Question 1

Why is a period of stagflation part of the normal aftermath of a period of excessive aggregate demand?

Accepted Answer

When aggregate demand is excessive,the e

Question 2

One reason the oversimplified multiplier is incorrect is that inflation

Accepted Answer

A)  increases the multiplier by increasing investment spending. 
B)  increases the multiplier by increasing consumer spending. 
C)  decreases the multiplier by increasing net exports. 
D)  decreases the multiplier by decreasing consumer spending. 
A)  increases the multiplier by increasing investment spending. 
B)  increases the multiplier by increasing consumer spending. 
C)  decreases the multiplier by increasing net exports. 
D)  decreases the multiplier by decreasing consumer spending.

Question 3

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 4

Using aggregate demand and aggregate supply analysis,explain why increases in oil did not lead to stagflation in 2006-2008 but did lead to stagflation in the 1970s and early 1980s.

Accepted Answer

In the 1970s the increases in oil prices

Question 5

For most firms in the economy,the largest part of factor costs is the cost of

Accepted Answer

A)  labor. 
B)  capital. 
C)  property and machinery. 
D)  land and natural resources. 
A)  labor. 
B)  capital. 
C)  property and machinery. 
D)  land and natural resources.

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

A period of stagflation is the normal aftermath of a period of

Accepted Answer

A)  excess aggregate supply. 
B)  deficient aggregate demand. 
C)  excess aggregate demand. 
D)  high unemployment rates. 
A)  excess aggregate supply. 
B)  deficient aggregate demand. 
C)  excess aggregate demand. 
D)  high unemployment rates.

Question 8

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?

Accepted Answer

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

Question 9

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 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 10

As long as the aggregate supply curve is upward sloping,an increase in aggregate demand will increase

Accepted Answer

A)  real wealth. 
B)  price levels. 
C)  unemployment. 
D)  net exports. 
A)  real wealth. 
B)  price levels. 
C)  unemployment. 
D)  net exports.

Question 11

If the prices of inputs changes,what will happen to the aggregate supply curve?

Accepted Answer

A)  It does not move but the economy moves along the curve. 
B)  It depends on whether the input prices rise or fall. 
C)  The curve will become flatter or steeper depending on whether the input prices rise or fall. 
D)  It shifts inward or outward depending on whether the input prices rise or fall. 
A)  It does not move but the economy moves along the curve. 
B)  It depends on whether the input prices rise or fall. 
C)  The curve will become flatter or steeper depending on whether the input prices rise or fall. 
D)  It shifts inward or outward depending on whether the input prices rise or fall.

Question 12

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 13

A statement issued by the president's economic advisors stating that growth can continue without price increases indicates that they believe the relevant aggregate supply curve is

Accepted Answer

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

Question 14

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 15

Which of the following is evidence of an inflationary gap?

Accepted Answer

A)  very long lines at employment agencies 
B)  very short waiting times for product delivery 
C)  very low sales figures 
D)  very long search times for people looking for jobs 
E)  very low unemployment rates 
A)  very long lines at employment agencies 
B)  very short waiting times for product delivery 
C)  very low sales figures 
D)  very long search times for people looking for jobs 
E)  very low unemployment rates

Question 16

Why is it possible that the economy will not self-correct out of a recessionary gap?

Accepted Answer

Unlike the case of an inflationary gap,a

Question 17

If short-run equilibrium GDP is above potential GDP,prices will eventually rise.

Accepted Answer

A) True 
 B)False

Question 18

Wage decreases lead to a decrease in aggregate quantity supplied.

Accepted Answer

A) True 
 B)False

Question 19

Distinguish between a movement along the aggregate supply curve and a shift of the entire aggregate supply curve.What factors cause each to occur?

Accepted Answer

The aggregate supply curve is analogous

Question 20

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.

Why is a period of stagflation part of the normal aftermath of a period of excessive aggregate demand?

One reason the oversimplified multiplier is incorrect is that inflation

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?

Using aggregate demand and aggregate supply analysis,explain why increases in oil did not lead to stagflation in 2006-2008 but did lead to stagflation in the 1970s and early 1980s.

For most firms in the economy,the largest part of factor costs is the cost of

The aggregate supply curve shows for each price level the

A period of stagflation is the normal aftermath of a period of

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?

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?

As long as the aggregate supply curve is upward sloping,an increase in aggregate demand will increase

If the prices of inputs changes,what will happen to the aggregate supply curve?

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

A statement issued by the president's economic advisors stating that growth can continue without price increases indicates that they believe the relevant aggregate supply curve is

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

Which of the following is evidence of an inflationary gap?

Why is it possible that the economy will not self-correct out of a recessionary gap?

If short-run equilibrium GDP is above potential GDP,prices will eventually rise.

Wage decreases lead to a decrease in aggregate quantity supplied.

Distinguish between a movement along the aggregate supply curve and a shift of the entire aggregate supply curve.What factors cause each to occur?

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

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?

Why is a period of stagflation part of the normal aftermath of a period of excessive aggregate demand?

One reason the oversimplified multiplier is incorrect is that inflation

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?

Using aggregate demand and aggregate supply analysis,explain why increases in oil did not lead to stagflation in 2006-2008 but did lead to stagflation in the 1970s and early 1980s.

For most firms in the economy,the largest part of factor costs is the cost of

The aggregate supply curve shows for each price level the

A period of stagflation is the normal aftermath of a period of

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?

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?

As long as the aggregate supply curve is upward sloping,an increase in aggregate demand will increase

If the prices of inputs changes,what will happen to the aggregate supply curve?

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

A statement issued by the president's economic advisors stating that growth can continue without price increases indicates that they believe the relevant aggregate supply curve is

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

Which of the following is evidence of an inflationary gap?

Why is it possible that the economy will not self-correct out of a recessionary gap?

If short-run equilibrium GDP is above potential GDP,prices will eventually rise.

Wage decreases lead to a decrease in aggregate quantity supplied.

Distinguish between a movement along the aggregate supply curve and a shift of the entire aggregate supply curve.What factors cause each to occur?

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

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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