Question 1

The recessionary gap of the 1990s in Japan led to decreases in the price level.

Accepted Answer

A) True 
 B)False

Question 2

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

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 3

As the multiplier process is working on the demand side:

Accepted Answer

A) ​firms will meet the additional demand without raising prices 
B) ​​firms will meet the additional demand only by raising prices 
C) ​firms will not meet the additional demand 
D) ​the multiplier process will cease creating demand 
A) ​firms will meet the additional demand without raising prices 
B) ​​firms will meet the additional demand only by raising prices 
C) ​firms will not meet the additional demand 
D) ​the multiplier process will cease creating demand

Question 4

What causes the aggregate supply curve to have an upward slope in the short run, but a vertical slope in the long run?

Accepted Answer

When there is substantial unemployment i

Question 5

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 6

A company succumbs to a wage increase demand without any changes in the productivity of labor, price of the product, and the total output sold.Which of the following would happen?

Accepted Answer

A) Total revenue of the company will fall. 
B) Investment by the company will increase. 
C) Profit per unit of the product will fall. 
D) Average profit per unit will increase. 
A) Total revenue of the company will fall. 
B) Investment by the company will increase. 
C) Profit per unit of the product will fall. 
D) Average profit per unit will increase.

Question 7

Describe the main explanations for the downward rigidity of wages in the modern macroeconomy.Evaluate their probability of being correct and important.

Accepted Answer

One reason is the existence of instituti

Question 8

The aggregate supply curve slopes upward because firms

Accepted Answer

A) seek to maximize profits and output. 
B) normally can purchase inputs at fixed prices. 
C) employ technology, which is always fixed. 
D) purchase inputs whose prices rise as output rises. 
A) seek to maximize profits and output. 
B) normally can purchase inputs at fixed prices. 
C) employ technology, which is always fixed. 
D) purchase inputs whose prices rise as output rises.

Question 9

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.

Question 10

Demand-side changes explain everything about stagflation.

Accepted Answer

A) True 
 B)False

Question 11

How is it possible for the economy to have an inflationary 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 12

Supply-side economics concerns itself with the interaction between demand and supply, the price level, and real GDP.

Accepted Answer

A) True 
 B)False

Question 13

Using the concepts of aggregate demand and aggregate supply, explain how the economy reaches an equilibrium level of real GDP and price level.

Accepted Answer

Equilibrium of real GDP and price level

Question 14

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 15

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.

Question 16

A change in the aggregate price level moves the economy along a given aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 17

Wage increases are resisted by firms because they decrease profits.

Accepted Answer

A) True 
 B)False

Question 18

The self-correcting mechanism would be expected to be very rapid in an economy with

Accepted Answer

A) a large multiplier. 
B) flexible prices. 
C) rigid wages. 
D) high labor productivity. 
A) a large multiplier. 
B) flexible prices. 
C) rigid wages. 
D) high labor productivity.

Question 19

The investment and capital spending boom of the late 1990s most likely resulted in a(n)

Accepted Answer

A) increase in aggregate supply. 
B) decrease in aggregate supply. 
C) steeper aggregate supply curve. 
D) flatter aggregate supply curve. 
A) increase in aggregate supply. 
B) decrease in aggregate supply. 
C) steeper aggregate supply curve. 
D) flatter aggregate supply curve.

Question 20

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.

Exam 27: Bringing in the Supply Side: Unemployment and Inflation

The recessionary gap of the 1990s in Japan led to decreases in the price level.

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

As the multiplier process is working on the demand side:

What causes the aggregate supply curve to have an upward slope in the short run, but a vertical slope in the long run?

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

A company succumbs to a wage increase demand without any changes in the productivity of labor, price of the product, and the total output sold.Which of the following would happen?

Describe the main explanations for the downward rigidity of wages in the modern macroeconomy.Evaluate their probability of being correct and important.

The aggregate supply curve slopes upward because firms

Stagflation is the conjunction of

Demand-side changes explain everything about stagflation.

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

Supply-side economics concerns itself with the interaction between demand and supply, the price level, and real GDP.

Using the concepts of aggregate demand and aggregate supply, explain how the economy reaches an equilibrium level of real GDP and price level.

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

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

A change in the aggregate price level moves the economy along a given aggregate supply curve.

Wage increases are resisted by firms because they decrease profits.

The self-correcting mechanism would be expected to be very rapid in an economy with

The investment and capital spending boom of the late 1990s most likely resulted in a(n)

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

What Is Economics

The Economy: 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

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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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