Question 1

As long as the multiplier process is working, firms will meet additional demand without raising prices.

Accepted Answer

A) True 
 B)False

Question 2

Figure 10-3
 
In Figure 10-3, we would expect the aggregate supply curve in graph (b) to eventually

Accepted Answer

A)  shift to the right, eliminating the recessionary gap. 
B)  shift to the left, eliminating the inflationary gap. 
C)  become steeper in the upper portion, eliminating the inflationary gap. 
D)  become flatter in the upper portion, eliminating the recessionary gap. 
A)  shift to the right, eliminating the recessionary gap. 
B)  shift to the left, eliminating the inflationary gap. 
C)  become steeper in the upper portion, eliminating the inflationary gap. 
D)  become flatter in the upper portion, eliminating the recessionary gap.

Question 3

In the period from 1996 to 2000, the U.S. economy experienced the unusual combination of

Accepted Answer

A)  high unemployment and high inflation. 
B)  high unemployment and low inflation. 
C)  low unemployment and high inflation. 
D)  low unemployment and low inflation. 
A)  high unemployment and high inflation. 
B)  high unemployment and low inflation. 
C)  low unemployment and high inflation. 
D)  low unemployment and low inflation.

Question 4

For any given growth rate of aggregate supply, a faster growth rate of aggregate demand will lead to more inflation and faster growth of real output.

Accepted Answer

A) True 
 B)False

Question 5

The 2002-2008 OPEC price increases caused by conflict in the Middle East caused the aggregate

Accepted Answer

A)  demand curve to shift outward. 
B)  demand curve to shift inward. 
C)  supply curve to shift outward. 
D)  supply curve to shift inward. 
A)  demand curve to shift outward. 
B)  demand curve to shift inward. 
C)  supply curve to shift outward. 
D)  supply curve to shift inward.

Question 6

A higher expected price level would shift the short-run aggregate supply curve to the left, and a lower expected price level would shift the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 7

The years 2002 through 2007 can be described as a period of

Accepted Answer

A)  falling output accompanied by increasing inflation. 
B)  falling output accompanied by decreasing inflation. 
C)  rising output accompanied by increasing inflation. 
D)  rising output accompanied by decreasing inflation. 
A)  falling output accompanied by increasing inflation. 
B)  falling output accompanied by decreasing inflation. 
C)  rising output accompanied by increasing inflation. 
D)  rising output accompanied by decreasing inflation.

Question 8

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 9

Figure 10-1
 
In Figure 10-1, what is the equilibrium level of real GDP and equilibrium price?

Accepted Answer

A)  $6,000 billion real GDP and price level of 110 
B)  $5,000 billion real GDP and price level of 120 
C)  $5,000 billion real GDP and price level of 110 
D)  $7,500 billion real GDP and price level of 100 
A)  $6,000 billion real GDP and price level of 110 
B)  $5,000 billion real GDP and price level of 120 
C)  $5,000 billion real GDP and price level of 110 
D)  $7,500 billion real GDP and price level of 100

Question 10

When equilibrium GDP is below potential GDP, jobs are plentiful and unemployment is low.

Accepted Answer

A) True 
 B)False

Question 11

Economists generally assume that there is a short-run trade-off between

Accepted Answer

A)  output and employment. 
B)  inflation and employment. 
C)  deflation and unemployment. 
D)  inflation and unemployment. 
E)  output and growth. 
A)  output and employment. 
B)  inflation and employment. 
C)  deflation and unemployment. 
D)  inflation and unemployment. 
E)  output and growth.

Question 12

During 2008-2010, the U.S. economy showed signs of a(n)

Accepted Answer

A)  mild recession. 
B)  recessionary gap. 
C)  inflationary gap. 
D)  deflationary gap. 
A)  mild recession. 
B)  recessionary gap. 
C)  inflationary gap. 
D)  deflationary gap.

Question 13

Profit per unit can be expressed as price − cost per unit.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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

Question 15

Holding wages constant, any increase in productivity will decrease business costs, improve profitability, and encourage more production.

Accepted Answer

A) True 
 B)False

Question 16

Figure 10-3
 
When the economy represented in Figure 10-3 has completed the self-correcting adjustment process, the expenditure line in graph (a) will be

Accepted Answer

A)  flatter. 
B)  steeper. 
C)  higher. 
D)  lower. 
E)  unchanged. 
A)  flatter. 
B)  steeper. 
C)  higher. 
D)  lower. 
E)  unchanged.

Question 17

In response to the demands of environmentalists, large sections of timberlands are put off limits to logging. What effect will this have on 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 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

Table 10-1   In Table 10-1, if full employment occurs at $3,100 billion, then

Accepted Answer

A)  the economy experiences a recessionary gap of $150 billion. 
B)  the economy experiences a recessionary gap of $300 billion. 
C)  the economy experiences an inflationary gap of $150 billion. 
D)  the economy experiences an inflationary gap of $300 billion. 
A)  the economy experiences a recessionary gap of $150 billion. 
B)  the economy experiences a recessionary gap of $300 billion. 
C)  the economy experiences an inflationary gap of $150 billion. 
D)  the economy experiences an inflationary gap of $300 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

As long as the multiplier process is working, firms will meet additional demand without raising prices.

Figure 10-3 In Figure 10-3, we would expect the aggregate supply curve in graph (b) to eventually

In the period from 1996 to 2000, the U.S. economy experienced the unusual combination of

For any given growth rate of aggregate supply, a faster growth rate of aggregate demand will lead to more inflation and faster growth of real output.

The 2002-2008 OPEC price increases caused by conflict in the Middle East caused the aggregate

A higher expected price level would shift the short-run aggregate supply curve to the left, and a lower expected price level would shift the short-run aggregate supply curve to the right.

The years 2002 through 2007 can be described as a period of

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 10-1 In Figure 10-1, what is the equilibrium level of real GDP and equilibrium price?

When equilibrium GDP is below potential GDP, jobs are plentiful and unemployment is low.

Economists generally assume that there is a short-run trade-off between

During 2008-2010, the U.S. economy showed signs of a(n)

Profit per unit can be expressed as price − cost per unit.

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

Holding wages constant, any increase in productivity will decrease business costs, improve profitability, and encourage more production.

Figure 10-3 When the economy represented in Figure 10-3 has completed the self-correcting adjustment process, the expenditure line in graph (a) will be

In response to the demands of environmentalists, large sections of timberlands are put off limits to logging. What effect will this have on the aggregate supply curve?

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

Table 10-1 In Table 10-1, if full employment occurs at $3,100 billion, then

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

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

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 Us Economy

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