Exam 11: Aggregate Supply

Exhibit 10-12 -Consider Exhibit 10-12.Aggregate demand is represented by AD₀ and the aggregate supply is AS₁₂₀ since the expected price level is 120.Which of the following identifies the the short-run equilibrium?

If workers are willing to work more hours when the nominal wage increases,what can be said about the economic rationality of their decision?

As a contractionary gap is closed in the long run,

Wage rates are typically flexible upward but "sticky" downward.

In constructing the short-run aggregate supply curve,we define the short run as the period in which

If the price level turns out to be higher than expected,

Exhibit 10-2 -In Exhibit 10-2,if P₁ is the prevailing price level,then

Which of the following changes best represents the effect on the U.S.of the oil embargo (a shut-off of oil from certain OPEC countries)of the 1970s?

During recessions,workers resist efforts to reduce nominal wages because

If the expected price level exceeds the actual price level

Exhibit 10-8 -In the short run,if the economy is operating below potential output and if the aggregate supply curve shifts outward,then the price level will

Given the aggregate demand curve,a beneficial supply shock would

An increase in short-run aggregate supply that increases the price level will increase the inflation rate as well.

If the economy is experiencing an expansionary gap,which of the following will occur in the long run?

Which of the following is true about real and nominal wages?

Compensation is usually negotiated in terms of a nominal wage because

The steepness of the short-run aggregate supply curve depends primarily on

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

Floods in the midwest that diminish farm output would shift the aggregate supply curve outward (to the right).

The long-run equilibrium price level is the price level the economy is expected to reach when the