Question 1

The potential output of an economy is:​

Accepted Answer

A) the output level at which inflation is very high. 
B) the output level at which nominal GDP is equal to real GDP. 
C) less than the full-employment rate of output. 
D) the output level at which total unemployment is zero. 
E) also referred to as the natural rate of output. 
A) the output level at which inflation is very high. 
B) the output level at which nominal GDP is equal to real GDP. 
C) less than the full-employment rate of output. 
D) the output level at which total unemployment is zero. 
E) also referred to as the natural rate of output.

Question 2

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

Accepted Answer

A) The aggregate demand curve determines the level of potential output. 
B) The long-run aggregate supply curve is horizontal. 
C) The actual price level and the expected price level are equal. 
D) Cyclical unemployment is between 5 percent and 6 percent. 
E) The price level is determined entirely by the long-run aggregate supply curve. 
A) The aggregate demand curve determines the level of potential output. 
B) The long-run aggregate supply curve is horizontal. 
C) The actual price level and the expected price level are equal. 
D) Cyclical unemployment is between 5 percent and 6 percent. 
E) The price level is determined entirely by the long-run aggregate supply curve.

Question 3

The figure below shows the short-run aggregate supply curve of an economy.If the actual price level exceeds the expected price level,then:​ ​
Figure 10.1

Accepted Answer

A) equilibrium output is likely to be Y2 in the short run. 
B) equilibrium output is likely to be Y1 in the short run. 
C) equilibrium output is likely to be Y3 in the short run. 
D) potential output is greater than actual output. 
E) unemployment is above the natural rate. 
A) equilibrium output is likely to be Y2 in the short run. 
B) equilibrium output is likely to be Y1 in the short run. 
C) equilibrium output is likely to be Y3 in the short run. 
D) potential output is greater than actual output. 
E) unemployment is above the natural rate.

Question 4

Which of the following is true of the short-run aggregate supply curve?​

Accepted Answer

A) It shows the relation between the inflation rate and the quantity of aggregate output firms supply,other things constant. 
B) It shows the relation between the price of labor and the aggregate quantity of labor workers supply,other things constant. 
C) It shows the relation between the interest rate and the quantity of capital goods firms supply,other things constant. 
D) It shows the relation between the price level and the quantity of aggregate output firms supply,other things constant. 
E) It shows an inverse relationship between the price level and real GDP. 
A) It shows the relation between the inflation rate and the quantity of aggregate output firms supply,other things constant. 
B) It shows the relation between the price of labor and the aggregate quantity of labor workers supply,other things constant. 
C) It shows the relation between the interest rate and the quantity of capital goods firms supply,other things constant. 
D) It shows the relation between the price level and the quantity of aggregate output firms supply,other things constant. 
E) It shows an inverse relationship between the price level and real GDP.

Question 5

Which of the following supply shocks will shift the long-run aggregate supply curve outward?​

Accepted Answer

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

Question 6

Which of the following is most likely to cause the long-run aggregate supply curve to shift rightward?​

Accepted Answer

A) A rise in energy prices 
B) A drop in the actual price level​ 
C) An increase in the demand for leisure hours​ 
D) An increase in the level of investment spending that is less than the depreciation of the capital stock​ 
E) A technological breakthrough with widespread practical applications​ 
A) A rise in energy prices 
B) A drop in the actual price level​ 
C) An increase in the demand for leisure hours​ 
D) An increase in the level of investment spending that is less than the depreciation of the capital stock​ 
E) A technological breakthrough with widespread practical applications​

Question 7

An increase in aggregate demand in the long run will most likely result in:​

Accepted Answer

A) a decrease in price and output levels. 
B) an increase in price and output levels. 
C) an increase in the price level and a decrease in output. 
D) a decrease in the price level and an increase in output. 
E) an increase in the price level but no change in output. 
A) a decrease in price and output levels. 
B) an increase in price and output levels. 
C) an increase in the price level and a decrease in output. 
D) a decrease in the price level and an increase in output. 
E) an increase in the price level but no change in output.

Question 8

When the economy is at its potential output level,which of the following is true?​

Accepted Answer

A) The price level is higher than that expected by workers. 
B) The nominal wage is equal to the real wage. 
C) The unemployment rate is about 14 percent. 
D) The economy is producing its maximum sustainable output. 
E) The actual price level is less than the expected price level. 
A) The price level is higher than that expected by workers. 
B) The nominal wage is equal to the real wage. 
C) The unemployment rate is about 14 percent. 
D) The economy is producing its maximum sustainable output. 
E) The actual price level is less than the expected price level.

Question 9

Which of the following is most likely to shift the potential output of an economy to the right?​

Accepted Answer

A) A decline in the length of the average workweek 
B) An increase in the supply of educated and skilled workers​ 
C) A drought​ 
D) An increase in aggregate demand​ 
E) An increase in the minimum wage received by workers​ 
A) A decline in the length of the average workweek 
B) An increase in the supply of educated and skilled workers​ 
C) A drought​ 
D) An increase in aggregate demand​ 
E) An increase in the minimum wage received by workers​

Question 10

The figure shows the determination of thr equilibrium price level and real GDP in an aggregate demand-aggregate supply model.Which of the following economic changes is depicted by a movement from point e to point e'?​ ​
Figure 10.6

Accepted Answer

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

The potential output of an economy is:

Which of the following is true in the long run?

The figure below shows the short-run aggregate supply curve of an economy.If the actual price level exceeds the expected price level,then: Figure 10.1

Which of the following is true of the short-run aggregate supply curve?

Which of the following supply shocks will shift the long-run aggregate supply curve outward?

Which of the following is most likely to cause the long-run aggregate supply curve to shift rightward?

An increase in aggregate demand in the long run will most likely result in:

When the economy is at its potential output level,which of the following is true?

Which of the following is most likely to shift the potential output of an economy to the right?

The figure shows the determination of thr equilibrium price level and real GDP in an aggregate demand-aggregate supply model.Which of the following economic changes is depicted by a movement from point e to point e'? Figure 10.6

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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Economic Development

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Exam 10: Aggregate Supply