Question 1

Decreasing profit margins indicate a need to increase production in an economy.

Accepted Answer

A) True 
 B)False

Question 2

The primary effect of OPEC actions in the period from 1973 to 1980 was to increase

Accepted Answer

A)  wage rates. 
B)  interest rates. 
C)  employment and output. 
D)  energy prices. 
A)  wage rates. 
B)  interest rates. 
C)  employment and output. 
D)  energy prices.

Question 3

An economist who claims that an increase in government spending would result mainly in a higher price level believes the economy is operating where

Accepted Answer

A)  the MPC is small. 
B)  the MPC is large. 
C)  aggregate supply curve is flat. 
D)  aggregate supply curve is steep. 
A)  the MPC is small. 
B)  the MPC is large. 
C)  aggregate supply curve is flat. 
D)  aggregate supply curve is steep.

Question 4

If the price level rises,what will happen to aggregate supply?

Accepted Answer

A)  It will shift outward. 
B)  It will shift inward. 
C)  Nothing. 
D)  It will get steeper. 
E)  It will get flatter. 
A)  It will shift outward. 
B)  It will shift inward. 
C)  Nothing. 
D)  It will get steeper. 
E)  It will get flatter.

Question 5

The aggregate supply curve slopes upward because firms

Accepted Answer

A)  seek to maximize profits and output. 
B)  normally can purchase inputs at fixed prices. 
C)  employ technology, which is always fixed. 
D)  purchase inputs whose prices rise as output rises. 
A)  seek to maximize profits and output. 
B)  normally can purchase inputs at fixed prices. 
C)  employ technology, which is always fixed. 
D)  purchase inputs whose prices rise as output rises.

Question 6

An increase in wages 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 7

The OPEC production cuts of 1999-2000 increased energy prices and caused 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 8

Over time,aggregate demand and aggregate supply grow by the same amount.

Accepted Answer

A) True 
 B)False

Question 9

What is the usual response of firm to an increase in the price of what they sell?

Accepted Answer

A)  An increase in output. 
B)  An increase in hiring factors of production. 
C)  An increase in the profit level of the firm. 
D)  An increase in employment at the firm. 
E)  All of the above. 
A)  An increase in output. 
B)  An increase in hiring factors of production. 
C)  An increase in the profit level of the firm. 
D)  An increase in employment at the firm. 
E)  All of the above.

Question 10

Aggregate supply can be thought of as

Accepted Answer

A)  a fixed amount of output. 
B)  unrelated to the price level. 
C)  a schedule of output at different price levels. 
D)  the volume of goods at the ends of the production possibilities curve. 
A)  a fixed amount of output. 
B)  unrelated to the price level. 
C)  a schedule of output at different price levels. 
D)  the volume of goods at the ends of the production possibilities curve.

Question 11

A period of stagflation can be considered as part of the normal aftermath of a

Accepted Answer

A)  decrease in aggregate demand. 
B)  period of high unemployment. 
C)  period of low unemployment. 
D)  period of inward shifting aggregate demand. 
A)  decrease in aggregate demand. 
B)  period of high unemployment. 
C)  period of low unemployment. 
D)  period of inward shifting aggregate demand.

Question 12

The reason why inflation reduces the value of the multiplier is that part of the change in demand is

Accepted Answer

A)  absorbed by price changes. 
B)  saved rather than spent. 
C)  matched by changes in supply. 
D)  matched by changes in income. 
A)  absorbed by price changes. 
B)  saved rather than spent. 
C)  matched by changes in supply. 
D)  matched by changes in income.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

In our modern economy,the adjustment process necessary to eliminate a recessionary gap is very rapid.

Accepted Answer

A) True 
 B)False

Question 15

An increase in the price level causes the aggregate supply curve to shift to another supply schedule.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Figure 10-3
  
-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 18

The principal way in which an economy self-corrects from an inflationary gap is through

Accepted Answer

A)  deflation, which increases purchasing power. 
B)  inflation, which reduces purchasing power. 
C)  disinflation, which maintains purchasing power. 
D)  price level decreases, which stimulate production. 
A)  deflation, which increases purchasing power. 
B)  inflation, which reduces purchasing power. 
C)  disinflation, which maintains purchasing power. 
D)  price level decreases, which stimulate production.

Question 19

Wage increases are resisted by firms because they decrease profits.

Accepted Answer

A) True 
 B)False

Question 20

When the inflationary gap is finally eliminated,a long-run equilibrium is established with a ____ price level and with GDP ____ potential GDP.

Accepted Answer

A)  higher; equal to 
B)  higher; greater than 
C)  lower; equal to 
D)  lower; greater than 
A)  higher; equal to 
B)  higher; greater than 
C)  lower; equal to 
D)  lower; greater than

Decreasing profit margins indicate a need to increase production in an economy.

The primary effect of OPEC actions in the period from 1973 to 1980 was to increase

An economist who claims that an increase in government spending would result mainly in a higher price level believes the economy is operating where

If the price level rises,what will happen to aggregate supply?

The aggregate supply curve slopes upward because firms

An increase in wages will cause the aggregate supply curve to

The OPEC production cuts of 1999-2000 increased energy prices and caused the aggregate supply curve to

Over time,aggregate demand and aggregate supply grow by the same amount.

What is the usual response of firm to an increase in the price of what they sell?

Aggregate supply can be thought of as

A period of stagflation can be considered as part of the normal aftermath of a

The reason why inflation reduces the value of the multiplier is that part of the change in demand is

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

In our modern economy,the adjustment process necessary to eliminate a recessionary gap is very rapid.

An increase in the price level causes the aggregate supply curve to shift to another supply schedule.

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

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

The principal way in which an economy self-corrects from an inflationary gap is through

Wage increases are resisted by firms because they decrease profits.

When the inflationary gap is finally eliminated,a long-run equilibrium is established with a price level and with GDP potential GDP.

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?

Decreasing profit margins indicate a need to increase production in an economy.

The primary effect of OPEC actions in the period from 1973 to 1980 was to increase

An economist who claims that an increase in government spending would result mainly in a higher price level believes the economy is operating where

If the price level rises,what will happen to aggregate supply?

The aggregate supply curve slopes upward because firms

An increase in wages will cause the aggregate supply curve to

The OPEC production cuts of 1999-2000 increased energy prices and caused the aggregate supply curve to

Over time,aggregate demand and aggregate supply grow by the same amount.

What is the usual response of firm to an increase in the price of what they sell?

Aggregate supply can be thought of as

A period of stagflation can be considered as part of the normal aftermath of a

The reason why inflation reduces the value of the multiplier is that part of the change in demand is

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

In our modern economy,the adjustment process necessary to eliminate a recessionary gap is very rapid.

An increase in the price level causes the aggregate supply curve to shift to another supply schedule.

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

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

The principal way in which an economy self-corrects from an inflationary gap is through

Wage increases are resisted by firms because they decrease profits.

When the inflationary gap is finally eliminated,a long-run equilibrium is established with a ____ price level and with GDP ____ potential GDP.

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

When the inflationary gap is finally eliminated,a long-run equilibrium is established with a price level and with GDP potential GDP.