Question 1

Figure 10-1
  
-If the price level in Figure 10-1 were 110,

Accepted Answer

A) inventories would be accumulating. 
B) firms would have to lower their prices. 
C) aggregate quantity demanded would equal aggregate quantity supplied. 
D) shortages of goods would exist. 
A) inventories would be accumulating. 
B) firms would have to lower their prices. 
C) aggregate quantity demanded would equal aggregate quantity supplied. 
D) shortages of goods would exist.

Question 2

In the period from 1996-2000, the United States economy experienced the unusual combination of

Accepted Answer

A) high unemployment and high inflation. 
B) high unemployment and low inflation. 
C) low unemployment and high inflation. 
D) low unemployment and low inflation. 
A) high unemployment and high inflation. 
B) high unemployment and low inflation. 
C) low unemployment and high inflation. 
D) low unemployment and low inflation.

Question 3

An increase in the money wage rate will cause the aggregate supply curve to shift

Accepted Answer

A) outward, which means the quantity supplied at any price level decreases. 
B) outward, which means the quantity supplied at any price level increases. 
C) inward, which means the quantity supplied at any price level increases. 
D) inward, which means the quantity supplied at any price level decreases. 
A) outward, which means the quantity supplied at any price level decreases. 
B) outward, which means the quantity supplied at any price level increases. 
C) inward, which means the quantity supplied at any price level increases. 
D) inward, which means the quantity supplied at any price level decreases.

Question 4

-In Table 10-1, if full employment occurs at $3,100 billion, then

Accepted Answer

A) the economy experiences a recessionary gap of $150 billion. 
B) the economy experiences a recessionary gap of $300 billion. 
C) the economy experiences an inflationary gap of $150 billion. 
D) the economy experiences an inflationary gap of $300 billion. 
A) the economy experiences a recessionary gap of $150 billion. 
B) the economy experiences a recessionary gap of $300 billion. 
C) the economy experiences an inflationary gap of $150 billion. 
D) the economy experiences an inflationary gap of $300 billion.

Question 5

The case for government stabilization policy is made more compelling if the

Accepted Answer

A) self-correcting mechanism works very slowly. 
B) self-correcting mechanism works too fast. 
C) value of the multiplier is very small. 
D) aggregate supply curve is very flat. 
A) self-correcting mechanism works very slowly. 
B) self-correcting mechanism works too fast. 
C) value of the multiplier is very small. 
D) aggregate supply curve is very flat.

Question 6

Aggregate supply can be thought of as

Accepted Answer

A) a fixed amount of output. 
B) unrelated to the price level. 
C) a schedule of output at different price levels. 
D) the volume of goods at the ends of the production possibilities curve. 
A) a fixed amount of output. 
B) unrelated to the price level. 
C) a schedule of output at different price levels. 
D) the volume of goods at the ends of the production possibilities curve.

Question 7

If the price level rises, what will happen to the level of real GDP supplied?

Accepted Answer

A) It will usually decrease. 
B) It will usually increase. 
C) Nothing. 
D) It will decrease at first and then increase. 
A) It will usually decrease. 
B) It will usually increase. 
C) Nothing. 
D) It will decrease at first and then increase.

Question 8

A shift outward of the aggregate supply curve could be caused by

Accepted Answer

A) higher import prices. 
B) lower import prices. 
C) energy shortages. 
D) rising wage rates. 
A) higher import prices. 
B) lower import prices. 
C) energy shortages. 
D) rising wage rates.

Question 9

As long as the multiplier process is working, firms will meet additional demand without raising prices.

Accepted Answer

A) True 
 B)False

Question 10

Figure 10-9
  
-Figure 10-9 describes which of the following periods in the U.S.?

Accepted Answer

A) 1930s 
B) 1973-1975 
C) late 1990s 
D) 2007-2009 
A) 1930s 
B) 1973-1975 
C) late 1990s 
D) 2007-2009

Question 11

Resource prices are fixed for some period of time because

Accepted Answer

A) some workers enter into long-term contracts. 
B) firms purchase raw materials on set-price contracts. 
C) many workers get pay increases only once a year. 
D) All of the above are correct. 
A) some workers enter into long-term contracts. 
B) firms purchase raw materials on set-price contracts. 
C) many workers get pay increases only once a year. 
D) All of the above are correct.

Question 12

At levels of output close to full employment, the aggregate supply curve is probably

Accepted Answer

A) very flat. 
B) very steep. 
C) sloped downward. 
D) perfectly elastic. 
A) very flat. 
B) very steep. 
C) sloped downward. 
D) perfectly elastic.

Question 13

Stabilization policy may be necessary to slow down the speed of the adjustment process.

Accepted Answer

A) True 
 B)False

Question 14

If the price level decreases, what will happen to the level of real GDP supplied?

Accepted Answer

A) It will usually decrease. 
B) It will usually increase. 
C) Nothing. 
D) It will decrease at first and then increase. 
A) It will usually decrease. 
B) It will usually increase. 
C) Nothing. 
D) It will decrease at first and then increase.

Question 15

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

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 16

When money wages rise, the most significant effect on the aggregate supply curve is that it

Accepted Answer

A) shifts outward. 
B) shifts inward. 
C) becomes flatter. 
D) becomes steeper. 
A) shifts outward. 
B) shifts inward. 
C) becomes flatter. 
D) becomes steeper.

Question 17

Figure 10-9
  
-Figure 10-9 illustrates a period of

Accepted Answer

A) economic growth and high inflation. 
B) economic growth and low inflation. 
C) economic recession and high inflation. 
D) economic recession and low inflation. 
A) economic growth and high inflation. 
B) economic growth and low inflation. 
C) economic recession and high inflation. 
D) economic recession and low inflation.

Question 18

If an economy is growing, but experiences no inflation, this means

Accepted Answer

A) aggregate demand increased, but aggregate supply did not. 
B) aggregate supply decreased, but aggregate demand did not. 
C) aggregate demand and aggregate supply increased by the same amount. 
D) aggregate demand and aggregate supply decreased by the same amount. 
A) aggregate demand increased, but aggregate supply did not. 
B) aggregate supply decreased, but aggregate demand did not. 
C) aggregate demand and aggregate supply increased by the same amount. 
D) aggregate demand and aggregate supply decreased by the same amount.

Question 19

When price level is considered, the value of the multiplier will be less than that suggested by the oversimplified version of multiplier.Why?

Accepted Answer

As long as the aggregate supply curve sl

Question 20

Increases in the price of imported oil in 2011 led to a leftward shift of the aggregate supply curve.

Accepted Answer

A) True 
 B)False

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

Figure 10-1 -If the price level in Figure 10-1 were 110,

In the period from 1996-2000, the United States economy experienced the unusual combination of

An increase in the money wage rate will cause the aggregate supply curve to shift

-In Table 10-1, if full employment occurs at $3,100 billion, then

The case for government stabilization policy is made more compelling if the

Aggregate supply can be thought of as

If the price level rises, what will happen to the level of real GDP supplied?

A shift outward of the aggregate supply curve could be caused by

As long as the multiplier process is working, firms will meet additional demand without raising prices.

Figure 10-9 -Figure 10-9 describes which of the following periods in the U.S.?

Resource prices are fixed for some period of time because

At levels of output close to full employment, the aggregate supply curve is probably

Stabilization policy may be necessary to slow down the speed of the adjustment process.

If the price level decreases, what will happen to the level of real GDP supplied?

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

When money wages rise, the most significant effect on the aggregate supply curve is that it

Figure 10-9 -Figure 10-9 illustrates a period of

If an economy is growing, but experiences no inflation, this means

When price level is considered, the value of the multiplier will be less than that suggested by the oversimplified version of multiplier.Why?

Increases in the price of imported oil in 2011 led to a leftward shift of 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

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