Exam 24: From the Short Run to the Long Run: the Adjustment of Factor Prices

In the basic AD/AS model,which of the following is a defining assumption of the adjustment process that takes the economy from the short run to the long run?

(Multiple Choice)

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Question 21

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short -run equilibrium at point A. FIGURE 24-7 -Refer to Figure 24-7.If the government takes no action to close the existing output gap,then

(Multiple Choice)

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Question 22

Consider the AD/AS model.In the long run,after factor prices have fully adjusted to any output gaps,real GDP

(Multiple Choice)

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Question 23

Suppose Canadaʹs economy is in a long-run equilibrium with real GDP equal to potential output.Now suppose there is an increase in world demand for Canadaʹs goods.In the short run,. In the long run, .

(Multiple Choice)

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Question 24

Consider the AD/AS model and suppose the economy begins at potential output.The effect of a negative AS shock on real GDP will be reversed in the long run with a shift in .

(Multiple Choice)

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Question 25

A common assumption among macroeconomists is that when real GDP is less than potential output,factor prices adjust and the

(Multiple Choice)

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Question 26

When we study the adjustment process in macroeconomics,we are analyzing the process by which

(Multiple Choice)

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Question 27

Suppose Canadaʹs economy is in a long-run equilibrium with real GDP equal to potential output.Now suppose there is an unexpected and sharp reduction in desired business investment expenditure.In the short run,. In the long run,.

(Multiple Choice)

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Question 28

The diagram below shows an AD/AS model for a hypothetical economy.The economy begins in long-run equilibrium at point A. FIGURE 24-3 -Refer to Figure 24-3. Following the negative AD shock shown in the diagram (from AD1 to AD2), the adjustment process will take the economy to a long-run equilibrium where the price level is and real GDP is .

(Multiple Choice)

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Question 29

In the basic AD/AS macro model,the ʺparadox of thriftʺ is only a short-run phenomenon because

(Multiple Choice)

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Question 30

Fiscal policies typically affect the short-run level of GDP because they cause shifts in the but they will not generally have any long-run effects on real GDP unless they affect .

(Multiple Choice)

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Question 31

The paradox of thrift does not exist in the long run because

(Multiple Choice)

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Question 32

Consider the basic AD/AS macro model in long -run equilibrium.An expansionary AD shock will the price level and output in the short run.In the long run,the price level will and output will .

(Multiple Choice)

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Question 33

As a global recession began in late 2008,the governments of all major economies searched for policy responses to dampen the effects of the recession.In general,governments were aiming to

(Multiple Choice)

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Question 34

Consider the AD/AS model after factor prices have fully adjusted to output gaps.A reduction in the level of potential output,with aggregate demand constant,will

(Multiple Choice)

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Question 35

The table below shows data for five economies of similar size.Real GDP is measured in billions of dollars.Assume that potential output for each economy is $340 billion. TABLE 24-1 -Refer to Table 24-1.Which of the economies is operating at its long -run equilibrium?

(Multiple Choice)

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Question 36

In any decision about stimulating the economy with a fiscal expansion (increasing government purchases),the government must weigh the short-run benefits of against the long-run costs of .

(Multiple Choice)

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Question 37

Suppose the government had made a decision to change fiscal policy,but it then took nine months to implement a tax reduction.This is an example of

(Multiple Choice)

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Question 38

The diagram below shows an AD/AS model for a hypothetical economy.The economy begins in long-run equilibrium at point A. FIGURE 24-3 -Refer to Figure 24-3.After the negative aggregate demand shock shown in the diagram (from AD1 to AD2),which of the following describes the adjustment process that would return the economy to its long -run equilibrium?

(Multiple Choice)

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Question 39

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short -run equilibrium at point A. FIGURE 24-6 -Refer to Figure 24-6.The government could close the existing output gap by

(Multiple Choice)

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Question 40

Showing 21 - 40 of 125

Exam 24: From the Short Run to the Long Run: the Adjustment of Factor Prices

In the basic AD/AS model,which of the following is a defining assumption of the adjustment process that takes the economy from the short run to the long run?

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short -run equilibrium at point A. FIGURE 24-7 -Refer to Figure 24-7.If the government takes no action to close the existing output gap,then

Consider the AD/AS model.In the long run,after factor prices have fully adjusted to any output gaps,real GDP

Suppose Canadaʹs economy is in a long-run equilibrium with real GDP equal to potential output.Now suppose there is an increase in world demand for Canadaʹs goods.In the short run,________. In the long run, ________.

Consider the AD/AS model and suppose the economy begins at potential output.The effect of a negative AS shock on real GDP will be reversed in the long run with a ________ shift in ________.

A common assumption among macroeconomists is that when real GDP is less than potential output,factor prices adjust and the

When we study the adjustment process in macroeconomics,we are analyzing the process by which

Suppose Canadaʹs economy is in a long-run equilibrium with real GDP equal to potential output.Now suppose there is an unexpected and sharp reduction in desired business investment expenditure.In the short run,________. In the long run,________.

In the basic AD/AS macro model,the ʺparadox of thriftʺ is only a short-run phenomenon because

Fiscal policies typically affect the short-run level of GDP because they cause shifts in the ________ but they will not generally have any long-run effects on real GDP unless they affect ________.

The paradox of thrift does not exist in the long run because

Consider the basic AD/AS macro model in long -run equilibrium.An expansionary AD shock will the price level and output in the short run.In the long run,the price level will and output will .

As a global recession began in late 2008,the governments of all major economies searched for policy responses to dampen the effects of the recession.In general,governments were aiming to

Consider the AD/AS model after factor prices have fully adjusted to output gaps.A reduction in the level of potential output,with aggregate demand constant,will

The table below shows data for five economies of similar size.Real GDP is measured in billions of dollars.Assume that potential output for each economy is $340 billion. TABLE 24-1 -Refer to Table 24-1.Which of the economies is operating at its long -run equilibrium?

In any decision about stimulating the economy with a fiscal expansion (increasing government purchases),the government must weigh the short-run benefits of ________ against the long-run costs of ________.

Suppose the government had made a decision to change fiscal policy,but it then took nine months to implement a tax reduction.This is an example of

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short -run equilibrium at point A. FIGURE 24-6 -Refer to Figure 24-6.The government could close the existing output gap by

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Suppose Canadaʹs economy is in a long-run equilibrium with real GDP equal to potential output.Now suppose there is an increase in world demand for Canadaʹs goods.In the short run,. In the long run, .

Consider the AD/AS model and suppose the economy begins at potential output.The effect of a negative AS shock on real GDP will be reversed in the long run with a shift in .

Suppose Canadaʹs economy is in a long-run equilibrium with real GDP equal to potential output.Now suppose there is an unexpected and sharp reduction in desired business investment expenditure.In the short run,. In the long run,.

Fiscal policies typically affect the short-run level of GDP because they cause shifts in the but they will not generally have any long-run effects on real GDP unless they affect .

In any decision about stimulating the economy with a fiscal expansion (increasing government purchases),the government must weigh the short-run benefits of against the long-run costs of .