Question 1

What is the slope of the long-run aggregate supply curve?

Accepted Answer

A)  Negative slope 
B)  Steep but positive slope 
C)  Vertical slope 
D)  Flat slope 
A)  Negative slope 
B)  Steep but positive slope 
C)  Vertical slope 
D)  Flat slope

Question 2

Refer to Figure 15.1 for the following questions.
Figure 15.1  
-In Figure 15.1,which of the points are possible long-run equilibriums?

Accepted Answer

A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D 
A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D

Question 3

Refer to Figure 15.2 for the following questions.
Figure 15.2  
-Refer to Figure 15.2.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

Accepted Answer

A)  0.3 per cent 
B)  1.1 per cent 
C)  2.7 per cent 
D)  3.7 per cent 
A)  0.3 per cent 
B)  1.1 per cent 
C)  2.7 per cent 
D)  3.7 per cent

Question 4

'Stagflation' is often a result of

Accepted Answer

A)  a negative supply shock. 
B)  a decrease in aggregate demand. 
C)  an increase in aggregate demand. 
D)  an increase in aggregate supply. 
A)  a negative supply shock. 
B)  a decrease in aggregate demand. 
C)  an increase in aggregate demand. 
D)  an increase in aggregate supply.

Question 5

Along a short-run aggregate supply curve,a decrease in the price level causes

Accepted Answer

A)  firms to increase their production levels, as the lower prices will increase consumer demand. 
B)  no change in output to occur, as at the macroeconomic level, the price level does not affect supply. 
C)  firms to reduce their production levels. 
D)  production levels to rise as the price of inputs becomes cheaper. 
A)  firms to increase their production levels, as the lower prices will increase consumer demand. 
B)  no change in output to occur, as at the macroeconomic level, the price level does not affect supply. 
C)  firms to reduce their production levels. 
D)  production levels to rise as the price of inputs becomes cheaper.

Question 6

When does 'stagflation' occur?

Accepted Answer

A)  When inflation rises and GDP falls 
B)  When inflation falls and GDP rises 
C)  When inflation rises and GDP rises 
D)  When inflation falls and GDP falls 
A)  When inflation rises and GDP falls 
B)  When inflation falls and GDP rises 
C)  When inflation rises and GDP rises 
D)  When inflation falls and GDP falls

Question 7

The model that relies on emphasising the importance of sticky wages and prices is the ________.

Accepted Answer

A)  monetarist model 
B)  new Keynesian model 
C)  real business cycle model 
D)  new classical model 
A)  monetarist model 
B)  new Keynesian model 
C)  real business cycle model 
D)  new classical model

Question 8

Which of the following is true in the long run?

Accepted Answer

A)  Unemployment is above its natural state 
B)  Unemployment is below its natural rate 
C)  LRAS and SRAS lie on the same line 
D)  Real GDP = potential GDP 
A)  Unemployment is above its natural state 
B)  Unemployment is below its natural rate 
C)  LRAS and SRAS lie on the same line 
D)  Real GDP = potential GDP

Question 9

What does the long-run aggregate supply curve show?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The relationship in

Question 10

Which of the following is an assumption of the basis (static)aggregate demand and aggregate supply model?

Accepted Answer

A)  Potential GDP increases continuously. 
B)  The economy does not experience continuing inflation. 
C)  The economy does not experience long-run growth. 
D)  The economy's aggregate demand curve shifts to the right in most periods. 
A)  Potential GDP increases continuously. 
B)  The economy does not experience continuing inflation. 
C)  The economy does not experience long-run growth. 
D)  The economy's aggregate demand curve shifts to the right in most periods.

Question 11

Why does the short-run aggregate supply (SRAS)curve slope upward?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The short-run aggregate supply (SRAS)cur

Question 12

The short-run aggregate supply curve has a ________ slope because as prices of ________ rise,prices of ________ rise more slowly.

Accepted Answer

A)  positive; final goods and services; inputs 
B)  vertical; final goods and services; inputs 
C)  positive; inputs; final goods and services 
D)  vertical; inputs; final goods and services 
A)  positive; final goods and services; inputs 
B)  vertical; final goods and services; inputs 
C)  positive; inputs; final goods and services 
D)  vertical; inputs; final goods and services

Question 13

What variables will shift the short-run aggregate supply curve?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Expected changes in the future price lev

Question 14

A 'recession' is often defined as

Accepted Answer

A)  two consecutive quarters experiencing a decline in the economic growth rate. 
B)  two consecutive quarters of declining nominal GDP. 
C)  a significant decline in activity visible in industrial production, employment, real income, and wholesale/retail trade lasting more than a few months. 
D)  a significant decline in inflation and unemployment lasting more than a few months. 
A)  two consecutive quarters experiencing a decline in the economic growth rate. 
B)  two consecutive quarters of declining nominal GDP. 
C)  a significant decline in activity visible in industrial production, employment, real income, and wholesale/retail trade lasting more than a few months. 
D)  a significant decline in inflation and unemployment lasting more than a few months.

