Question 1

Economists do not agree on why wages are more rigid now than they were before World War II.

Accepted Answer

A) True 
 B)False

Question 2

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 3

The diminished employment prospects for the graduates of 2002 is most likely due to the existence of a(n)

Accepted Answer

A)  inflationary gap. 
B)  significant increase in real GDP. 
C)  shift of the aggregate demand curve outward. 
D)  recessionary gap. 
A)  inflationary gap. 
B)  significant increase in real GDP. 
C)  shift of the aggregate demand curve outward. 
D)  recessionary gap.

Question 4

How is it possible for the economy to have a recessionary gap?

Accepted Answer

A)  Equilibrium is at a GDP level below full employment. 
B)  Equilibrium is at a GDP level equal to full employment. 
C)  Equilibrium is at a GDP level above full employment. 
D)  GDP is rising at full employment. 
E)  GDP is falling at full employment. 
A)  Equilibrium is at a GDP level below full employment. 
B)  Equilibrium is at a GDP level equal to full employment. 
C)  Equilibrium is at a GDP level above full employment. 
D)  GDP is rising at full employment. 
E)  GDP is falling at full employment.

Question 5

Recessionary gaps usually lead to

Accepted Answer

A)  structural unemployment. 
B)  cyclical unemployment. 
C)  seasonal unemployment. 
D)  frictional unemployment. 
A)  structural unemployment. 
B)  cyclical unemployment. 
C)  seasonal unemployment. 
D)  frictional unemployment.

Question 6

Discuss some of the arguments that help explain why wages and prices rarely fall in a modern economy.

Accepted Answer

Institutional factors such as minimum wa

Question 7

Increases in productivity are caused by

Accepted Answer

A)  better education and training of the labor force. 
B)  higher levels of literacy. 
C)  improvements in technology. 
D)  All of the above are correct. 
A)  better education and training of the labor force. 
B)  higher levels of literacy. 
C)  improvements in technology. 
D)  All of the above are correct.

Question 8

Increases in the prices of imported energy in 2002-2008 caused the aggregate supply curve to shift inward.

Accepted Answer

A) True 
 B)False

Question 9

Resource prices are fixed for some period of time because

Accepted Answer

A)  some workers enter into long-term contracts. 
B)  firms purchase raw materials on set-price contracts. 
C)  many workers get pay increases only once a year. 
D)  All of the above are correct. 
A)  some workers enter into long-term contracts. 
B)  firms purchase raw materials on set-price contracts. 
C)  many workers get pay increases only once a year. 
D)  All of the above are correct.

Question 10

Figure 10-5
  
-In Figure 10-5,which graph best illustrates the situation of an economy near full employment that experiences an increase in autonomous consumer spending?

Accepted Answer

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

Question 11

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.

Question 12

Stabilization policy may be necessary to modify or counteract volatile changes in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 13

Figure 10-7
  
-Which of the panels in Figure 10-7 shows an economic expansion caused primarily by a change in aggregate demand?

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 14

The economy's self-correcting mechanism appears to be more efficient at curing

Accepted Answer

A)  recessionary gaps by reducing price levels. 
B)  inflationary gaps by reducing price levels. 
C)  unemployment by reducing wage levels. 
D)  inflationary gaps through inflation. 
A)  recessionary gaps by reducing price levels. 
B)  inflationary gaps by reducing price levels. 
C)  unemployment by reducing wage levels. 
D)  inflationary gaps through inflation.

Question 15

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.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Inflation reduces the multiplier effect by reducing consumers' wealth and purchasing power.

Accepted Answer

A) True 
 B)False

Question 19

Figure 10-5
  
-In Figure 10-5,which graph best illustrates the situation of an economy with high unemployment that experiences an increase in investment spending?

Accepted Answer

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

Question 20

What is the principal reason that economists give for the existence of deflationary and inflationary gaps?

Accepted Answer

A)  Wages are flexible in the short run. 
B)  Wages are flexible in the long run. 
C)  Wages are fixed in the long run. 
D)  Wages are fixed in the short run. 
A)  Wages are flexible in the short run. 
B)  Wages are flexible in the long run. 
C)  Wages are fixed in the long run. 
D)  Wages are fixed in the short run.

Economists do not agree on why wages are more rigid now than they were before World War II.

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

The diminished employment prospects for the graduates of 2002 is most likely due to the existence of a(n)

How is it possible for the economy to have a recessionary gap?

Recessionary gaps usually lead to

Discuss some of the arguments that help explain why wages and prices rarely fall in a modern economy.

Increases in productivity are caused by

Increases in the prices of imported energy in 2002-2008 caused the aggregate supply curve to shift inward.

Resource prices are fixed for some period of time because

Figure 10-5 -In Figure 10-5,which graph best illustrates the situation of an economy near full employment that experiences an increase in autonomous consumer spending?

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

Stabilization policy may be necessary to modify or counteract volatile changes in aggregate demand.

Figure 10-7 -Which of the panels in Figure 10-7 shows an economic expansion caused primarily by a change in aggregate demand?

The economy's self-correcting mechanism appears to be more efficient at curing

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

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

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

Inflation reduces the multiplier effect by reducing consumers' wealth and purchasing power.

Figure 10-5 -In Figure 10-5,which graph best illustrates the situation of an economy with high unemployment that experiences an increase in investment spending?

What is the principal reason that economists give for the existence of deflationary and inflationary gaps?

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

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Exam 10: Bringing in the Supply Side: Unemployment and Inflation?

Economists do not agree on why wages are more rigid now than they were before World War II.

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

The diminished employment prospects for the graduates of 2002 is most likely due to the existence of a(n)

How is it possible for the economy to have a recessionary gap?

Recessionary gaps usually lead to

Discuss some of the arguments that help explain why wages and prices rarely fall in a modern economy.

Increases in productivity are caused by

Increases in the prices of imported energy in 2002-2008 caused the aggregate supply curve to shift inward.

Resource prices are fixed for some period of time because

Figure 10-5 -In Figure 10-5,which graph best illustrates the situation of an economy near full employment that experiences an increase in autonomous consumer spending?

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

Stabilization policy may be necessary to modify or counteract volatile changes in aggregate demand.

Figure 10-7 -Which of the panels in Figure 10-7 shows an economic expansion caused primarily by a change in aggregate demand?

The economy's self-correcting mechanism appears to be more efficient at curing

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

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

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

Inflation reduces the multiplier effect by reducing consumers' wealth and purchasing power.

Figure 10-5 -In Figure 10-5,which graph best illustrates the situation of an economy with high unemployment that experiences an increase in investment spending?

What is the principal reason that economists give for the existence of deflationary and inflationary gaps?

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

Filters