Exam 6: An Introduction to Macroeconomics

-The above diagram (a)represents the demand for and supply of a brand of automobile (Turbo-car)for a car manufacturing company named Fancy Auto.Assume that D_L represents low demand for the Turbo-car,D_M represents the medium level of demand and,D_H represents the high level of demand for Turbo-car and Fancy Auto's optimal output level is 900 cars per week.If the prices are flexible,Fancy Auto:

Inflation means:

In reality,all the prices in the economy are inflexible and are not able to change rapidly when demand changes unexpectedly.

Before the start of the Industrial Revolution in the late 1700s,living standards around the world were quite different.

Demand shocks are the expected changes in the demand for goods and services.

Sticky prices imply that some firms are afraid to cut their prices because they are afraid of price wars.

In response to some unexpected changes in demand:

To facilitate the international comparisons of living standards around the world,adjustments are supposed to be made to each country's GDP.These adjustments require:

If prices are flexible,no matter what demand turns out to be,firms can continue selling their optimal output.

The inequality of saving and planned investment:

The higher is the current level of saving:

The term "inflation" describes the situation where:

When we say "Prices of many goods and services are inflexible in the short-run" it means:

Which of the following have the most flexible prices?

-Refer to the above diagram (b),assume that D_L represents low demand for the Turbo-car,D_M represents the medium level of demand and,D_H represents the high level of demand for Turbo-car and,Fancy Auto's optimal output level is 900 cars per week.If the Fancy Auto Company has a fixed price policy of $37,000 per vehicle:

To keep track of long-run growth and short-run fluctuations,economists will look at statistics such as:

The decisions about savings and investments are complicated because:

In 2008-2009,the Canadian economy experienced:

Assuming inflexible prices,if the demand for many goods and services falls across the entire economy and for an extended period of time:

Modern economic growth refers to the idea of experiencing: