Exam 11: Aggregate Supply

Potential output will decrease if

Exhibit 10-3 -In Exhibit 10-3,the distance between Y₁ and Y₂ is called

Which of the following supply shocks would shift the long-run aggregate supply curve outward?

If the inflation rate is 4 percent a year and everyone expected 2 percent a year,then the potential level of real GDP will increase.

In the short run,but not in the long run,

A rising price level in the short run may create an incentive for firms to increase production because

An increase in the federal minimum wage would shift the long-run aggregate supply curve inward (to the left).

The actual price level is assumed to be constant along a given short-run aggregate supply curve.

Because some resource prices are assumed to be constant in the short run,

In the long run,the aggregate demand curve determines the price level.

A coordination failure occurs when

The real wage represents the

In the short run,but not in the long run,

If the price level rises by 5 percent and the nominal wage rises 3 percent,the real wage

If resource suppliers and demanders find out that their price expectations were wrong,they will take corrective actions that will

If the actual price level is lower than the expected price level,the economy will contract in the short run.

The long-run aggregate supply curve is vertical because potential real GDP is determined by resource availabilities and productivities.

The capital stock increases

Exhibit 10-11 -Refer to Exhibit 10-11.Which point represents short-run equilibrium?

An adverse supply shock could increase both the price level and nominal GDP.