Exam 18: Extending the Analysis of Aggregate Supply

From the perspective of supply-side economists, a cut in tax rates will:

Which action will tend to decrease aggregate supply according to supply-side economists?

The short-run aggregate supply curve intersects the long-run aggregate supply curve at:

Refer to the graph above. Assume the economy is at the initial position of B₂. It is possible for the government to reduce the unemployment rate and move the economy to C₂ if:

In the short run, if the actual rate of inflation is lower than the expected rate, then:

In the long run, the economy will always move towards full employment.

Refer to the graph above. Assume the economy is at the initial position of B₂. An increase in aggregate demand with no corresponding change in inflation expectations and wage rates will tend to:

Based on the long-run Phillips Curve, any rate of inflation is compatible in the long run with the natural rate of unemployment.

Assume that initially your nominal wage was $16 an hour and the price index was 100. If the price level increases to 105, then your:

Inflation in the short run is most likely to result from a(n):

Consider the following national data: tax revenues as a percent of GDP: 25 percent; government spending as a percent of GDP: 31 percent; unemployment rate: 9 percent; inflation rate: 6 percent. What is the misery index for this nation?

Refer to the graph above. If the government wants to collect tax revenues equal to R₂, then the tax rate should be set at:

If cost-push inflation occurs and the government adopts a "hands-off" policy approach, then according to the simple extended AD-AS model, in the long run the economy will:

The traditional Phillips Curve showing a tradeoff between inflation and unemployment is based on having a stable:

Refer to the graph above. If the economy is initially at equilibrium at the intersection of AD₁ and AS₁ and there is a tax cut, then, from a skeptical mainstream perspective, the immediate impact is that aggregate:

Refer to the graph above. An expansion of the economy's production possibilities can, by itself:

The misery index is a measure of national economic discomfort that adds together a nation's:

The inflation and unemployment data for the 1970s suggest that the aggregate-supply shocks of that period caused the:

Stagflation's demise during the 1980s resulted in a:

The long run aggregate supply curve is upward-sloping because real wages eventually change by the same amount as changes in the price level.