Question 1

The capital stock of an economy increases:​

Accepted Answer

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

Question 2

The long run is the period of time during which:​

Accepted Answer

A) real wage is exactly equal to nominal wage. 
B) inflation is zero. 
C) excess aggregate demand leads to a shortage. 
D) real wages are constant. 
E) all resource prices can be varied. 
A) real wage is exactly equal to nominal wage. 
B) inflation is zero. 
C) excess aggregate demand leads to a shortage. 
D) real wages are constant. 
E) all resource prices can be varied.

Question 3

The international oil price hike by OPEC was an adverse supply shock faced by the U.S.in the 1970s.​

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

In the long run,a leftward shift of the aggregate demand curve will lead to a(n):​

Accepted Answer

A) increase in equilibrium output but will not change the price level in an economy. 
B) increase in the price level as well as the equilibrium output in an economy. 
C) decrease in the price level but will leave the equilibrium output unchanged in an economy. 
D) increase in the price level but will leave the equilibrium output unchanged in an economy. 
E) decrease in the price level as well as the equilibrium output in an economy. 
A) increase in equilibrium output but will not change the price level in an economy. 
B) increase in the price level as well as the equilibrium output in an economy. 
C) decrease in the price level but will leave the equilibrium output unchanged in an economy. 
D) increase in the price level but will leave the equilibrium output unchanged in an economy. 
E) decrease in the price level as well as the equilibrium output in an economy.

Question 6

The figure below shows the short-run aggregate supply curve of an economy.In this figure,if P1 is the price level prevailing in the economy,it implies that:​ ​
Figure 10.1

Accepted Answer

A) there is an expansionary gap. 
B) the price level will decrease. 
C) the actual unemployment rate is equal to the natural unemployment rate. 
D) the actual unemployment rate is below the natural unemployment rate. 
E) the actual rate of output is more than the potential output. 
A) there is an expansionary gap. 
B) the price level will decrease. 
C) the actual unemployment rate is equal to the natural unemployment rate. 
D) the actual unemployment rate is below the natural unemployment rate. 
E) the actual rate of output is more than the potential output.

Question 7

The longer the unemployment rate remains above the natural rate,the higher the natural rate.This theory is known as historical analysis.​

Accepted Answer

A) True 
 B)False

Question 8

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is currently producing Y1 level of output,_____.​ ​
Figure 10.5

Accepted Answer

A) potential output is less than actual output. 
B) there is zero unemployment. 
C) the price level will rise eventually. 
D) aggregate supply will fall to restore equilibrium. 
E) the actual unemployment rate is more than the natural rate. 
A) potential output is less than actual output. 
B) there is zero unemployment. 
C) the price level will rise eventually. 
D) aggregate supply will fall to restore equilibrium. 
E) the actual unemployment rate is more than the natural rate.

Question 9

The actual price level is assumed to be constant along a given short-run aggregate supply curve.​

Accepted Answer

A) True 
 B)False

Question 10

The real wage is equal to the:​

Accepted Answer

A) wage measured in terms of the quantity of goods and services it buys. 
B) wage measured in terms of the dollar value of the goods and services it buys. 
C) nominal wage net of taxes paid on wages. 
D) non-wage benefits received by workers. 
E) product of the nominal wage and the price level. 
A) wage measured in terms of the quantity of goods and services it buys. 
B) wage measured in terms of the dollar value of the goods and services it buys. 
C) nominal wage net of taxes paid on wages. 
D) non-wage benefits received by workers. 
E) product of the nominal wage and the price level.

Question 11

When resource prices are negotiable,the long-run aggregate supply curve is represented by:​

Accepted Answer

A) an upward-sloping line 
B) a downward-sloping line​ 
C) a vertical line at potential output. 
D) a horizontal line at the actual price level. 
E) a horizontal line at the expected price level. 
A) an upward-sloping line 
B) a downward-sloping line​ 
C) a vertical line at potential output. 
D) a horizontal line at the actual price level. 
E) a horizontal line at the expected price level.

Question 12

The figure below shows equilibrium in an aggregate demand-aggregate supply model.In this figure,the shift from AS to AS' is likely to occur when:​ ​
Figure 10.3

Accepted Answer

A) the actual price level is higher than expected. 
B) the actual price level is lower than expected. 
C) the unemployment rate is lower than the natural rate. 
D) the actual output is more than the potential output. 
E) the aggregate demand curve intersects the short-run aggregate supply curve at the potential output. 
A) the actual price level is higher than expected. 
B) the actual price level is lower than expected. 
C) the unemployment rate is lower than the natural rate. 
D) the actual output is more than the potential output. 
E) the aggregate demand curve intersects the short-run aggregate supply curve at the potential output.

Question 13

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 14

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 15

Which of the following supply shocks would shift the aggregate supply curve inward?​

Accepted Answer

A) A decrease in business taxes 
B) A decrease in gasoline taxes​ 
C) A decrease in the cost of raw materials​ 
D) A decrease in agricultural output​ 
E) A decrease in the amount and cost of government regulation​ 
A) A decrease in business taxes 
B) A decrease in gasoline taxes​ 
C) A decrease in the cost of raw materials​ 
D) A decrease in agricultural output​ 
E) A decrease in the amount and cost of government regulation​

Question 16

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of these situations will be experienced by the economy as it moves from point e to point e'?​ ​
Figure 10.3

Accepted Answer

A) An expansionary gap 
B) A decline in potential GDP​ 
C) Overutilization of resources​ 
D) Deflation​ 
E) Cost-push inflation​ 
A) An expansionary gap 
B) A decline in potential GDP​ 
C) Overutilization of resources​ 
D) Deflation​ 
E) Cost-push inflation​

Question 17

If the price level in an economy turns out to be higher than that expected by workers and firms,_____.​

Accepted Answer

A) businesses increase production. 
B) the economy's potential output level increases. 
C) the economy's short-run aggregate supply curve shifts rightward. 
D) the economy's short-run aggregate supply curve shifts leftward. 
E) a recessionary gap develops. 
A) businesses increase production. 
B) the economy's potential output level increases. 
C) the economy's short-run aggregate supply curve shifts rightward. 
D) the economy's short-run aggregate supply curve shifts leftward. 
E) a recessionary gap develops.

Question 18

An adverse supply shock generally decreases the price level and the real GDP.​

Accepted Answer

A) True 
 B)False

Question 19

During a particular year,nominal wages increased by 4 percent but real wages declined by 2 percent.This implies that the price level increased by 6 percent.​

Accepted Answer

A) True 
 B)False

Question 20

As actual output falls below the potential level in the short run,which of the following is most likely to occur?​

Accepted Answer

A) More resources will become unemployed. 
B) The price level will increase. 
C) Real GDP will increase. 
D) Nominal GDP will remain constant. 
E) The natural rate of unemployment will fall. 
A) More resources will become unemployed. 
B) The price level will increase. 
C) Real GDP will increase. 
D) Nominal GDP will remain constant. 
E) The natural rate of unemployment will fall.

The capital stock of an economy increases:

The long run is the period of time during which:

The international oil price hike by OPEC was an adverse supply shock faced by the U.S.in the 1970s.

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

In the long run,a leftward shift of the aggregate demand curve will lead to a(n):

The figure below shows the short-run aggregate supply curve of an economy.In this figure,if P₁ is the price level prevailing in the economy,it implies that: Figure 10.1

The longer the unemployment rate remains above the natural rate,the higher the natural rate.This theory is known as historical analysis.

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is currently producing Y₁ level of output,_____. Figure 10.5

The actual price level is assumed to be constant along a given short-run aggregate supply curve.

The real wage is equal to the:

When resource prices are negotiable,the long-run aggregate supply curve is represented by:

The figure below shows equilibrium in an aggregate demand-aggregate supply model.In this figure,the shift from AS to AS' is likely to occur when: Figure 10.3

Cyclical unemployment in an economy will be zero when:

An adverse supply shock would shift:

Which of the following supply shocks would shift the aggregate supply curve inward?

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of these situations will be experienced by the economy as it moves from point e to point e'? Figure 10.3

If the price level in an economy turns out to be higher than that expected by workers and firms,_____.

An adverse supply shock generally decreases the price level and the real GDP.

During a particular year,nominal wages increased by 4 percent but real wages declined by 2 percent.This implies that the price level increased by 6 percent.

As actual output falls below the potential level in the short run,which of the following is most likely to occur?

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

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Exam 10: Aggregate Supply

The capital stock of an economy increases:​

The long run is the period of time during which:​

The international oil price hike by OPEC was an adverse supply shock faced by the U.S.in the 1970s.​

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

In the long run,a leftward shift of the aggregate demand curve will lead to a(n):​

The figure below shows the short-run aggregate supply curve of an economy.In this figure,if P1 is the price level prevailing in the economy,it implies that:​ ​ Figure 10.1

The longer the unemployment rate remains above the natural rate,the higher the natural rate.This theory is known as historical analysis.​

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is currently producing Y1 level of output,_____.​ ​ Figure 10.5

The actual price level is assumed to be constant along a given short-run aggregate supply curve.​

The real wage is equal to the:​

When resource prices are negotiable,the long-run aggregate supply curve is represented by:​

The figure below shows equilibrium in an aggregate demand-aggregate supply model.In this figure,the shift from AS to AS' is likely to occur when:​ ​ Figure 10.3

Cyclical unemployment in an economy will be zero when:​

An adverse supply shock would shift:​

Which of the following supply shocks would shift the aggregate supply curve inward?​

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of these situations will be experienced by the economy as it moves from point e to point e'?​ ​ Figure 10.3

If the price level in an economy turns out to be higher than that expected by workers and firms,_____.​

An adverse supply shock generally decreases the price level and the real GDP.​

During a particular year,nominal wages increased by 4 percent but real wages declined by 2 percent.This implies that the price level increased by 6 percent.​

As actual output falls below the potential level in the short run,which of the following is most likely to occur?​

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

The capital stock of an economy increases:

The long run is the period of time during which:

The international oil price hike by OPEC was an adverse supply shock faced by the U.S.in the 1970s.

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

In the long run,a leftward shift of the aggregate demand curve will lead to a(n):

The figure below shows the short-run aggregate supply curve of an economy.In this figure,if P₁ is the price level prevailing in the economy,it implies that: Figure 10.1

The longer the unemployment rate remains above the natural rate,the higher the natural rate.This theory is known as historical analysis.

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is currently producing Y₁ level of output,_____. Figure 10.5

The actual price level is assumed to be constant along a given short-run aggregate supply curve.

The real wage is equal to the:

When resource prices are negotiable,the long-run aggregate supply curve is represented by:

The figure below shows equilibrium in an aggregate demand-aggregate supply model.In this figure,the shift from AS to AS' is likely to occur when: Figure 10.3

Cyclical unemployment in an economy will be zero when:

An adverse supply shock would shift:

Which of the following supply shocks would shift the aggregate supply curve inward?

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of these situations will be experienced by the economy as it moves from point e to point e'? Figure 10.3

If the price level in an economy turns out to be higher than that expected by workers and firms,_____.

An adverse supply shock generally decreases the price level and the real GDP.

During a particular year,nominal wages increased by 4 percent but real wages declined by 2 percent.This implies that the price level increased by 6 percent.

As actual output falls below the potential level in the short run,which of the following is most likely to occur?