Question 15

What effect does a change in expectations by households and firms have on the aggregate demand curve?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Changes in expectations by households an

Question 16

Explain how each of the following events would affect the long-run aggregate supply curve.
a.A lower price level
b.A decrease in the labour force
c.A decrease in the quantity of capital goods
d.Technological change
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.A lower price level would cause a move

Question 17

As the economy nears the end of an expansion,interest rates usually ________ and wages rise more ________ than prices.

Accepted Answer

A)  rise; rapidly 
B)  rise; slowly 
C)  fall; rapidly 
D)  fall; slowly 
A)  rise; rapidly 
B)  rise; slowly 
C)  fall; rapidly 
D)  fall; slowly

Question 18

The model that focuses on how productivity shocks explain fluctuations in real GDP is the

Accepted Answer

A)  monetarist model. 
B)  real business cycle model. 
C)  new classical model. 
D)  new Keynesian model. 
A)  monetarist model. 
B)  real business cycle model. 
C)  new classical model. 
D)  new Keynesian model.

Question 19

Suppose you are an advisor to the federal government.You are asked to look at macroeconomic data to evaluate whether the economy has entered an economic contraction this year.Which data do you look at? How does the economy behave at the onset of an economic contraction?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Since an economic contraction occurs whe

Question 20

What are sticky prices or wages,and how can contracts make them 'sticky'?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Prices or wages are said to be 'sticky'

What is the slope of the long-run aggregate supply curve?

Refer to Figure 15.1 for the following questions. Figure 15.1 -In Figure 15.1,which of the points are possible long-run equilibriums?

Refer to Figure 15.2 for the following questions. Figure 15.2 -Refer to Figure 15.2.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

'Stagflation' is often a result of

Along a short-run aggregate supply curve,a decrease in the price level causes

When does 'stagflation' occur?

The model that relies on emphasising the importance of sticky wages and prices is the ________.

Which of the following is true in the long run?

What does the long-run aggregate supply curve show? _ _

Which of the following is an assumption of the basis (static)aggregate demand and aggregate supply model?

Why does the short-run aggregate supply (SRAS)curve slope upward? _ _

The short-run aggregate supply curve has a slope because as prices of rise,prices of rise more slowly.

What variables will shift the short-run aggregate supply curve? _ _

A 'recession' is often defined as

What effect does a change in expectations by households and firms have on the aggregate demand curve? _ _

Explain how each of the following events would affect the long-run aggregate supply curve. a.A lower price level b.A decrease in the labour force c.A decrease in the quantity of capital goods d.Technological change _ _

As the economy nears the end of an expansion,interest rates usually and wages rise more than prices.

The model that focuses on how productivity shocks explain fluctuations in real GDP is the

Suppose you are an advisor to the federal government.You are asked to look at macroeconomic data to evaluate whether the economy has entered an economic contraction this year.Which data do you look at? How does the economy behave at the onset of an economic contraction? _ _

What are sticky prices or wages,and how can contracts make them 'sticky'? _ _

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 15: Aggregate Demand and Aggregate Supply Analysis

What is the slope of the long-run aggregate supply curve?

Refer to Figure 15.1 for the following questions. Figure 15.1 -In Figure 15.1,which of the points are possible long-run equilibriums?

Refer to Figure 15.2 for the following questions. Figure 15.2 -Refer to Figure 15.2.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

'Stagflation' is often a result of

Along a short-run aggregate supply curve,a decrease in the price level causes

When does 'stagflation' occur?

The model that relies on emphasising the importance of sticky wages and prices is the ________.

Which of the following is true in the long run?

What does the long-run aggregate supply curve show? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Which of the following is an assumption of the basis (static)aggregate demand and aggregate supply model?

Why does the short-run aggregate supply (SRAS)curve slope upward? _____________________________________________________________________________________________ _____________________________________________________________________________________________

The short-run aggregate supply curve has a ________ slope because as prices of ________ rise,prices of ________ rise more slowly.

What variables will shift the short-run aggregate supply curve? _____________________________________________________________________________________________ _____________________________________________________________________________________________

A 'recession' is often defined as

What effect does a change in expectations by households and firms have on the aggregate demand curve? _____________________________________________________________________________________________ _____________________________________________________________________________________________

As the economy nears the end of an expansion,interest rates usually ________ and wages rise more ________ than prices.

The model that focuses on how productivity shocks explain fluctuations in real GDP is the

What are sticky prices or wages,and how can contracts make them 'sticky'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

What does the long-run aggregate supply curve show? _ _

Why does the short-run aggregate supply (SRAS)curve slope upward? _ _

The short-run aggregate supply curve has a slope because as prices of rise,prices of rise more slowly.

What variables will shift the short-run aggregate supply curve? _ _

What effect does a change in expectations by households and firms have on the aggregate demand curve? _ _

As the economy nears the end of an expansion,interest rates usually and wages rise more than prices.

What are sticky prices or wages,and how can contracts make them 'sticky'? _ _