Question 1

An adverse supply shock would shift _____

Accepted Answer

A)  only the short-run aggregate supply curve outward. 
B)  only the long-run aggregate supply curve outward. 
C)  only the long-run aggregate supply curve inward. 
D)  only the short-run aggregate supply curve inward. 
E)  both the long-run and the short-run aggregate supply curves inward. 
A)  only the short-run aggregate supply curve outward. 
B)  only the long-run aggregate supply curve outward. 
C)  only the long-run aggregate supply curve inward. 
D)  only the short-run aggregate supply curve inward. 
E)  both the long-run and the short-run aggregate supply curves inward.

Question 2

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 3

Which of the following explains the shape of the short-run aggregate supply curve?

Accepted Answer

A)  the inverse relationship between quantity supplied and cost per unit 
B)  the direct relationship between quantity supplied and cost per unit 
C)  the direct relationship between quantity supplied and price level 
D)  the inverse relationship between quantity supplied and GDP 
E)  the inverse relationship between quantity supplied and profit per unit 
A)  the inverse relationship between quantity supplied and cost per unit 
B)  the direct relationship between quantity supplied and cost per unit 
C)  the direct relationship between quantity supplied and price level 
D)  the inverse relationship between quantity supplied and GDP 
E)  the inverse relationship between quantity supplied and profit per unit

Question 4

Which of the following is true when an economy is in long-run equilibrium?

Accepted Answer

A)  Actual output can exceed potential output. 
B)  Potential output can exceed actual output. 
C)  Actual output must equal potential output. 
D)  Real GDP must equal nominal GDP. 
E)  Expected price level can exceed actual price level. 
A)  Actual output can exceed potential output. 
B)  Potential output can exceed actual output. 
C)  Actual output must equal potential output. 
D)  Real GDP must equal nominal GDP. 
E)  Expected price level can exceed actual price level.

Question 5

Exhibit 10.1
  
-Refer to Exhibit 10.1, which shows the short-run aggregate supply curve of an economy. An expansionary gap would be represented by the distance between _____

Accepted Answer

A)  Y₂ and Y₁. 
B)  Y₃ and Y₁. 
C)  Y₂ and Y₃. 
D)  P₂ and P₁. 
E)  P₂ and P₃. 
A)  Y₂ and Y₁. 
B)  Y₃ and Y₁. 
C)  Y₂ and Y₃. 
D)  P₂ and P₁. 
E)  P₂ and P₃.

Question 6

If resource suppliers and demanders find out that the actual price level exceeds the expected price level, they will take corrective actions that will _____

Accepted Answer

A)  cause an economy to move away from the potential output level. 
B)  raise the unemployment level above the natural rate of unemployment. 
C)  shift the aggregate demand curve for an economy. 
D)  shift the short-run aggregate supply curve of an economy. 
E)  lower the actual price level. 
A)  cause an economy to move away from the potential output level. 
B)  raise the unemployment level above the natural rate of unemployment. 
C)  shift the aggregate demand curve for an economy. 
D)  shift the short-run aggregate supply curve of an economy. 
E)  lower the actual price level.

Question 7

The capital stock of an economy increases _____

Accepted Answer

A)  whenever money in circulation decreases. 
B)  whenever gross investment is greater than zero. 
C)  whenever gross investment is negative. 
D)  only if net investment is positive. 
E)  only if gross investment is zero. 
A)  whenever money in circulation decreases. 
B)  whenever gross investment is greater than zero. 
C)  whenever gross investment is negative. 
D)  only if net investment is positive. 
E)  only if gross investment is zero.

Question 8

Exhibit 10.3
  
-Refer to Exhibit 10.3, which shows an aggregate demand-aggregate supply model. The shift from AS to AS' represents a(n) _____

Accepted Answer

A)  increase in short-run aggregate supply. 
B)  increase in long-run aggregate supply. 
C)  decrease in short-run aggregate supply. 
D)  decrease in long-run aggregate supply. 
E)  decrease in the aggregate quantity demanded. 
A)  increase in short-run aggregate supply. 
B)  increase in long-run aggregate supply. 
C)  decrease in short-run aggregate supply. 
D)  decrease in long-run aggregate supply. 
E)  decrease in the aggregate quantity demanded.

Question 9

Exhibit 10.1
  
-Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. If output is at Y₁, _____

Accepted Answer

A)  the economy produces its potential output and unemployment is at the natural rate. 
B)  the economy produces its potential output and unemployment is higher than the natural rate. 
C)  the economy produces its potential output and unemployment is lower than the natural rate. 
D)  the economy is less than its potential output and unemployment is at the natural rate. 
E)  the economy is more than its potential output and unemployment is at the natural rate. 
A)  the economy produces its potential output and unemployment is at the natural rate. 
B)  the economy produces its potential output and unemployment is higher than the natural rate. 
C)  the economy produces its potential output and unemployment is lower than the natural rate. 
D)  the economy is less than its potential output and unemployment is at the natural rate. 
E)  the economy is more than its potential output and unemployment is at the natural rate.

