Question 1

As the U.S.labor force grows and the nation's capital stock is augmented by investment, the

Accepted Answer

A)  price level will rise. 
B)  aggregate supply curve shifts inward. 
C)  aggregate supply curve shifts outward. 
D)  aggregate supply curve becomes steeper. 
A)  price level will rise. 
B)  aggregate supply curve shifts inward. 
C)  aggregate supply curve shifts outward. 
D)  aggregate supply curve becomes steeper.

Question 2

Figure 10-4
  
-In Figure 10-4, if full employment occurs at 5,000 and the price level is currently 130, then we can expect the

Accepted Answer

A)  aggregate supply curve to shift to the left until a new equilibrium is established at an output level of 4,000. 
B)  aggregate demand curve to shift to the right until a new equilibrium is established at an output level of 6,000. 
C)  the price level to fall to 110. 
D)  aggregate demand to shift to the left and aggregate supply to shift to the right until the price level reaches 130. 
A)  aggregate supply curve to shift to the left until a new equilibrium is established at an output level of 4,000. 
B)  aggregate demand curve to shift to the right until a new equilibrium is established at an output level of 6,000. 
C)  the price level to fall to 110. 
D)  aggregate demand to shift to the left and aggregate supply to shift to the right until the price level reaches 130.

Question 3

What is meant by an economy's self correcting mechanism? Explain the process through which self correcting mechanism reduces inflationary gap.

Accepted Answer

The economy's self correcting mechanism

Question 4

Figure 10-7
  
-Refer to Figure 10-7.Which of the diagrams in Figure 10-7 represents a period of economic growth and inflation?

Accepted Answer

A)  Panel (
A)  
B)  Panel (
B)  
C)  Panel (
C)  
D)  Panel (
D)  
A)  Panel (
A)  
B)  Panel (
B)  
C)  Panel (
C)  
D)  Panel (
D)

Question 5

If resource prices are fixed and the selling price rises, then

Accepted Answer

A)  profits will decrease. 
B)  profits will increase. 
C)  profits will remain constant. 
D)  both profits and output will decrease. 
A)  profits will decrease. 
B)  profits will increase. 
C)  profits will remain constant. 
D)  both profits and output will decrease.

Question 6

The aggregate supply curve shows for each price level the

Accepted Answer

A)  total amount of money supply at each price level. 
B)  amount of frictional unemployment that will occur. 
C)  amount of structural unemployment that will occur. 
D)  quantity of goods and services that businesses are willing to produce. 
A)  total amount of money supply at each price level. 
B)  amount of frictional unemployment that will occur. 
C)  amount of structural unemployment that will occur. 
D)  quantity of goods and services that businesses are willing to produce.

Question 7

Figure 10-1
  
-If the price level in Figure 10-1 were 100,

Accepted Answer

A)  firms would have to lower their prices. 
B)  inventories would be accumulating. 
C)  shortages of goods would exist. 
D)  aggregate quantity demanded would exceed aggregate quantity supplied. 
E)  both c and d would occur. 
A)  firms would have to lower their prices. 
B)  inventories would be accumulating. 
C)  shortages of goods would exist. 
D)  aggregate quantity demanded would exceed aggregate quantity supplied. 
E)  both c and d would occur.

Question 8

The aggregate supply curve slopes

Accepted Answer

A)  downward because firms can sell more at lower prices. 
B)  downward because firms can hire more workers at lower prices. 
C)  upward because firms want to hire more workers at higher wage levels. 
D)  upward because firms can hire labor at fixed wages for short-run periods. 
A)  downward because firms can sell more at lower prices. 
B)  downward because firms can hire more workers at lower prices. 
C)  upward because firms want to hire more workers at higher wage levels. 
D)  upward because firms can hire labor at fixed wages for short-run periods.

Question 9

The typical movement of the aggregate supply curve resulting from an increase in productivity is that it

Accepted Answer

A)  shifts inward and becomes flatter. 
B)  shifts inward. 
C)  shifts outward. 
D)  becomes flatter. 
E)  becomes steeper. 
A)  shifts inward and becomes flatter. 
B)  shifts inward. 
C)  shifts outward. 
D)  becomes flatter. 
E)  becomes steeper.

Question 10

The typical result of an adverse supply shock is

Accepted Answer

A)  falling output accompanied by accelerating inflation. 
B)  falling output accompanied by decelerating inflation. 
C)  rising output accompanied by accelerating inflation. 
D)  rising output accompanied by decelerating inflation. 
A)  falling output accompanied by accelerating inflation. 
B)  falling output accompanied by decelerating inflation. 
C)  rising output accompanied by accelerating inflation. 
D)  rising output accompanied by decelerating inflation.

Question 11

Describe the main explanations for the downward rigidity of wages in the modern macroeconomy.Evaluate their probability of being correct and important.

Accepted Answer

One reason is the existence of instituti

Question 12

As a result of the war in Afghanistan, the population of Afghanistan as well as their capital stock was reduced.This can be illustrated by aggregate supply curve

Accepted Answer

A)  shifting outward. 
B)  becoming flatter. 
C)  shifting inward. 
D)  becoming more elastic. 
A)  shifting outward. 
B)  becoming flatter. 
C)  shifting inward. 
D)  becoming more elastic.

Question 13

According to Baumol and Blinder, does the U.S.economy have a self-correcting mechanism?

Accepted Answer

A)  No, there is no such thing in reality. 
B)  Yes, and it works very rapidly. 
C)  Yes, and it works very slowly. 
D)  No, unless the aggregate supply curve is perfectly flat. 
A)  No, there is no such thing in reality. 
B)  Yes, and it works very rapidly. 
C)  Yes, and it works very slowly. 
D)  No, unless the aggregate supply curve is perfectly flat.

Question 14

Labor contracts often fix wages for more than one year.

Accepted Answer

A) True 
 B)False

Question 15

The aggregate supply curve slopes upward because as price rises the quantity of output supplied rises.

Accepted Answer

A) True 
 B)False

Question 16

Educational reforms that result in improved reading and math skills of high school graduates as they enter the labor force would do what to the aggregate supply curve?

Accepted Answer

A)  Shift it outward. 
B)  Shift it inward. 
C)  Move the economy up along the curve. 
D)  Move the economy down along the curve. 
A)  Shift it outward. 
B)  Shift it inward. 
C)  Move the economy up along the curve. 
D)  Move the economy down along the curve.

Question 17

An increase in the money wage rate will cause the aggregate supply curve to shift

Accepted Answer

A)  outward, which means the quantity supplied at any price level decreases. 
B)  outward, which means the quantity supplied at any price level increases. 
C)  inward, which means the quantity supplied at any price level increases. 
D)  inward, which means the quantity supplied at any price level decreases. 
A)  outward, which means the quantity supplied at any price level decreases. 
B)  outward, which means the quantity supplied at any price level increases. 
C)  inward, which means the quantity supplied at any price level increases. 
D)  inward, which means the quantity supplied at any price level decreases.

Question 18

If the price level falls, what will happen to the aggregate supply curve?

Accepted Answer

A)  It will shift outward. 
B)  It will shift inward. 
C)  Nothing. 
D)  It will get steeper. 
E)  It will get flatter. 
A)  It will shift outward. 
B)  It will shift inward. 
C)  Nothing. 
D)  It will get steeper. 
E)  It will get flatter.

Question 19

Wage decreases lead to a decrease in aggregate quantity supplied.

Accepted Answer

A) True 
 B)False

Question 20

In spite of the fact that unemployment rates were at a 30-year low in 1996-2000, the United States economy also experienced

Accepted Answer

A)  declining inflation. 
B)  balance of payments surpluses. 
C)  large budget deficits. 
D)  low growth. 
A)  declining inflation. 
B)  balance of payments surpluses. 
C)  large budget deficits. 
D)  low growth.

Exam 27: Bringing in the Supply Side: Unemployment and Inflation?

As the U.S.labor force grows and the nation's capital stock is augmented by investment, the

Figure 10-4 -In Figure 10-4, if full employment occurs at 5,000 and the price level is currently 130, then we can expect the

What is meant by an economy's self correcting mechanism? Explain the process through which self correcting mechanism reduces inflationary gap.

Figure 10-7 -Refer to Figure 10-7.Which of the diagrams in Figure 10-7 represents a period of economic growth and inflation?

If resource prices are fixed and the selling price rises, then

The aggregate supply curve shows for each price level the

Figure 10-1 -If the price level in Figure 10-1 were 100,

The aggregate supply curve slopes

The typical movement of the aggregate supply curve resulting from an increase in productivity is that it

The typical result of an adverse supply shock is

Describe the main explanations for the downward rigidity of wages in the modern macroeconomy.Evaluate their probability of being correct and important.

As a result of the war in Afghanistan, the population of Afghanistan as well as their capital stock was reduced.This can be illustrated by aggregate supply curve

According to Baumol and Blinder, does the U.S.economy have a self-correcting mechanism?

Labor contracts often fix wages for more than one year.

The aggregate supply curve slopes upward because as price rises the quantity of output supplied rises.

Educational reforms that result in improved reading and math skills of high school graduates as they enter the labor force would do what to the aggregate supply curve?

An increase in the money wage rate will cause the aggregate supply curve to shift

If the price level falls, what will happen to the aggregate supply curve?

Wage decreases lead to a decrease in aggregate quantity supplied.

In spite of the fact that unemployment rates were at a 30-year low in 1996-2000, the United States economy also experienced

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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