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

Figure 10-5   In Figure 10-5, which graph best illustrates the situation of an economy reacting to an inflationary gap through an increase in wage levels?

An inflationary gap exists when consumers

The aggregate supply curve is

Figure 10-7 Which of the diagrams in Figure 10-7 represents a decrease in consumer spending combined with a positive supply shock?

The principal way in which an economy self-corrects from an inflationary gap is through

If the economy experiences inflation and economic growth, this means that aggregate demand grows by more than aggregate supply.

If an economy is growing, but experiences no inflation, this means

A common error of business managers is to blame inflation on

How is it possible for the economy to have an inflationary gap?

The general shape of the aggregate supply curve is

The aggregate supply curve is shifted to the left ( inward) by

The aggregate supply curve shows the relationship between the ____ and the ____, holding all other factors constant.

One of the justifications of government stabilization policy is that it may

Inflationary GDP is the amount by which equilibrium real GDP falls short of the full employment level of GDP.

Figure 10-9 Figure 10-9 describes which of the following periods in the United States?

Stagflation is the conjunction of

In our modern economy, the adjustment process necessary to eliminate a recessionary gap is very rapid.

In 1986, OPEC countries increased their production of oil. This caused

Stagflation is the typical result of adverse shifts in the aggregate supply curve.

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 the aggregate supply curve