Question 10

Suppose the real wage remains unchanged between Year 1 and Year 2 but the nominal wage increases from $20 to $24. Based on this information, we can conclude that the price level has _____

Accepted Answer

A)  increased by 20 percent. 
B)  increased by 25 percent. 
C)  remained unchanged. 
D)  decreased by 10 percent. 
E)  decreased by 20 percent. 
A)  increased by 20 percent. 
B)  increased by 25 percent. 
C)  remained unchanged. 
D)  decreased by 10 percent. 
E)  decreased by 20 percent.

Question 11

In the long run, the price level in an economy is determined solely by _____

Accepted Answer

A)  the long-run aggregate supply curve. 
B)  the aggregate demand curve. 
C)  the amount of cyclical unemployment in the economy. 
D)  the short-run aggregate supply curve. 
E)  the actual output level. 
A)  the long-run aggregate supply curve. 
B)  the aggregate demand curve. 
C)  the amount of cyclical unemployment in the economy. 
D)  the short-run aggregate supply curve. 
E)  the actual output level.

Question 12

Exhibit 10.2
  
-Refer to Exhibit 10.2, which shows the short-run aggregate supply curve of an economy. In this Exhibit, the distance between Y₁ and Y₂ represents _____

Accepted Answer

A)  an expansionary gap. 
B)  a recessionary gap. 
C)  cost-push inflation. 
D)  the natural rate of unemployment. 
E)  the full-employment output. 
A)  an expansionary gap. 
B)  a recessionary gap. 
C)  cost-push inflation. 
D)  the natural rate of unemployment. 
E)  the full-employment output.

Question 13

Table 10.2
  
-Refer to Table 10.2, which shows the aggregate demand and aggregate supply in an economy. In schedule #2, the equilibrium output and price level for the economy are _____

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 14

Exhibit 10.9
  
-Refer to Exhibit 10.9, which shows the long-run equilibrium in the aggregate demand-aggregate supply model. The movement from Y₁ to Y₂ in this exhibit could have been caused by a(n) _____

Accepted Answer

A)  decrease in the size of the labor force. 
B)  decrease in the price level. 
C)  positive level of net investment. 
D)  increase in autonomous consumption. 
E)  decrease in autonomous consumption. 
A)  decrease in the size of the labor force. 
B)  decrease in the price level. 
C)  positive level of net investment. 
D)  increase in autonomous consumption. 
E)  decrease in autonomous consumption.

Question 15

Which of the following is most likely to increase long-run aggregate supply in an economy?

Accepted Answer

A)  a decrease in the size of the labor force 
B)  a deterioration in the quality of the labor force 
C)  a reduction in the cost of using computers 
D)  an increase in the price level 
E)  an increase in aggregate demand 
A)  a decrease in the size of the labor force 
B)  a deterioration in the quality of the labor force 
C)  a reduction in the cost of using computers 
D)  an increase in the price level 
E)  an increase in aggregate demand

Question 16

Table 10.1
 $$\begin{array}{l}
\text { Table } 10.1\
\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { Aggregate Output } \
\text { Demanded (\$) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { Level }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Aggregate Output } \
\text { Supplied (\$) }
\end{array} \
\hline 7.0 & 110 & 5.0 \
\hline 6.5 & 120 & 5.5 \
\hline 6.0 & 130 & 6.0 \
\hline 5.5 & 140 & 6.5 \
\hline 5.0 & 150 & 7.0 \
\hline
\end{array}
\end{array}$$
-Refer to Table 10.1, which shows the aggregate demand and aggregate supply in an economy. The equilibrium output and price level for the economy are _____

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 17

How much is the output gap if short-run output is $18.0 trillion and potential output is $18.2 trillion?

Accepted Answer

A)  $18.2 trillion. 
B)  $18.0 trillion. 
C)  + $0.2 trillion. 
D)  - $0.2 trillion. 
E)  Zero. 
A)  $18.2 trillion. 
B)  $18.0 trillion. 
C)  + $0.2 trillion. 
D)  - $0.2 trillion. 
E)  Zero.

Question 18

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

Question 19

Exhibit 10.8
  
-Refer to Exhibit 10.8, which shows the long-run equilibrium in an aggregate demand-aggregate supply model. Which of the following is indicated by the arrow given?

Accepted Answer

A)  a decrease in capital stock 
B)  an increase in long-run aggregate supply 
C)  an increase in nominal wage 
D)  a decrease in long-run aggregate supply 
E)  a decrease in the aggregate quantity demanded 
A)  a decrease in capital stock 
B)  an increase in long-run aggregate supply 
C)  an increase in nominal wage 
D)  a decrease in long-run aggregate supply 
E)  a decrease in the aggregate quantity demanded

Question 20

In the short run, there is a positive relationship between _____

Accepted Answer

A)  inflation and unemployment. 
B)  inflation and real GDP. 
C)  the actual price level and the aggregate quantity supplied. 
D)  the actual price level and unemployment. 
E)  the actual price level and consumption spending. 
A)  inflation and unemployment. 
B)  inflation and real GDP. 
C)  the actual price level and the aggregate quantity supplied. 
D)  the actual price level and unemployment. 
E)  the actual price level and consumption spending.

An adverse supply shock would shift _____

Cyclical unemployment in an economy will be zero when _____

Which of the following explains the shape of the short-run aggregate supply curve?

Which of the following is true when an economy is in long-run equilibrium?

Exhibit 10.1 -Refer to Exhibit 10.1, which shows the short-run aggregate supply curve of an economy. An expansionary gap would be represented by the distance between _____

If resource suppliers and demanders find out that the actual price level exceeds the expected price level, they will take corrective actions that will _____

The capital stock of an economy increases _____

Exhibit 10.3 -Refer to Exhibit 10.3, which shows an aggregate demand-aggregate supply model. The shift from AS to AS' represents a(n) _____

Exhibit 10.1 -Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. If output is at Y₁, _____

Suppose the real wage remains unchanged between Year 1 and Year 2 but the nominal wage increases from $20 to $24. Based on this information, we can conclude that the price level has _____

In the long run, the price level in an economy is determined solely by _____

Exhibit 10.2 -Refer to Exhibit 10.2, which shows the short-run aggregate supply curve of an economy. In this Exhibit, the distance between Y₁ and Y₂ represents _____

Table 10.2 -Refer to Table 10.2, which shows the aggregate demand and aggregate supply in an economy. In schedule #2, the equilibrium output and price level for the economy are _____

Exhibit 10.9 -Refer to Exhibit 10.9, which shows the long-run equilibrium in the aggregate demand-aggregate supply model. The movement from Y₁ to Y₂ in this exhibit could have been caused by a(n) _____

Which of the following is most likely to increase long-run aggregate supply in an economy?

How much is the output gap if short-run output is $18.0 trillion and potential output is $18.2 trillion?

An expansionary gap is closed in the long run by a(n) _____

Exhibit 10.8 -Refer to Exhibit 10.8, which shows the long-run equilibrium in an aggregate demand-aggregate supply model. Which of the following is indicated by the arrow given?

In the short run, there is a positive relationship between _____

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Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

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Macro Policy Debate: Active or Passive?

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Exam 10: Aggregate Supply.

An adverse supply shock would shift _____

Cyclical unemployment in an economy will be zero when _____

Which of the following explains the shape of the short-run aggregate supply curve?

Which of the following is true when an economy is in long-run equilibrium?

Exhibit 10.1 -Refer to Exhibit 10.1, which shows the short-run aggregate supply curve of an economy. An expansionary gap would be represented by the distance between _____

If resource suppliers and demanders find out that the actual price level exceeds the expected price level, they will take corrective actions that will _____

The capital stock of an economy increases _____

Exhibit 10.3 -Refer to Exhibit 10.3, which shows an aggregate demand-aggregate supply model. The shift from AS to AS' represents a(n) _____

Exhibit 10.1 -Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. If output is at Y₁, _____

Suppose the real wage remains unchanged between Year 1 and Year 2 but the nominal wage increases from $20 to $24. Based on this information, we can conclude that the price level has _____

In the long run, the price level in an economy is determined solely by _____

Exhibit 10.2 -Refer to Exhibit 10.2, which shows the short-run aggregate supply curve of an economy. In this Exhibit, the distance between Y₁ and Y₂ represents _____

Table 10.2 -Refer to Table 10.2, which shows the aggregate demand and aggregate supply in an economy. In schedule #2, the equilibrium output and price level for the economy are _____

Exhibit 10.9 -Refer to Exhibit 10.9, which shows the long-run equilibrium in the aggregate demand-aggregate supply model. The movement from Y₁ to Y₂ in this exhibit could have been caused by a(n) _____

Which of the following is most likely to increase long-run aggregate supply in an economy?

How much is the output gap if short-run output is $18.0 trillion and potential output is $18.2 trillion?

An expansionary gap is closed in the long run by a(n) _____

Exhibit 10.8 -Refer to Exhibit 10.8, which shows the long-run equilibrium in an aggregate demand-aggregate supply model. Which of the following is indicated by the arrow given?

In the short run, there is a positive relationship between _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

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.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

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