Question 1

If the selling price falls and input costs are fixed, profit margins will increase.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

A recessionary gap exists when aggregate demand is above the full employment level of output.

Accepted Answer

A) True 
 B)False

Question 5

Like the supply curve for individual goods and services, the aggregate supply curve slopes upward and to the right.

Accepted Answer

A) True 
 B)False

Question 6

The aggregate supply curve shows the relationship between ____ and ____, holding all other factors constant.

Accepted Answer

A) price level; quantity of real GDP supplied 
B) price level; supply of nominal GDP 
C) nominal GDP; price level of real GDP 
D) price level; amount of nominal GDP supplied 
A) price level; quantity of real GDP supplied 
B) price level; supply of nominal GDP 
C) nominal GDP; price level of real GDP 
D) price level; amount of nominal GDP supplied

Question 7

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

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 8

If aggregate quantity demanded exceeds aggregate quantity supplied, we can expect an unplanned

Accepted Answer

A) depletion of inventories, causing firms to raise prices. 
B) depletion of inventories, causing firms to lower prices. 
C) accumulation of inventories, causing firms to raise prices. 
D) accumulation of inventories, causing firms to lower prices. 
A) depletion of inventories, causing firms to raise prices. 
B) depletion of inventories, causing firms to lower prices. 
C) accumulation of inventories, causing firms to raise prices. 
D) accumulation of inventories, causing firms to lower prices.

Question 9

The 2006-2008 period can be accurately described as a time of stagflation.

Accepted Answer

A) True 
 B)False

Question 10

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 11

"Stagflation" refers to the unwelcome combination of

Accepted Answer

A) inflation and rising prices. 
B) deflation and unemployment. 
C) inflation and unemployment. 
D) inflation and expansion. 
A) inflation and rising prices. 
B) deflation and unemployment. 
C) inflation and unemployment. 
D) inflation and expansion.

Question 12

For a given growth rate in aggregate supply, slower growth in aggregate demand will lead to lower inflation.

Accepted Answer

A) True 
 B)False

Question 13

Many economists describe the 2007-2009 period in the United States as being a condition of a(n)

Accepted Answer

A) deflationary gap. 
B) recessionary gap. 
C) inflationary gap. 
D) reflationary gap. 
A) deflationary gap. 
B) recessionary gap. 
C) inflationary gap. 
D) reflationary gap.

Question 14

Aggregate supply grows over time because of growing consumer and government spending.

Accepted Answer

A) True 
 B)False

Question 15

The aggregate supply curve slopes

Accepted Answer

A) downward because firms can sell more at lower prices. 
B) downward because firms can hire more workers at lower prices. 
C) upward because firms want to hire more workers at higher wage levels. 
D) upward because firms can hire labor at fixed wages for short-run periods. 
A) downward because firms can sell more at lower prices. 
B) downward because firms can hire more workers at lower prices. 
C) upward because firms want to hire more workers at higher wage levels. 
D) upward because firms can hire labor at fixed wages for short-run periods.

Question 16

If money wages increase, the most likely result is 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 17

When economists refer to the economy's self-correcting mechanism, they are referring to the fact that the

Accepted Answer

A) economy will react automatically to a recessionary gap through inflation. 
B) economy will react automatically to an inflationary gap through deflation. 
C) economy will react automatically to an inflationary gap through inflation. 
D) simple multiplier is greater than the complex multiplier. 
A) economy will react automatically to a recessionary gap through inflation. 
B) economy will react automatically to an inflationary gap through deflation. 
C) economy will react automatically to an inflationary gap through inflation. 
D) simple multiplier is greater than the complex multiplier.

Question 18

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 19

An increase in the price level causes the aggregate supply curve to shift to another supply schedule.

Accepted Answer

A) True 
 B)False

Question 20

The price of imported oil decreased in 2001.How did this affect the aggregate supply curve?

Accepted Answer

A) It became steeper. 
B) It became flatter. 
C) It shifted inward. 
D) It shifted outward. 
A) It became steeper. 
B) It became flatter. 
C) It shifted inward. 
D) It shifted outward.

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

If the selling price falls and input costs are fixed, profit margins will increase.

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

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

A recessionary gap exists when aggregate demand is above the full employment level of output.

Like the supply curve for individual goods and services, the aggregate supply curve slopes upward and to the right.

The aggregate supply curve shows the relationship between ____ and ____, holding all other factors constant.

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

If aggregate quantity demanded exceeds aggregate quantity supplied, we can expect an unplanned

The 2006-2008 period can be accurately described as a time of stagflation.

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

"Stagflation" refers to the unwelcome combination of

For a given growth rate in aggregate supply, slower growth in aggregate demand will lead to lower inflation.

Many economists describe the 2007-2009 period in the United States as being a condition of a(n)

Aggregate supply grows over time because of growing consumer and government spending.

The aggregate supply curve slopes

If money wages increase, the most likely result is a(n)

When economists refer to the economy's self-correcting mechanism, they are referring to the fact that the

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?

An increase in the price level causes the aggregate supply curve to shift to another supply schedule.

The price of imported oil decreased in 2001.How did this affect the aggregate supply curve?

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

Filters

The aggregate supply curve shows the relationship between and , holding all other factors constant.