Question 1

Self correcting mechanism reveals that

Accepted Answer

A)  real wages will increase if there is an increase in price. 
B)  nominal wages will fall if there is inflationary gap. 
C)  nominal wages will increase if there is recessionary gap. 
D)  in the long run economy will be in equilibrium at potential GDP. 
A)  real wages will increase if there is an increase in price. 
B)  nominal wages will fall if there is inflationary gap. 
C)  nominal wages will increase if there is recessionary gap. 
D)  in the long run economy will be in equilibrium at potential GDP.

Question 2

If scientific research produces a technological breakthrough in the production of computer memory,then

Accepted Answer

A)  business costs will increase,profits will fall,and production will decrease. 
B)  business costs will fall,but profits will also fall,and production will decrease. 
C)  business costs will fall,profits will improve,and production will increase. 
D)  profits will increase,allowing businesses to cut back production. 
A)  business costs will increase,profits will fall,and production will decrease. 
B)  business costs will fall,but profits will also fall,and production will decrease. 
C)  business costs will fall,profits will improve,and production will increase. 
D)  profits will increase,allowing businesses to cut back production.

Question 3

As the slope of the aggregate supply curve increases,this indicates that

Accepted Answer

A)  the economy is getting close to potential GDP. 
B)  the economy is reducing employment. 
C)  inflation will be less of a problem. 
D)  output is falling. 
A)  the economy is getting close to potential GDP. 
B)  the economy is reducing employment. 
C)  inflation will be less of a problem. 
D)  output is falling.

Question 4

In Table 10-1,if full employment occurs at $3,400 billion,then

Accepted Answer

A)  the economy experiences a recessionary gap of $75 billion. 
B)  the economy experiences a recessionary gap of $150 billion. 
C)  the economy experiences an inflationary gap of $75 billion. 
D)  the economy experiences an inflationary gap of $150 billion. 
A)  the economy experiences a recessionary gap of $75 billion. 
B)  the economy experiences a recessionary gap of $150 billion. 
C)  the economy experiences an inflationary gap of $75 billion. 
D)  the economy experiences an inflationary gap of $150 billion.

Question 5

When the economy represented in Figure 10-3 has completed the self-correcting adjustment process,the expenditure line in graph (a)will be

Accepted Answer

A)  flatter. 
B)  steeper. 
C)  higher. 
D)  lower. 
E)  unchanged. 
A)  flatter. 
B)  steeper. 
C)  higher. 
D)  lower. 
E)  unchanged.

Question 6

A company succumbs to a wage increase demand without any changes in the productivity of labor,price of the product,and the total output sold.Which of the following would happen?

Accepted Answer

A)  Total revenue of the company will fall. 
B)  Investment by the company will increase. 
C)  Profit per unit of the product will fall. 
D)  Average profit per unit will increase. 
A)  Total revenue of the company will fall. 
B)  Investment by the company will increase. 
C)  Profit per unit of the product will fall. 
D)  Average profit per unit will increase.

Question 7

If an economy is growing,but experiences no inflation,this means

Accepted Answer

A)  aggregate demand increased,but aggregate supply did not. 
B)  aggregate supply decreased,but aggregate demand did not. 
C)  aggregate demand and aggregate supply increased by the same amount. 
D)  aggregate demand and aggregate supply decreased by the same amount. 
A)  aggregate demand increased,but aggregate supply did not. 
B)  aggregate supply decreased,but aggregate demand did not. 
C)  aggregate demand and aggregate supply increased by the same amount. 
D)  aggregate demand and aggregate supply decreased by the same amount.

Question 8

Equilibrium GDP in excess of potential GDP eventually will cause the aggregate

Accepted Answer

A)  demand curve to shift outward. 
B)  supply curve to shift outward. 
C)  supply curve to shift inward. 
D)  demand curve to become flatter. 
A)  demand curve to shift outward. 
B)  supply curve to shift outward. 
C)  supply curve to shift inward. 
D)  demand curve to become flatter.

Question 9

Most economists agree that the economy will adjust to a recessionary gap,but the adjustment process

Accepted Answer

A)  is rapid and destabilizing. 
B)  is moderately quick,but not as rapid as necessary. 
C)  takes place solely on the supply side. 
D)  is very slow. 
A)  is rapid and destabilizing. 
B)  is moderately quick,but not as rapid as necessary. 
C)  takes place solely on the supply side. 
D)  is very slow.

Question 10

Which of the following is evidence of an inflationary gap?

Accepted Answer

A)  very long lines at employment agencies 
B)  very short waiting times for product delivery 
C)  very low sales figures 
D)  very long search times for people looking for jobs 
E)  very low unemployment rates 
A)  very long lines at employment agencies 
B)  very short waiting times for product delivery 
C)  very low sales figures 
D)  very long search times for people looking for jobs 
E)  very low unemployment rates

Question 11

What causes the aggregate supply curve to have an upward slope in the short run,but a vertical slope in the long run?

Accepted Answer

When there is substantial unemployment i

Question 12

From the mid-1980s until late 2007,many world economies became less volatile because of:

Accepted Answer

A)  ​sound macroeconomic policies 
B)  ​several structural change that made the economies more flexible 
C)  ​good luck 
D)  ​All of the above. 
E)  ​a through c only 
A)  ​sound macroeconomic policies 
B)  ​several structural change that made the economies more flexible 
C)  ​good luck 
D)  ​All of the above. 
E)  ​a through c only

Question 13

Why is it possible that the economy will not self-correct out of a recessionary gap?

Accepted Answer

Unlike the case of an inflationary gap,a

Question 14

Labor contracts often fix wages for more than one year.

Accepted Answer

A) True 
 B)False

Question 15

If the MPC of an economy is .90 and the economy has a horizontal aggregate supply curve,then an increase in investment spending of $50 million will increase total income by

Accepted Answer

A)  $50 million. 
B)  more than $50 million but less than $500 million. 
C)  $500 million. 
D)  more than $500 million. 
A)  $50 million. 
B)  more than $50 million but less than $500 million. 
C)  $500 million. 
D)  more than $500 million.

Question 16

Which of the following events will lead to an inward shift of the aggregate supply curve?

Accepted Answer

A)  an increase in the price level 
B)  an increase in consumer spending 
C)  an increase in labor productivity 
D)  an increase in wage rates 
A)  an increase in the price level 
B)  an increase in consumer spending 
C)  an increase in labor productivity 
D)  an increase in wage rates

Question 17

Figure 10-3  
-In Figure 10-3,we would expect the aggregate supply curve in graph (b)to eventually

Accepted Answer

A)  shift to the right,eliminating the recessionary gap. 
B)  shift to the left,eliminating the inflationary gap. 
C)  become steeper in the upper portion,eliminating the inflationary gap. 
D)  become flatter in the upper portion,eliminating the recessionary gap. 
A)  shift to the right,eliminating the recessionary gap. 
B)  shift to the left,eliminating the inflationary gap. 
C)  become steeper in the upper portion,eliminating the inflationary gap. 
D)  become flatter in the upper portion,eliminating the recessionary gap.

Question 18

The aggregate supply curve shows how much the nation's businesses are willing and able to produce at each price level.

Accepted Answer

A) True 
 B)False

Question 19

Increases in the price of imported oil in 2011 led to a leftward shift of the aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 20

The aggregate demand and aggregate supply curve intersect

Accepted Answer

A)  at potential GDP. 
B)  below potential GDP. 
C)  above potential GDP. 
D)  at a point which may or may not be equal to potential GDP. 
A)  at potential GDP. 
B)  below potential GDP. 
C)  above potential GDP. 
D)  at a point which may or may not be equal to potential GDP.

Self correcting mechanism reveals that

If scientific research produces a technological breakthrough in the production of computer memory,then

As the slope of the aggregate supply curve increases,this indicates that

In Table 10-1,if full employment occurs at $3,400 billion,then

When the economy represented in Figure 10-3 has completed the self-correcting adjustment process,the expenditure line in graph (a)will be

A company succumbs to a wage increase demand without any changes in the productivity of labor,price of the product,and the total output sold.Which of the following would happen?

If an economy is growing,but experiences no inflation,this means

Equilibrium GDP in excess of potential GDP eventually will cause the aggregate

Most economists agree that the economy will adjust to a recessionary gap,but the adjustment process

Which of the following is evidence of an inflationary gap?

What causes the aggregate supply curve to have an upward slope in the short run,but a vertical slope in the long run?

From the mid-1980s until late 2007,many world economies became less volatile because of:

Why is it possible that the economy will not self-correct out of a recessionary gap?

Labor contracts often fix wages for more than one year.

If the MPC of an economy is .90 and the economy has a horizontal aggregate supply curve,then an increase in investment spending of $50 million will increase total income by

Which of the following events will lead to an inward shift of the aggregate supply curve?

Figure 10-3 -In Figure 10-3,we would expect the aggregate supply curve in graph (b)to eventually

The aggregate supply curve shows how much the nation's businesses are willing and able to produce at each price level.

Increases in the price of imported oil in 2011 led to a leftward shift of the aggregate supply curve.

The aggregate demand and aggregate supply curve intersect

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

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Exam 10: Bringing In The Supply Side Unemployment and Inflation

Self correcting mechanism reveals that

If scientific research produces a technological breakthrough in the production of computer memory,then

As the slope of the aggregate supply curve increases,this indicates that

In Table 10-1,if full employment occurs at $3,400 billion,then

When the economy represented in Figure 10-3 has completed the self-correcting adjustment process,the expenditure line in graph (a)will be

A company succumbs to a wage increase demand without any changes in the productivity of labor,price of the product,and the total output sold.Which of the following would happen?

If an economy is growing,but experiences no inflation,this means

Equilibrium GDP in excess of potential GDP eventually will cause the aggregate

Most economists agree that the economy will adjust to a recessionary gap,but the adjustment process

Which of the following is evidence of an inflationary gap?

What causes the aggregate supply curve to have an upward slope in the short run,but a vertical slope in the long run?

From the mid-1980s until late 2007,many world economies became less volatile because of:

Why is it possible that the economy will not self-correct out of a recessionary gap?

Labor contracts often fix wages for more than one year.

If the MPC of an economy is .90 and the economy has a horizontal aggregate supply curve,then an increase in investment spending of $50 million will increase total income by

Which of the following events will lead to an inward shift of the aggregate supply curve?

Figure 10-3 -In Figure 10-3,we would expect the aggregate supply curve in graph (b)to eventually

The aggregate supply curve shows how much the nation's businesses are willing and able to produce at each price level.

Increases in the price of imported oil in 2011 led to a leftward shift of the aggregate supply curve.

The aggregate demand and aggregate supply curve intersect

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