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

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

Figure 10-1 -If the price level in Figure 10-1 were 120,

An economist who claims that an increase in government spending would result mainly in a higher price level believes the economy is operating where

Equilibrium GDP in excess of potential GDP eventually will cause the aggregate

The aggregate supply curve shows how much the nation's businesses are willing and able to produce at each price level.

If aggregate demand is $2,000 billion and aggregate supply is $2,300 billion, the price level will rise.

When OPEC cut energy production in 1973, the aggregate supply curve shifted outward.

If the MPC of an economy is .90 and the economy has a horizontal aggregate supply curve, then an increase in investment spending of $50 million will increase total income by

The post-World War II record shows that recessionary gaps may be long-lasting because ____ tends not to occur.

Many economists are in favor of increased immigration of adult foreigners who possess high levels of skills and education.Why?

The combination of high unemployment and high inflation is termed

The aggregate supply curve is

The major cost of production in the economy is

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

Suppose we observe an economy experience an economic expansion and high inflation.This means the expansion is attributed to

Input prices are fixed for a period of time and this causes firms to increase production as prices increase.

When inflation occurs, net exports will

A vertical aggregate supply curve increases the size of the multiplier effect.

Figure 10-1 -In Figure 10-1, what is the equilibrium level of real GDP and equilibrium price?

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