Question 1

The natural rate of unemployment includes frictional,cyclical,and structural unemployment.

Accepted Answer

A) True 
 B)False

Question 2

The longer the unemployment rate remains above the natural rate,the higher the natural rate.This theory is known as historical analysis.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is most likely to shift the potential output of an economy to the right?

Accepted Answer

A) A decline in the length of the average workweek 
B) An increase in the supply of educated and skilled workers 
C) A drought 
D) An increase in aggregate demand 
E) An increase in the minimum wage received by workers 
A) A decline in the length of the average workweek 
B) An increase in the supply of educated and skilled workers 
C) A drought 
D) An increase in aggregate demand 
E) An increase in the minimum wage received by workers

Question 4

Which of the following is true in the short run?

Accepted Answer

A) The aggregate supply curve is horizontal. 
B) The aggregate supply curve is vertical. 
C) Per-unit costs do not increase as much as output prices when the price level rises. 
D) An increase in price per unit results in a decrease in profit per unit. 
E) Firms' total costs of production decrease as output expands beyond the potential level. 
A) The aggregate supply curve is horizontal. 
B) The aggregate supply curve is vertical. 
C) Per-unit costs do not increase as much as output prices when the price level rises. 
D) An increase in price per unit results in a decrease in profit per unit. 
E) Firms' total costs of production decrease as output expands beyond the potential level.

Question 5

Which of these is not assumed to be constant along a short-run aggregate supply curve?

Accepted Answer

A) The actual price level 
B) The state of technology 
C) The size and quality of the labor force 
D) The expected price level 
E) The size and quality of the capital stock 
A) The actual price level 
B) The state of technology 
C) The size and quality of the labor force 
D) The expected price level 
E) The size and quality of the capital stock

Question 6

In a particular year,if the price level rises by 4 percent and the nominal wage of workers rises by 6 percent,we can conclude that the real wage has:

Accepted Answer

A) fallen by 2 percent. 
B) fallen by 10 percent. 
C) increased by 2 percent. 
D) increased by 10 percent. 
E) remained constant. 
A) fallen by 2 percent. 
B) fallen by 10 percent. 
C) increased by 2 percent. 
D) increased by 10 percent. 
E) remained constant.

Question 7

A recessionary gap is usually closed in the long run by a(n):

Accepted Answer

A) rightward shift of the short-run aggregate supply curve. 
B) leftward shift of the short-run aggregate supply curve. 
C) rightward movement along a fixed short-run aggregate supply curve. 
D) decrease in aggregate demand. 
E) leftward movement along a fixed short-run aggregate supply curve. 
A) rightward shift of the short-run aggregate supply curve. 
B) leftward shift of the short-run aggregate supply curve. 
C) rightward movement along a fixed short-run aggregate supply curve. 
D) decrease in aggregate demand. 
E) leftward movement along a fixed short-run aggregate supply curve.

Question 8

The more the short-run output exceeds an economy's potential,_____.

Accepted Answer

A) the smaller the expansionary gap 
B) the greater the upward pressure on the price level 
C) the larger the recessionary gap 
D) the greater the downward pressure on the price level 
E) the lesser the demand for resources 
A) the smaller the expansionary gap 
B) the greater the upward pressure on the price level 
C) the larger the recessionary gap 
D) the greater the downward pressure on the price level 
E) the lesser the demand for resources

Question 9

The figure below shows the short-run aggregate supply curve of an economy.In this figure,an expansionary gap would be represented by the distance between:

Accepted Answer

A) Y2and Y1. 
B) Y3and Y1. 
C) Y2and Y3. 
D) P2and P1. 
E) P2and P3. 
A) Y2and Y1. 
B) Y3and Y1. 
C) Y2and Y3. 
D) P2and P1. 
E) P2and P3.

Question 10

Cyclical unemployment in an economy will be zero when:

Accepted Answer

A) there is an expansionary gap in the economy. 
B) the economy is producing its natural rate of output. 
C) there is a recessionary gap in the economy. 
D) the actual price level is equal to the expected price level in the economy. 
E) the actual price level exceeds the expected price level in the economy. 
A) there is an expansionary gap in the economy. 
B) the economy is producing its natural rate of output. 
C) there is a recessionary gap in the economy. 
D) the actual price level is equal to the expected price level in the economy. 
E) the actual price level exceeds the expected price level in the economy.

