Question 1

The 2006-2008 period can be accurately described as a time of stagflation.

Accepted Answer

A) True 
 B)False

Question 2

If short-run equilibrium GDP is above potential GDP,prices will eventually rise.

Accepted Answer

A) True 
 B)False

Question 3

The main reason that firms adjust their output when the price level changes is that

Accepted Answer

A)  uncertainty causes a drop in output. 
B)  taxes cause a supply-side reaction. 
C)  their profit margins change. 
D)  increased risks lead to a change in output. 
E)  All of the above are correct. 
A)  uncertainty causes a drop in output. 
B)  taxes cause a supply-side reaction. 
C)  their profit margins change. 
D)  increased risks lead to a change in output. 
E)  All of the above are correct.

Question 4

The self-correcting mechanism would be expected to be very rapid in an economy with

Accepted Answer

A)  a large multiplier. 
B)  flexible prices. 
C)  rigid wages. 
D)  high labor productivity. 
A)  a large multiplier. 
B)  flexible prices. 
C)  rigid wages. 
D)  high labor productivity.

Question 5

How is it possible for the economy to have a recessionary gap?

Accepted Answer

A)  Equilibrium is at a GDP level below full employment. 
B)  Equilibrium is at a GDP level equal to full employment. 
C)  Equilibrium is at a GDP level above full employment. 
D)  GDP is rising at full employment. 
E)  GDP is falling at full employment. 
A)  Equilibrium is at a GDP level below full employment. 
B)  Equilibrium is at a GDP level equal to full employment. 
C)  Equilibrium is at a GDP level above full employment. 
D)  GDP is rising at full employment. 
E)  GDP is falling at full employment.

Question 6

Stabilization policy may be necessary to slow down the speed of the adjustment process.

Accepted Answer

A) True 
 B)False

Question 7

The recessionary gap of the 1990s in Japan led to decreases in the price level.

Accepted Answer

A) True 
 B)False

Question 8

As long as the aggregate supply curve is upward sloping,an increase in aggregate demand will increase

Accepted Answer

A)  real wealth. 
B)  price levels. 
C)  unemployment. 
D)  net exports. 
A)  real wealth. 
B)  price levels. 
C)  unemployment. 
D)  net exports.

Question 9

The aggregate supply curve slopes upward because as price rises the quantity of output supplied rises.

Accepted Answer

A) True 
 B)False

Question 10

If the economy experiences inflation and economic growth,this means that aggregate demand grows by more than aggregate supply.

Accepted Answer

A) True 
 B)False

Question 11

The money wage rate has little effect on the supply curve.It mainly affects the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 12

When the expenditure schedule is too high,the result is a(n)

Accepted Answer

A)  unemployment surplus. 
B)  inflationary gap. 
C)  recessionary gap. 
D)  budgetary gap. 
A)  unemployment surplus. 
B)  inflationary gap. 
C)  recessionary gap. 
D)  budgetary gap.

Question 13

For a given growth rate in aggregate supply,slower growth in aggregate demand will lead to lower inflation.

Accepted Answer

A) True 
 B)False

Question 14

Figure 10-3  
-In Figure 10-3,both graphs (a)and (b)indicate that the economy is experiencing a(n)

Accepted Answer

A)  recessionary gap of RE. 
B)  recessionary gap of RG. 
C)  inflationary gap of RG. 
D)  inflationary gap of RE. 
A)  recessionary gap of RE. 
B)  recessionary gap of RG. 
C)  inflationary gap of RG. 
D)  inflationary gap of RE.

Question 15

Figure 10-5  
-According to Baumol and Blinder,does the U.S.economy have a self-correcting mechanism?

Accepted Answer

A)  No,there is no such thing in reality. 
B)  Yes,and it works very rapidly. 
C)  Yes,and it works very slowly. 
D)  No,unless the aggregate supply curve is perfectly flat. 
A)  No,there is no such thing in reality. 
B)  Yes,and it works very rapidly. 
C)  Yes,and it works very slowly. 
D)  No,unless the aggregate supply curve is perfectly flat.

Question 16

Supply-side economics concerns itself with the interaction between demand and supply,the price level,and real GDP.

Accepted Answer

A) True 
 B)False

Question 17

Figure 10-7  
-Refer to Figure 10-7.Which of the diagrams in Figure 10-7 represents a period of economic growth and inflation?

Accepted Answer

A)  Panel (
A)  
B)  Panel (
B)  
C)  Panel (
C)  
D)  Panel (
D)  
A)  Panel (
A)  
B)  Panel (
B)  
C)  Panel (
C)  
D)  Panel (
D)

Question 18

An inflationary gap will exist when

Accepted Answer

A)  aggregate demand grows more slowly than aggregate supply. 
B)  there is downward pressure on prices. 
C)  expenditures are not equal to aggregate demand. 
D)  equilibrium GDP is greater than full employment GDP. 
A)  aggregate demand grows more slowly than aggregate supply. 
B)  there is downward pressure on prices. 
C)  expenditures are not equal to aggregate demand. 
D)  equilibrium GDP is greater than full employment GDP.

Question 19

The major cost of production in the economy is

Accepted Answer

A)  interest expense. 
B)  capital costs. 
C)  rents. 
D)  profits. 
E)  wages. 
A)  interest expense. 
B)  capital costs. 
C)  rents. 
D)  profits. 
E)  wages.

Question 20

Recessionary gaps are associated with output below potential and high unemployment rates.

Accepted Answer

A) True 
 B)False

The 2006-2008 period can be accurately described as a time of stagflation.

If short-run equilibrium GDP is above potential GDP,prices will eventually rise.

The main reason that firms adjust their output when the price level changes is that

The self-correcting mechanism would be expected to be very rapid in an economy with

How is it possible for the economy to have a recessionary gap?

Stabilization policy may be necessary to slow down the speed of the adjustment process.

The recessionary gap of the 1990s in Japan led to decreases in the price level.

As long as the aggregate supply curve is upward sloping,an increase in aggregate demand will increase

The aggregate supply curve slopes upward because as price rises the quantity of output supplied rises.

If the economy experiences inflation and economic growth,this means that aggregate demand grows by more than aggregate supply.

The money wage rate has little effect on the supply curve.It mainly affects the aggregate demand curve.

When the expenditure schedule is too high,the result is a(n)

For a given growth rate in aggregate supply,slower growth in aggregate demand will lead to lower inflation.

Figure 10-3 -In Figure 10-3,both graphs (a)and (b)indicate that the economy is experiencing a(n)

Figure 10-5 -According to Baumol and Blinder,does the U.S.economy have a self-correcting mechanism?

Supply-side economics concerns itself with the interaction between demand and supply,the price level,and real GDP.

Figure 10-7 -Refer to Figure 10-7.Which of the diagrams in Figure 10-7 represents a period of economic growth and inflation?

An inflationary gap will exist when

The major cost of production in the economy is

Recessionary gaps are associated with output below potential and high unemployment rates.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 10: Bringing In The Supply Side Unemployment and Inflation

The 2006-2008 period can be accurately described as a time of stagflation.

If short-run equilibrium GDP is above potential GDP,prices will eventually rise.

The main reason that firms adjust their output when the price level changes is that

The self-correcting mechanism would be expected to be very rapid in an economy with

How is it possible for the economy to have a recessionary gap?

Stabilization policy may be necessary to slow down the speed of the adjustment process.

The recessionary gap of the 1990s in Japan led to decreases in the price level.

As long as the aggregate supply curve is upward sloping,an increase in aggregate demand will increase

The aggregate supply curve slopes upward because as price rises the quantity of output supplied rises.

If the economy experiences inflation and economic growth,this means that aggregate demand grows by more than aggregate supply.

The money wage rate has little effect on the supply curve.It mainly affects the aggregate demand curve.

When the expenditure schedule is too high,the result is a(n)

For a given growth rate in aggregate supply,slower growth in aggregate demand will lead to lower inflation.

Figure 10-3 -In Figure 10-3,both graphs (a)and (b)indicate that the economy is experiencing a(n)

Figure 10-5 -According to Baumol and Blinder,does the U.S.economy have a self-correcting mechanism?

Supply-side economics concerns itself with the interaction between demand and supply,the price level,and real GDP.

Figure 10-7 -Refer to Figure 10-7.Which of the diagrams in Figure 10-7 represents a period of economic growth and inflation?

An inflationary gap will exist when

The major cost of production in the economy is

Recessionary gaps are associated with output below potential and high unemployment rates.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters