Question 1

A decrease in the aggregate demand curve along the LRAS curve, all other things unchanged, will generate ____ in potential real GDP and ____ in the price level.

Accepted Answer

A)  an increase; no change 
B)  a decrease; no change 
C)  no change; an increase 
D)  no change; a decrease 
A)  an increase; no change 
B)  a decrease; no change 
C)  no change; an increase 
D)  no change; a decrease

Question 2

Exhibit 14A-2  Macro AD-AS Model   In Exhibit 14A-2, the long-run aggregate supply curve represents:

Accepted Answer

A)  potential real GDP output for this economy. 
B)  that the economy is experiencing zero inflation. 
C)  that the economy is experiencing a recessionary gap. 
D)  the level of real GDP where the unemployment rate is zero. 
A)  potential real GDP output for this economy. 
B)  that the economy is experiencing zero inflation. 
C)  that the economy is experiencing a recessionary gap. 
D)  the level of real GDP where the unemployment rate is zero.

Question 3

An aggregate supply curve with a positive slope is associated with an economy in which:

Accepted Answer

A)  input prices and final goods prices always change by the same amount. 
B)  firms expect output prices to be unaffected by changes in input prices. 
C)  nominal wages and salaries do not change much in the short run. 
D)  firms expect consumer demand to be unaffected by changes in prices of final goods. 
A)  input prices and final goods prices always change by the same amount. 
B)  firms expect output prices to be unaffected by changes in input prices. 
C)  nominal wages and salaries do not change much in the short run. 
D)  firms expect consumer demand to be unaffected by changes in prices of final goods.

A decrease in the aggregate demand curve along the LRAS curve, all other things unchanged, will generate in potential real GDP and in the price level.

Exhibit 14A-2 Macro AD-AS Model In Exhibit 14A-2, the long-run aggregate supply curve represents:

An aggregate supply curve with a positive slope is associated with an economy in which:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

Exam 14: Aggregate Demand and Supply

A decrease in the aggregate demand curve along the LRAS curve, all other things unchanged, will generate ____ in potential real GDP and ____ in the price level.

Exhibit 14A-2 Macro AD-AS Model In Exhibit 14A-2, the long-run aggregate supply curve represents:

An aggregate supply curve with a positive slope is associated with an economy in which:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

A decrease in the aggregate demand curve along the LRAS curve, all other things unchanged, will generate in potential real GDP and in the price level.