Question 1

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 2

Describe the main explanations for the downward rigidity of wages in the modern macroeconomy.Evaluate their probability of being correct and important.

Accepted Answer

One reason is the existence of instituti

Question 3

The usual results of an adverse supply shock are

Accepted Answer

A)  a rise in prices and a fall in output. 
B)  a fall in prices and a rise in output. 
C)  increased growth and lower inflation. 
D)  higher net exports. 
A)  a rise in prices and a fall in output. 
B)  a fall in prices and a rise in output. 
C)  increased growth and lower inflation. 
D)  higher net exports.

Question 4

At levels of output close to full employment,the aggregate supply curve is probably

Accepted Answer

A)  very flat. 
B)  very steep. 
C)  sloped downward. 
D)  perfectly elastic. 
A)  very flat. 
B)  very steep. 
C)  sloped downward. 
D)  perfectly elastic.

Question 5

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 6

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 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

The aggregate supply curve normally

Accepted Answer

A)  slopes downward and to the right due to higher resource prices. 
B)  has a horizontal slope equal to zero. 
C)  is very steep in the lower portion and flatter in the upper portion. 
D)  slopes upward to the right due to short-run fixed costs of production. 
A)  slopes downward and to the right due to higher resource prices. 
B)  has a horizontal slope equal to zero. 
C)  is very steep in the lower portion and flatter in the upper portion. 
D)  slopes upward to the right due to short-run fixed costs of production.

Question 9

The existence of an inflationary gap would tend to benefit most

Accepted Answer

A)  bankers. 
B)  retired persons. 
C)  unemployed workers. 
D)  stock owners. 
A)  bankers. 
B)  retired persons. 
C)  unemployed workers. 
D)  stock owners.

Question 10

If the selling price falls and input costs are fixed,profit margins will increase.

Accepted Answer

A) True 
 B)False

Question 11

When inflation occurs,net exports will

Accepted Answer

A)  increase as imports decrease. 
B)  increase as exports increase. 
C)  decrease as imports decrease. 
D)  decrease as imports increase. 
A)  increase as imports decrease. 
B)  increase as exports increase. 
C)  decrease as imports decrease. 
D)  decrease as imports increase.

Question 12

If money wages increase,the most likely result is a(n)

Accepted Answer

A)  increase in aggregate supply. 
B)  decrease in aggregate supply. 
C)  steeper aggregate supply curve. 
D)  flatter aggregate supply curve. 
A)  increase in aggregate supply. 
B)  decrease in aggregate supply. 
C)  steeper aggregate supply curve. 
D)  flatter aggregate supply curve.

Question 13

If aggregate quantity demanded exceeds aggregate quantity supplied,we can expect an unplanned

Accepted Answer

A)  depletion of inventories, causing firms to raise prices. 
B)  depletion of inventories, causing firms to lower prices. 
C)  accumulation of inventories, causing firms to raise prices. 
D)  accumulation of inventories, causing firms to lower prices. 
A)  depletion of inventories, causing firms to raise prices. 
B)  depletion of inventories, causing firms to lower prices. 
C)  accumulation of inventories, causing firms to raise prices. 
D)  accumulation of inventories, causing firms to lower prices.

Question 14

A decrease in the price of resources will cause the aggregate supply curve to

Accepted Answer

A)  shift outward. 
B)  shift inward. 
C)  become flatter. 
D)  become steeper. 
A)  shift outward. 
B)  shift inward. 
C)  become flatter. 
D)  become steeper.

Question 15

Using the concepts of aggregate demand and aggregate supply,explain how the economy reaches an equilibrium level of real GDP and price level.

Accepted Answer

Equilibrium of real GDP and price level

Question 16

Figure 10-9
  
-Figure 10-9 describes which of the following periods in the U.S.?

Accepted Answer

A)  1930s 
B)  1973-1975 
C)  late 1990s 
D)  2007-2009 
A)  1930s 
B)  1973-1975 
C)  late 1990s 
D)  2007-2009

Question 17

The aggregate supply curve slopes

Accepted Answer

A)  downward because firms can sell more at lower prices. 
B)  downward because firms can hire more workers at lower prices. 
C)  upward because firms want to hire more workers at higher wage levels. 
D)  upward because firms can hire labor at fixed wages for short-run periods. 
A)  downward because firms can sell more at lower prices. 
B)  downward because firms can hire more workers at lower prices. 
C)  upward because firms want to hire more workers at higher wage levels. 
D)  upward because firms can hire labor at fixed wages for short-run periods.

Question 18

When equilibrium GDP is greater than potential GDP,jobs are plentiful and labor is in great demand.

Accepted Answer

A) True 
 B)False

Question 19

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 20

The aggregate supply curve shows the relationship between ____ and ____,holding all other factors constant.

Accepted Answer

A)  price level; quantity of real GDP supplied 
B)  price level; supply of nominal GDP 
C)  nominal GDP; price level of real GDP 
D)  price level; amount of nominal GDP supplied 
A)  price level; quantity of real GDP supplied 
B)  price level; supply of nominal GDP 
C)  nominal GDP; price level of real GDP 
D)  price level; amount of nominal GDP supplied

An inflationary gap will exist when

Describe the main explanations for the downward rigidity of wages in the modern macroeconomy.Evaluate their probability of being correct and important.

The usual results of an adverse supply shock are

At levels of output close to full employment,the aggregate supply curve is probably

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

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

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

The aggregate supply curve normally

The existence of an inflationary gap would tend to benefit most

If the selling price falls and input costs are fixed,profit margins will increase.

When inflation occurs,net exports will

If money wages increase,the most likely result is a(n)

If aggregate quantity demanded exceeds aggregate quantity supplied,we can expect an unplanned

A decrease in the price of resources will cause the aggregate supply curve to

Using the concepts of aggregate demand and aggregate supply,explain how the economy reaches an equilibrium level of real GDP and price level.

Figure 10-9 -Figure 10-9 describes which of the following periods in the U.S.?

The aggregate supply curve slopes

When equilibrium GDP is greater than potential GDP,jobs are plentiful and labor is in great demand.

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?

The aggregate supply curve shows the relationship between and ,holding all other factors constant.

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?

An inflationary gap will exist when

Describe the main explanations for the downward rigidity of wages in the modern macroeconomy.Evaluate their probability of being correct and important.

The usual results of an adverse supply shock are

At levels of output close to full employment,the aggregate supply curve is probably

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

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

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

The aggregate supply curve normally

The existence of an inflationary gap would tend to benefit most

If the selling price falls and input costs are fixed,profit margins will increase.

When inflation occurs,net exports will

If money wages increase,the most likely result is a(n)

If aggregate quantity demanded exceeds aggregate quantity supplied,we can expect an unplanned

A decrease in the price of resources will cause the aggregate supply curve to

Using the concepts of aggregate demand and aggregate supply,explain how the economy reaches an equilibrium level of real GDP and price level.

Figure 10-9 -Figure 10-9 describes which of the following periods in the U.S.?

The aggregate supply curve slopes

When equilibrium GDP is greater than potential GDP,jobs are plentiful and labor is in great demand.

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?

The aggregate supply curve shows the relationship between ____ and ____,holding all other factors constant.

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

The aggregate supply curve shows the relationship between and ,holding all other factors constant.