Exam 10: Aggregate Supply.

Exhibit 10.5 -Refer to Exhibit 10.5, which shows the short-run equilibrium in an aggregate demand-aggregate supply model. If the economy is currently producing Y₁ level of output, _____

In the long run, an economy will produce its potential output if _____

Unexpected events that increase aggregate supply, sometimes only temporarily, are _____ shocks.

A beneficial supply shock such as a breakthrough in technology _____

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

The short run is a period of time during which _____

Exhibit 10.5 -Refer to Exhibit 10.5, which shows the short-run equilibrium in an aggregate demand-aggregate supply model. If the economy is currently producing Y₁ level of output, long-run equilibrium will be established if _____

Exhibit 10.6 -Refer to Exhibit 10.6, which shows the equilibrium price level and real GDP in an aggregate demand-aggregate supply model. The movement shown in this exhibit is most likely to be caused by _____

Which of the following is true about real wages?

The nominal cost per unit of output rises when production is pushed beyond an economy's potential output.

The real wage is equal to the _____

The aggregate demand-aggregate supply model shows that closing an expansionary gap involves deflation and closing a recessionary gap involves inflation.

If costs decrease, what happens to the aggregate supply curve?

Exhibit 10.1 -Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. To the right of Y₁, _____

The main effect of a decrease in the stock of capital is a(n) _____

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

If resource prices are flexible, the long-run aggregate supply curve is vertical.

In constructing the short-run aggregate supply curve, we assume that the goal of business is to _____

The amount by which actual output falls short of potential output is called _____

Suppose the price level increases by 5 percent and the nominal wages of workers increase by 3 percent during a particular year. This implies that the real wage has _____