Question 1

Most economists agree that the economy will adjust to a recessionary gap, but the adjustment process

Accepted Answer

A) is rapid and destabilizing. 
B) is moderately quick, but not as rapid as necessary. 
C) takes place solely on the supply side. 
D) is very slow. 
A) is rapid and destabilizing. 
B) is moderately quick, but not as rapid as necessary. 
C) takes place solely on the supply side. 
D) is very slow.

Question 2

The existence of an inflationary gap would tend to benefit most

Accepted Answer

A) bankers. 
B) retired persons. 
C) unemployed workers. 
D) stock owners. 
A) bankers. 
B) retired persons. 
C) unemployed workers. 
D) stock owners.

Question 3

Figure 10-1
  
-If the price level in Figure 10-1 were 100,

Accepted Answer

A) firms would have to lower their prices. 
B) inventories would be accumulating. 
C) shortages of goods would exist. 
D) aggregate quantity demanded would exceed aggregate quantity supplied. 
E) both c and d would occur. 
A) firms would have to lower their prices. 
B) inventories would be accumulating. 
C) shortages of goods would exist. 
D) aggregate quantity demanded would exceed aggregate quantity supplied. 
E) both c and d would occur.

Question 4

The main reason that firms adjust their output when the price level changes is that

Accepted Answer

A) uncertainty causes a drop in output. 
B) taxes cause a supply-side reaction. 
C) their profit margins change. 
D) increased risks lead to a change in output. 
E) All of the above are correct. 
A) uncertainty causes a drop in output. 
B) taxes cause a supply-side reaction. 
C) their profit margins change. 
D) increased risks lead to a change in output. 
E) All of the above are correct.

Question 5

The concept of aggregate supply is a

Accepted Answer

A) fixed number. 
B) schedule. 
C) predetermined amount of output. 
D) All of the above are correct. 
A) fixed number. 
B) schedule. 
C) predetermined amount of output. 
D) All of the above are correct.

Question 6

The money wage rate has little effect on the supply curve.It mainly affects the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 7

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 8

A recession can be expected to reduce inflation in the economy if the recession is caused by a(n)

Accepted Answer

A) increase in aggregate demand. 
B) increase in aggregate supply. 
C) decrease in aggregate demand. 
D) decrease in aggregate supply. 
A) increase in aggregate demand. 
B) increase in aggregate supply. 
C) decrease in aggregate demand. 
D) decrease in aggregate supply.

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

Most economists agree that the economy will adjust to a recessionary gap, but the adjustment process

The existence of an inflationary gap would tend to benefit most

Figure 10-1 -If the price level in Figure 10-1 were 100,

The main reason that firms adjust their output when the price level changes is that

The concept of aggregate supply is a

The money wage rate has little effect on the supply curve.It mainly affects the aggregate demand curve.

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

A recession can be expected to reduce inflation in the economy if the recession is caused by a(n)

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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