Exam 16: B: Long-Run Macroeconomic Adjustments

Aggregate supply shocks will:

In the long-run, the attempt to correct slow economic growth or the unemployment caused by cost-push inflation by implementing an expansionary fiscal policy will most likely produce:

The economy enters the long run once:

Supply-side economists say that:

The long-run aggregate supply curve:

The long-run Phillips Curve is essentially a horizontal line at the economy's natural rate of unemployment.

Cost-push inflation results directly from a(n):

In the long-run, any inflation that occurs in the economy is the result of:

Economic growth driven by supply factors causes:

In the short run, demand-pull inflation increases:

Although the increase in long-run aggregate supply (other things equal), would expand real GDP and lower the price level, the declines in the price level has not been part of Canada's growth experience.This is because:

Which of the following is true of disinflation?

Critics of supply-side economics:

If there is sufficient time for wage contracts to expire and nominal wage adjustments to occur, then the:

An adverse aggregate supply shock:

Refer to the diagram given below. Assume that nominal wages are initially set on the basis of the price level P₂ and that the economy is initially operating at the full-employment level of output Q_f.In the short run, an increase in the price level from P₂ to P₃ will:

Refer to the above diagram for a specific economy.Stagflation will:

A rightward shift of the Phillips Curve suggests that:

In the conventional view, outward shifts of the Phillips Curve in the 1970s and early 1980s were caused by:

Prominent supply-side economist Arthur Laffer has argued that: