Question 1

The main reason that firms adjust their output when the price level changes is that

Accepted Answer

A) uncertainty causes a drop in output. 
B) taxes cause a supply-side reaction. 
C) their profit margins change. 
D) increased risks lead to a change in output. 
E) All of these responses are correct. 
A) uncertainty causes a drop in output. 
B) taxes cause a supply-side reaction. 
C) their profit margins change. 
D) increased risks lead to a change in output. 
E) All of these responses are correct. C

Question 2

Stagflation is the conjunction of

Accepted Answer

A) stagnation and recession. 
B) inflation and stagnation. 
C) depression and inflation. 
D) stagnation and deflation. 
A) stagnation and recession. 
B) inflation and stagnation. 
C) depression and inflation. 
D) stagnation and deflation. B

Question 3

Like the supply curve for individual goods and services, the aggregate supply curve slopes upward and to the right.

Accepted Answer

A) True 
 B)False  True

Question 4

Part of the normal aftermath of a period of excessive aggregate demand is

Accepted Answer

A) improvement in the quality of life. 
B) reflation. 
C) real GDP growth. 
D) stagflation. 
E) All of these responses are correct. 
A) improvement in the quality of life. 
B) reflation. 
C) real GDP growth. 
D) stagflation. 
E) All of these responses are correct.

Question 5

The relationship between the price level and the quantity of real GDP supplied is

Accepted Answer

A) full employment output. 
B) inflationary or recessionary gap. 
C) aggregate supply. 
D) supply-side equilibrium. 
A) full employment output. 
B) inflationary or recessionary gap. 
C) aggregate supply. 
D) supply-side equilibrium.

Question 6

An economic boom that creates an inflationary gap is usually followed later by

Accepted Answer

A) falling prices. 
B) a period of stagflation. 
C) an increase of potential GDP. 
D) an increase in aggregate supply. 
A) falling prices. 
B) a period of stagflation. 
C) an increase of potential GDP. 
D) an increase in aggregate supply.

Question 7

The general shape of the aggregate supply curve is

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) vertical. 
D) horizontal. 
A) downward sloping. 
B) upward sloping. 
C) vertical. 
D) horizontal.

Question 8

Demand-side changes explain everything about stagflation.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following events will lead to an inward shift of the aggregate supply curve?

Accepted Answer

A) An increase in the price level 
B) An increase in consumer spending 
C) An increase in labor productivity 
D) An increase in wage rates 
A) An increase in the price level 
B) An increase in consumer spending 
C) An increase in labor productivity 
D) An increase in wage rates

Question 10

A decrease in the nominal wage will cause the aggregate supply curve to

Accepted Answer

A) shift outward.. 
B) shift inward. 
C) become flatter 
D) become steeper.. 
A) shift outward.. 
B) shift inward. 
C) become flatter 
D) become steeper..

Question 11

Higher wages mean higher production costs and lower profits at any given selling price.

Accepted Answer

A) True 
 B)False

Question 12

Recessionary gaps are associated with output below potential and high unemployment rates.

Accepted Answer

A) True 
 B)False

Question 13

A recession can be expected to reduce inflation in the economy if the recession is caused by a(n)

Accepted Answer

A) increase in aggregate demand. 
B) increase in aggregate supply. 
C) decrease in aggregate demand. 
D) decrease in aggregate supply. 
A) increase in aggregate demand. 
B) increase in aggregate supply. 
C) decrease in aggregate demand. 
D) decrease in aggregate supply.

Question 14

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

Question 15

Figure 10-6
​  
-In Figure 10-6, which graph best illustrates an autonomous increase in consumption spending?

Accepted Answer

A) (1) 
B) (2) 
C) (3) 
D) (4) 
A) (1) 
B) (2) 
C) (3) 
D) (4)

Question 16

The aggregate supply curve is shifted to the right (outward) by a decrease in the price of any input to the production process.

Accepted Answer

A) True 
 B)False

Question 17

The aggregate supply curve will shift to the left if

Accepted Answer

A) energy prices fall. 
B) technology and productivity increase in the economy. 
C) the capital stock of the economy increases. 
D) the money wage rate increases. 
A) energy prices fall. 
B) technology and productivity increase in the economy. 
C) the capital stock of the economy increases. 
D) the money wage rate increases.

Question 18

Over time, aggregate demand and aggregate supply grow by the same amount.

Accepted Answer

A) True 
 B)False

Question 19

Assume an economy with an upward-sloping aggregate supply curve and an MPC of 0.80.An increase in investment spending of $50 billion will most likely increase total income by

Accepted Answer

A) $200 billion. 
B) $40 billion. 
C) more than $200 billion. 
D) more than $50 billion but less than $250 billion. 
A) $200 billion. 
B) $40 billion. 
C) more than $200 billion. 
D) more than $50 billion but less than $250 billion.

Question 20

The Japanese economy has been consistently weak throughout the 1990s.This has caused a slight deflation, illustrating the

Accepted Answer

A) negligible cost of eliminating inflation. 
B) very slow operation of the economy's self-correcting mechanism. 
C) tendency of inflation to accelerate during recessions. 
D) rapidity with which inflation can be stopped. 
A) negligible cost of eliminating inflation. 
B) very slow operation of the economy's self-correcting mechanism. 
C) tendency of inflation to accelerate during recessions. 
D) rapidity with which inflation can be stopped.

Exam 26: Bringing in the Supply Side: Unemployment and Inflation

The main reason that firms adjust their output when the price level changes is that

Stagflation is the conjunction of

Like the supply curve for individual goods and services, the aggregate supply curve slopes upward and to the right.

Part of the normal aftermath of a period of excessive aggregate demand is

The relationship between the price level and the quantity of real GDP supplied is

An economic boom that creates an inflationary gap is usually followed later by

The general shape of the aggregate supply curve is

Demand-side changes explain everything about stagflation.

Which of the following events will lead to an inward shift of the aggregate supply curve?

A decrease in the nominal wage will cause the aggregate supply curve to

Higher wages mean higher production costs and lower profits at any given selling price.

Recessionary gaps are associated with output below potential and high unemployment rates.

A recession can be expected to reduce inflation in the economy if the recession is caused by a(n)

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?

Figure 10-6 ​ -In Figure 10-6, which graph best illustrates an autonomous increase in consumption spending?

The aggregate supply curve is shifted to the right (outward) by a decrease in the price of any input to the production process.

The aggregate supply curve will shift to the left if

Over time, aggregate demand and aggregate supply grow by the same amount.

Assume an economy with an upward-sloping aggregate supply curve and an MPC of 0.80.An increase in investment spending of $50 billion will most likely increase total income by

The Japanese economy has been consistently weak throughout the 1990s.This has caused a slight deflation, illustrating the

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

Filters

Figure 10-6 -In Figure 10-6, which graph best illustrates an autonomous increase in consumption spending?