Exam 6: An Introduction to Macroeconomics

Refer to the graphs above. Suppose a firm is currently producing 500 computers per week and charging a price of $1000. What happens to the firm's inventory of computers if there is a negative demand shock and prices are inflexible?

Real gross domestic product:

Real GDP can change due to changes in the price level.

Which of the following is NOT a factor that increases short-run price stickiness?

Macroeconomic models help clarify important questions such as the following, except:

If prices are inflexible, then a negative demand shock will lead to:

Suppose that an economy's output does not change from one year to the next, but the price level doubles. What happens to nominal GDP?

Suppose that real GDP increases by 5% while the population of a country increases by 7%. Then:

High rates of unemployment:

Price wars among firms:

Economists believe that most short-run fluctuations are the result of supply shocks.

Suppose a small economy produces only MP3 players. In year 1, 10,000 MP3 players are produce and sold at a price of $100 each. In year 2, 12,000 MP3 players are produced and sold at a price of $80 each. Which of the following statements is true?

Macroeconomics is primarily concerned with studying two broad topics:

An unexpected negative demand shock would lead to a decrease in inventories.

Sharply rising oil prices are most likely to lead to a:

At the core of understanding economic growth is the idea that to raise living standards over time, an economy must:

Business cycle fluctuations typically arise because:

An unexpected negative demand shock would lead to a decrease in real GDP.

Economists and policy makers are committed to encouraging a high and growing level of real GDP because:

Suppose a small economy produces only HD TV sets. In year 1, 100,000 sets are produce and sold at a price of $1,200 each. In year 2, 100,000 sets are produced and sold at a price of $1,000 each. As a result: