Question 1

In the long run,the price level is determined by aggregate supply.​

Accepted Answer

A) True 
 B)False  False

Question 2

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. C

Question 3

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.Which of the following is indicated by the arrow given in this figure?​ ​
Figure 10.8
​

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​ B

Question 4

If the price level in the current year is much higher than the expected price level,_____.​

Accepted Answer

A) firms will increase production beyond the economy's potential level 
B) the unemployment rate will increase​ 
C) firms will decrease production below the economy's potential level​ 
D) the short-run aggregate supply curve will become steeper​ 
E) the unemployment rate will fall to zero​ 
A) firms will increase production beyond the economy's potential level 
B) the unemployment rate will increase​ 
C) firms will decrease production below the economy's potential level​ 
D) the short-run aggregate supply curve will become steeper​ 
E) the unemployment rate will fall to zero​

Question 5

The more the short-run output exceeds an economy's potential,_____.​

Accepted Answer

A) the smaller the expansionary gap 
B) the greater the upward pressure on the price level​ 
C) the larger the recessionary gap​ 
D) the greater the downward pressure on the price level​ 
E) the lesser the demand for resources​ 
A) the smaller the expansionary gap 
B) the greater the upward pressure on the price level​ 
C) the larger the recessionary gap​ 
D) the greater the downward pressure on the price level​ 
E) the lesser the demand for resources​

Question 6

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

Accepted Answer

A) maximize sales revenue. 
B) maximize profit. 
C) maximize growth in assets. 
D) maximize growth in sales. 
E) minimize cost. 
A) maximize sales revenue. 
B) maximize profit. 
C) maximize growth in assets. 
D) maximize growth in sales. 
E) minimize cost.

Question 7

Workers usually negotiate compensation in terms of the nominal wage because wage agreements are based on expected price levels.​

Accepted Answer

A) True 
 B)False

Question 8

The natural rate of unemployment includes frictional,cyclical,and structural unemployment.​

Accepted Answer

A) True 
 B)False

Question 9

Which of these is most likely to shift the long-run aggregate supply curve to the left?​

Accepted Answer

A) An increase in the average workweek 
B) An improvement in technology​ 
C) A civil war​ 
D) A decrease in aggregate demand​ 
E) A decline in global oil prices​ 
A) An increase in the average workweek 
B) An improvement in technology​ 
C) A civil war​ 
D) A decrease in aggregate demand​ 
E) A decline in global oil prices​

Question 10

Which of the following is true in the short run?​

Accepted Answer

A) The aggregate supply curve is horizontal. 
B) The aggregate supply curve is vertical. 
C) Per-unit costs do not increase as much as output prices when the price level rises. 
D) An increase in price per unit results in a decrease in profit per unit. 
E) Firms' total costs of production decrease as output expands beyond the potential level. 
A) The aggregate supply curve is horizontal. 
B) The aggregate supply curve is vertical. 
C) Per-unit costs do not increase as much as output prices when the price level rises. 
D) An increase in price per unit results in a decrease in profit per unit. 
E) Firms' total costs of production decrease as output expands beyond the potential level.

Question 11

If the price level increases by 5 percent and the nominal wage increases by 3.5 percent,the real wage will decrease by 1.5 percent.​

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

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

Question 13

The figure below shows 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:​ ​
Figure 10.5

Accepted Answer

A) the short-run aggregate supply curve shifts to the right to remove the expansionary gap. 
B) the short-run aggregate supply curve shifts to the left to remove the expansionary gap. 
C) the short-run aggregate supply curve shifts to the left to remove the recessionary gap. 
D) the short-run aggregate supply curve shifts to the right to remove the recessionary gap. 
E) there is a leftward shift of the aggregate demand curve. 
A) the short-run aggregate supply curve shifts to the right to remove the expansionary gap. 
B) the short-run aggregate supply curve shifts to the left to remove the expansionary gap. 
C) the short-run aggregate supply curve shifts to the left to remove the recessionary gap. 
D) the short-run aggregate supply curve shifts to the right to remove the recessionary gap. 
E) there is a leftward shift of the aggregate demand curve.

Question 14

The figure below shows the determination of the equilibrium price level and real GDP in an aggregate demand-aggregate supply model.The movement shown in this figure is most likely to be caused by:​ ​
Figure 10.6

Accepted Answer

A) a decrease in the real wage. 
B) an increase in the economy's capital stock. 
C) the actions of a labor union. 
D) a decrease in consumer spending. 
E) an increase in labor productivity. 
A) a decrease in the real wage. 
B) an increase in the economy's capital stock. 
C) the actions of a labor union. 
D) a decrease in consumer spending. 
E) an increase in labor productivity.

Question 15

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of the following will be true of an economy in the long run that is at point M in the short run?​ ​
Figure 10.4
​

Accepted Answer

A) The actual price level will be lower than the expected price level. 
B) The actual output will fall short of the potential output. 
C) The short-run aggregate supply curve will remain stable at SRAS100. 
D) The short-run aggregate supply curve will shift to SRAS109. 
E) Real GDP will be equal to nominal GDP. 
A) The actual price level will be lower than the expected price level. 
B) The actual output will fall short of the potential output. 
C) The short-run aggregate supply curve will remain stable at SRAS100. 
D) The short-run aggregate supply curve will shift to SRAS109. 
E) Real GDP will be equal to nominal GDP.

Question 16

The figure below shows the short-run aggregate supply of an economy.Which of the following is likely to be true if the actual price level in this figure exceeds the expected price level?​ ​
Figure 10.1

Accepted Answer

A) Equilibrium output will be Y2 in the short run. 
B) Equilibrium output will be Y1 in the short run. 
C) The actual unemployment rate is below the natural rate. 
D) Potential output is greater than actual output. 
E) The actual price level is less than the equilibrium price level. 
A) Equilibrium output will be Y2 in the short run. 
B) Equilibrium output will be Y1 in the short run. 
C) The actual unemployment rate is below the natural rate. 
D) Potential output is greater than actual output. 
E) The actual price level is less than the equilibrium price level.

Question 17

Suppose the actual and expected price levels in an economy are initially equal.However,the actual price level falls eventually due to a change in economic conditions.Which of the following will occur over the long run?​

Accepted Answer

A) The economy will move rightward along the short-run aggregate supply curve. 
B) The economy will move leftward along the short-run aggregate supply curve. 
C) The short-run aggregate supply curve will shift to the right. 
D) The short-run aggregate supply curve will shift to the left. 
E) The short-run aggregate supply curve will become flatter. 
A) The economy will move rightward along the short-run aggregate supply curve. 
B) The economy will move leftward along the short-run aggregate supply curve. 
C) The short-run aggregate supply curve will shift to the right. 
D) The short-run aggregate supply curve will shift to the left. 
E) The short-run aggregate supply curve will become flatter.

Question 18

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.In this figure,the distance between points Y1 and Y2 represents:​ ​
Figure 10.5

Accepted Answer

A) an expansionary gap. 
B) a recessionary gap. 
C) the potential output. 
D) seasonal unemployment. 
E) structural unemployment. 
A) an expansionary gap. 
B) a recessionary gap. 
C) the potential output. 
D) seasonal unemployment. 
E) structural unemployment.

Question 19

The rate at which aggregate supply changes to restore equilibrium at potential output depends crucially on:​

Accepted Answer

A) how quickly planned investment spending adjusts to changes in population growth. 
B) how quickly planned consumption spending adjusts to changes in the price level and nominal wages. 
C) how quickly technology changes to increase aggregate supply. 
D) whether the economy is experiencing a recessionary gap or an expansionary gap. 
E) how quickly real wages adjust to restore full employment in the labor market. 
A) how quickly planned investment spending adjusts to changes in population growth. 
B) how quickly planned consumption spending adjusts to changes in the price level and nominal wages. 
C) how quickly technology changes to increase aggregate supply. 
D) whether the economy is experiencing a recessionary gap or an expansionary gap. 
E) how quickly real wages adjust to restore full employment in the labor market.

Question 20

Which of the following is true of an expansionary gap?​

Accepted Answer

A) It develops when the expected price level exceeds the actual price level. 
B) In the long run,this gap will close when resource suppliers negotiate lower resource payments. 
C) It measures the amount by which actual output falls short of the economy's potential. 
D) In the long run,this gap will close when the short-run aggregate supply curve shifts rightward. 
E) In the long run,this gap will close when resource suppliers negotiate higher resource payments. 
A) It develops when the expected price level exceeds the actual price level. 
B) In the long run,this gap will close when resource suppliers negotiate lower resource payments. 
C) It measures the amount by which actual output falls short of the economy's potential. 
D) In the long run,this gap will close when the short-run aggregate supply curve shifts rightward. 
E) In the long run,this gap will close when resource suppliers negotiate higher resource payments.

In the long run,the price level is determined by aggregate supply.

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

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.Which of the following is indicated by the arrow given in this figure? Figure 10.8

If the price level in the current year is much higher than the expected price level,_____.

The more the short-run output exceeds an economy's potential,_____.

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

Workers usually negotiate compensation in terms of the nominal wage because wage agreements are based on expected price levels.

The natural rate of unemployment includes frictional,cyclical,and structural unemployment.

Which of these is most likely to shift the long-run aggregate supply curve to the left?

Which of the following is true in the short run?

If the price level increases by 5 percent and the nominal wage increases by 3.5 percent,the real wage will decrease by 1.5 percent.

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

The figure below shows 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: Figure 10.5

The figure below shows the determination of the equilibrium price level and real GDP in an aggregate demand-aggregate supply model.The movement shown in this figure is most likely to be caused by: Figure 10.6

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of the following will be true of an economy in the long run that is at point M in the short run? Figure 10.4

The figure below shows the short-run aggregate supply of an economy.Which of the following is likely to be true if the actual price level in this figure exceeds the expected price level? Figure 10.1

Suppose the actual and expected price levels in an economy are initially equal.However,the actual price level falls eventually due to a change in economic conditions.Which of the following will occur over the long run?

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.In this figure,the distance between points Y₁ and Y2 represents: Figure 10.5

The rate at which aggregate supply changes to restore equilibrium at potential output depends crucially on:

Which of the following is true of an expansionary gap?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

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

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Economic Development

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Exam 10: Aggregate Supply

In the long run,the price level is determined by aggregate supply.​

In the short run,there is a positive relationship between:​

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.Which of the following is indicated by the arrow given in this figure?​ ​ Figure 10.8 ​

If the price level in the current year is much higher than the expected price level,_____.​

The more the short-run output exceeds an economy's potential,_____.​

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

Workers usually negotiate compensation in terms of the nominal wage because wage agreements are based on expected price levels.​

The natural rate of unemployment includes frictional,cyclical,and structural unemployment.​

Which of these is most likely to shift the long-run aggregate supply curve to the left?​

Which of the following is true in the short run?​

If the price level increases by 5 percent and the nominal wage increases by 3.5 percent,the real wage will decrease by 1.5 percent.​

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

The figure below shows 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:​ ​ Figure 10.5

The figure below shows the determination of the equilibrium price level and real GDP in an aggregate demand-aggregate supply model.The movement shown in this figure is most likely to be caused by:​ ​ Figure 10.6

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of the following will be true of an economy in the long run that is at point M in the short run?​ ​ Figure 10.4 ​

The figure below shows the short-run aggregate supply of an economy.Which of the following is likely to be true if the actual price level in this figure exceeds the expected price level?​ ​ Figure 10.1

Suppose the actual and expected price levels in an economy are initially equal.However,the actual price level falls eventually due to a change in economic conditions.Which of the following will occur over the long run?​

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.In this figure,the distance between points Y1 and Y2 represents:​ ​ Figure 10.5

The rate at which aggregate supply changes to restore equilibrium at potential output depends crucially on:​

Which of the following is true of an expansionary gap?​

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

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

Filters

In the long run,the price level is determined by aggregate supply.

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

The figure given below depicts long run equilibrium in an aggregate demand-aggregate supply model.Which of the following is indicated by the arrow given in this figure? Figure 10.8

If the price level in the current year is much higher than the expected price level,_____.

The more the short-run output exceeds an economy's potential,_____.

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

Workers usually negotiate compensation in terms of the nominal wage because wage agreements are based on expected price levels.

The natural rate of unemployment includes frictional,cyclical,and structural unemployment.

Which of these is most likely to shift the long-run aggregate supply curve to the left?

Which of the following is true in the short run?

If the price level increases by 5 percent and the nominal wage increases by 3.5 percent,the real wage will decrease by 1.5 percent.

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

The figure below shows 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: Figure 10.5

The figure below shows the determination of the equilibrium price level and real GDP in an aggregate demand-aggregate supply model.The movement shown in this figure is most likely to be caused by: Figure 10.6

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of the following will be true of an economy in the long run that is at point M in the short run? Figure 10.4

The figure below shows the short-run aggregate supply of an economy.Which of the following is likely to be true if the actual price level in this figure exceeds the expected price level? Figure 10.1

Suppose the actual and expected price levels in an economy are initially equal.However,the actual price level falls eventually due to a change in economic conditions.Which of the following will occur over the long run?

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.In this figure,the distance between points Y₁ and Y2 represents: Figure 10.5

The rate at which aggregate supply changes to restore equilibrium at potential output depends crucially on:

Which of the following is true of an expansionary gap?