Question 11

Which of these is most likely to reduce the potential output of an economy?

Accepted Answer

A) An increase in the size of the labor force 
B) A deterioration in the quality of the labor force 
C) A decrease in the cost of using computers 
D) A decrease in the price level 
E) An increase in the price level 
A) An increase in the size of the labor force 
B) A deterioration in the quality of the labor force 
C) A decrease in the cost of using computers 
D) A decrease in the price level 
E) An increase in the price level

Question 12

Which of the following is true of the short-run aggregate supply curve?

Accepted Answer

A) It shows the relation between the inflation rate and the quantity of aggregate output firms supply,other things constant. 
B) It shows the relation between the price of labor and the aggregate quantity of labor workers supply,other things constant. 
C) It shows the relation between the interest rate and the quantity of capital goods firms supply,other things constant. 
D) It shows the relation between the price level and the quantity of aggregate output firms supply,other things constant. 
E) It shows an inverse relationship between the price level and real GDP. 
A) It shows the relation between the inflation rate and the quantity of aggregate output firms supply,other things constant. 
B) It shows the relation between the price of labor and the aggregate quantity of labor workers supply,other things constant. 
C) It shows the relation between the interest rate and the quantity of capital goods firms supply,other things constant. 
D) It shows the relation between the price level and the quantity of aggregate output firms supply,other things constant. 
E) It shows an inverse relationship between the price level and real GDP.

Question 13

Actual output can exceed the economy's potential both in the short run and the long run.

Accepted Answer

A) True 
 B)False

Question 14

For the aggregate demand and aggregate supply listed in schedule #3 of the table given below,the equilibrium output level and price level are:
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Table 10.1
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$$\begin{array} { c c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Aggregate Output } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { Level }
\end{array} &\#1& \begin{array} { c } 
\text { Quantity of } \
\text { Aggregate Output Supplied } \
\# 2
\end{array} & \# 3 \
\hline \$ 7.0 & 110 & \$ 5.0 & \$ 6.0 & \$ 4.0 \
6.5 & 120 & 5.5 & 6.5 & 4.5 \
6.0 & 130 & 6.0 & 7.0 & 5.0 \
5.5 & 140 & 6.5 & 7.5 & 5.5 \
5.0 & 150 & 7.0 & 8.0 & 6.0
\end{array}$$
?

Accepted Answer

A) $7.0 and 110,respectively. 
B) $6.5 and 120,respectively. 
C) $6.0 and 130,respectively. 
D) $5.5 and 140,respectively. 
E) $5.0 and 150,respectively. 
A) $7.0 and 110,respectively. 
B) $6.5 and 120,respectively. 
C) $6.0 and 130,respectively. 
D) $5.5 and 140,respectively. 
E) $5.0 and 150,respectively.

Question 15

In constructing the short-run aggregate supply curve,we define the short run as the period in which:

Accepted Answer

A) the price level is constant. 
B) output is fixed. 
C) profit is constant. 
D) the costs of some resources are fixed. 
E) the economic growth rate is less than 4 percent. 
A) the price level is constant. 
B) output is fixed. 
C) profit is constant. 
D) the costs of some resources are fixed. 
E) the economic growth rate is less than 4 percent.

Question 16

If the actual price level is higher than the expected price level,the economy will:

Accepted Answer

A) have no structural unemployment. 
B) experience a recession. 
C) experience stagflation. 
D) expand output in the short run. 
E) have no seasonal unemployment. 
A) have no structural unemployment. 
B) experience a recession. 
C) experience stagflation. 
D) expand output in the short run. 
E) have no seasonal unemployment.

Question 17

Which of these is true of the expected price level in a labor market?

Accepted Answer

A) It is the equilibrium price level in the short run. 
B) It determines the actual price level in the short run. 
C) It determines the actual price level in the long run. 
D) It allows firms and resource owners to make long-term wage agreements. 
E) The difference between the expected and actual price levels is equal to the actual inflation rate. 
A) It is the equilibrium price level in the short run. 
B) It determines the actual price level in the short run. 
C) It determines the actual price level in the long run. 
D) It allows firms and resource owners to make long-term wage agreements. 
E) The difference between the expected and actual price levels is equal to the actual inflation rate.

Question 18

Which of the following is true in the short run but not in the long run?

Accepted Answer

A) Actual output is equal to potential output. 
B) Actual output can exceed potential output. 
C) Structural unemployment can exist. 
D) Frictional unemployment can exist. 
E) Real and nominal GDP can differ. 
A) Actual output is equal to potential output. 
B) Actual output can exceed potential output. 
C) Structural unemployment can exist. 
D) Frictional unemployment can exist. 
E) Real and nominal GDP can differ.

Question 19

The figure below shows the short-run aggregate demand and supply curves of an economy.When real GDP is at Y2,_____.

Accepted Answer

A) potential output is greater than actual output. 
B) there is a recessionary gap. 
C) the price level is likely to fall. 
D) the actual unemployment rate is less than the natural rate of unemployment. 
E) aggregate demand is likely to increase to restore equilibrium. 
A) potential output is greater than actual output. 
B) there is a recessionary gap. 
C) the price level is likely to fall. 
D) the actual unemployment rate is less than the natural rate of unemployment. 
E) aggregate demand is likely to increase to restore equilibrium.

Question 20

A failure in coordination between workers and employers is most likely to cause an expansionary gap.

Accepted Answer

A) True 
 B)False

The natural rate of unemployment includes frictional,cyclical,and structural unemployment.

The longer the unemployment rate remains above the natural rate,the higher the natural rate.This theory is known as historical analysis.

Which of the following is most likely to shift the potential output of an economy to the right?

Which of the following is true in the short run?

Which of these is not assumed to be constant along a short-run aggregate supply curve?

In a particular year,if the price level rises by 4 percent and the nominal wage of workers rises by 6 percent,we can conclude that the real wage has:

A recessionary gap is usually closed in the long run by a(n):

The more the short-run output exceeds an economy's potential,_____.

The figure below shows the short-run aggregate supply curve of an economy.In this figure,an expansionary gap would be represented by the distance between:

Cyclical unemployment in an economy will be zero when:

Which of these is most likely to reduce the potential output of an economy?

Which of the following is true of the short-run aggregate supply curve?

Actual output can exceed the economy's potential both in the short run and the long run.

In constructing the short-run aggregate supply curve,we define the short run as the period in which:

If the actual price level is higher than the expected price level,the economy will:

Which of these is true of the expected price level in a labor market?

Which of the following is true in the short run but not in the long run?

The figure below shows the short-run aggregate demand and supply curves of an economy.When real GDP is at Y2,_____.

A failure in coordination between workers and employers is most likely to cause an expansionary gap.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 10: Aggregate Supply

The natural rate of unemployment includes frictional,cyclical,and structural unemployment.

The longer the unemployment rate remains above the natural rate,the higher the natural rate.This theory is known as historical analysis.

Which of the following is most likely to shift the potential output of an economy to the right?

Which of the following is true in the short run?

Which of these is not assumed to be constant along a short-run aggregate supply curve?

In a particular year,if the price level rises by 4 percent and the nominal wage of workers rises by 6 percent,we can conclude that the real wage has:

A recessionary gap is usually closed in the long run by a(n):

The more the short-run output exceeds an economy's potential,_____.

The figure below shows the short-run aggregate supply curve of an economy.In this figure,an expansionary gap would be represented by the distance between:

Cyclical unemployment in an economy will be zero when:

Which of these is most likely to reduce the potential output of an economy?

Which of the following is true of the short-run aggregate supply curve?

Actual output can exceed the economy's potential both in the short run and the long run.

In constructing the short-run aggregate supply curve,we define the short run as the period in which:

If the actual price level is higher than the expected price level,the economy will:

Which of these is true of the expected price level in a labor market?

Which of the following is true in the short run but not in the long run?

The figure below shows the short-run aggregate demand and supply curves of an economy.When real GDP is at Y2,_____.

A failure in coordination between workers and employers is most likely to cause an expansionary gap.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters