unemployment rate below its natural rate and an unexpected increase in the consumer price index 
D) Sluggish growth in the rate of inflation and an exceptional increase in the Dow Jones average 
E) A modest increase in the number of new unemployment claims and a lower than expected price level

Question 20

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.The change in real GDP in this figure from Y1 to Y2 could have been caused by:

Accepted Answer

A) a government policy aimed at increasing demand. 
B) a change in weather conditions that led to worldwide crop failures. 
C) an attempt by key resource producers to monopolize supply. 
D) an increase in taxation or a decrease in government spending. 
E) an increase in labor productivity. 
A) a government policy aimed at increasing demand. 
B) a change in weather conditions that led to worldwide crop failures. 
C) an attempt by key resource producers to monopolize supply. 
D) an increase in taxation or a decrease in government spending. 
E) an increase in labor productivity.

In the short run,there is a positive relationship between:

In the long run,a decrease in aggregate demand will lead to a(n):

Which of the following does not influence the position of the long-run aggregate supply curve?

An adverse supply shock would shift:

Suppose the real wage remains unchanged between Year 1 and Year 2 but the nominal wage increases from $20 to $24.Based on this information,we can conclude that the price level has:

An economy's potential level of output can be altered by changes in:

The figure below shows the short-run aggregate demand and supply curves of an economy.In this figure,the distance between Y1 and Y2 represents:

When actual output increases the potential output,_____.

An adverse supply shock generally decreases the price level and the real GDP.

During a particular year,nominal wages increased by 4 percent but real wages declined by 2 percent.This implies that the price level increased by 6 percent.

When the economy is at its potential output level,which of the following is true?

The fact that some resource prices are fixed by contracts help explain why firms:

The figure below shows the short-run aggregate demand and supply curves of an economy.If the economy is currently producing at Y2,long-run equilibrium will most likely be established by a(n):

The figure below shows the determination of the equilibrium price level and real GDP in an aggregate demand-aggregate supply model.The movement shown in this figure is most likely to be caused by:

Stagflation is defined as:

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is currently producing Y1 level of output,_____.

If the price level increases by 5 percent and the nominal wage increases by 3.5 percent,the real wage will decrease by 1.5 percent.

Which of the following is most likely to cause the long-run aggregate supply curve to shift rightward?

Which of the following if true would suggest that an expansionary gap exists in an economy?

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.The change in real GDP in this figure from Y1 to Y2 could have been caused by:

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

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Exam 10: Aggregate Supply

In the short run,there is a positive relationship between:

In the long run,a decrease in aggregate demand will lead to a(n):

Which of the following does not influence the position of the long-run aggregate supply curve?

An adverse supply shock would shift:

Suppose the real wage remains unchanged between Year 1 and Year 2 but the nominal wage increases from $20 to $24.Based on this information,we can conclude that the price level has:

An economy's potential level of output can be altered by changes in:

The figure below shows the short-run aggregate demand and supply curves of an economy.In this figure,the distance between Y1 and Y2 represents:

When actual output increases the potential output,_____.

An adverse supply shock generally decreases the price level and the real GDP.

During a particular year,nominal wages increased by 4 percent but real wages declined by 2 percent.This implies that the price level increased by 6 percent.

When the economy is at its potential output level,which of the following is true?

The fact that some resource prices are fixed by contracts help explain why firms:

The figure below shows the short-run aggregate demand and supply curves of an economy.If the economy is currently producing at Y2,long-run equilibrium will most likely be established by a(n):

The figure below shows the determination of the equilibrium price level and real GDP in an aggregate demand-aggregate supply model.The movement shown in this figure is most likely to be caused by:

Stagflation is defined as:

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is currently producing Y1 level of output,_____.

If the price level increases by 5 percent and the nominal wage increases by 3.5 percent,the real wage will decrease by 1.5 percent.

Which of the following is most likely to cause the long-run aggregate supply curve to shift rightward?

Which of the following if true would suggest that an expansionary gap exists in an economy?

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.The change in real GDP in this figure from Y1 to Y2 could have been caused by:

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