Question 1

In the short run, but not in the long run,

Accepted Answer

A) output is fixed 
B) prices are fixed 
C) prices can change but output is fixed 
D) some resource prices are fixed 
E) the aggregate supply curve is vertical 
A) output is fixed 
B) prices are fixed 
C) prices can change but output is fixed 
D) some resource prices are fixed 
E) the aggregate supply curve is vertical

Question 2

Exhibit 11-6
  
-In Exhibit 11-6, long-run equilibrium would be established by

Accepted Answer

A) an increase in short-run aggregate supply to remove the expansionary gap 
B) a decrease in short-run aggregate supply to remove the expansionary gap 
C) a decrease in short-run aggregate supply to remove the contractionary gap 
D) an increase in short-run aggregate supply to remove the contractionary gap 
E) a leftward shift of the aggregate demand curve 
A) an increase in short-run aggregate supply to remove the expansionary gap 
B) a decrease in short-run aggregate supply to remove the expansionary gap 
C) a decrease in short-run aggregate supply to remove the contractionary gap 
D) an increase in short-run aggregate supply to remove the contractionary gap 
E) a leftward shift of the aggregate demand curve

Question 3

As an expansionary gap is closed in the long run,

Accepted Answer

A) nominal and real GDP decline 
B) nominal and real GDP increase 
C) nominal GDP increases but real GDP declines 
D) nominal GDP declines but real GDP increases 
E) real GDP declines, but nominal GDP can increase, decrease, or remain the same 
A) nominal and real GDP decline 
B) nominal and real GDP increase 
C) nominal GDP increases but real GDP declines 
D) nominal GDP declines but real GDP increases 
E) real GDP declines, but nominal GDP can increase, decrease, or remain the same

Question 4

If nominal wage rates increase by 5 percent per year and the price level increases by 3 percent per year, which of the following is correct?

Accepted Answer

A) real wages increase by 2 percent per year 
B) real wages increase by 3 percent per year 
C) real wages decrease by 3 percent per year 
D) real wages decrease by 2 percent per year 
E) real wages remain constant 
A) real wages increase by 2 percent per year 
B) real wages increase by 3 percent per year 
C) real wages decrease by 3 percent per year 
D) real wages decrease by 2 percent per year 
E) real wages remain constant

Question 5

Exhibit 11-5
  
-If the economy is at point M in Exhibit 11-5,

Accepted Answer

A) the actual price level is lower than expected with a $200 billion expansionary gap 
B) the actual price level is lower than expected with a $200 billion contractionary gap 
C) the actual price level is higher than expected with a $200 billion contractionary gap 
D) the short-run supply curve will shift to SRS109 and the expansionary gap will be eliminated 
E) the economy is in equilibrium in the short run and the long run 
A) the actual price level is lower than expected with a $200 billion expansionary gap 
B) the actual price level is lower than expected with a $200 billion contractionary gap 
C) the actual price level is higher than expected with a $200 billion contractionary gap 
D) the short-run supply curve will shift to SRS109 and the expansionary gap will be eliminated 
E) the economy is in equilibrium in the short run and the long run

Question 6

As macroeconomic output expands, the cost of additional output increases.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 11-2
  
-In Exhibit 11-2, a contractionary gap would be represented by the distance

Accepted Answer

A) Y1 - Y2 
B) Y1 - Y3 
C) Y2 - Y3 
D) P3 - P1 
E) P3 - P2 
A) Y1 - Y2 
B) Y1 - Y3 
C) Y2 - Y3 
D) P3 - P1 
E) P3 - P2

Question 8

The long-run aggregate supply curve is vertical because potential real GDP is determined by resource availabilities and productivities.

Accepted Answer

A) True 
 B)False

Question 9

The short run is a period of time

Accepted Answer

A) when there is an expansionary gap and firms run their plants only for short periods 
B) of one year or less 
C) when there is a contractionary gap 
D) during which resource buyers and sellers cannot adjust fully to changes in the price level 
E) when resource buyers and sellers can adjust fully to changes in the price level 
A) when there is an expansionary gap and firms run their plants only for short periods 
B) of one year or less 
C) when there is a contractionary gap 
D) during which resource buyers and sellers cannot adjust fully to changes in the price level 
E) when resource buyers and sellers can adjust fully to changes in the price level

Question 10

If the actual price level is less than the expected price level reflected in long-term contracts,

Accepted Answer

A) firms will find production more profitable than they had expected and will increase the quantity of output supplied 
B) firms will find production less profitable than they had expected and will decrease the quantity of output supplied 
C) firms, because they are making less profit than they had expected, will increase the quantity of output supplied 
D) resource owners, because they are making a lower profit than they had expected, will decrease the quantity of output supplied 
E) unemployment will increase 
A) firms will find production more profitable than they had expected and will increase the quantity of output supplied 
B) firms will find production less profitable than they had expected and will decrease the quantity of output supplied 
C) firms, because they are making less profit than they had expected, will increase the quantity of output supplied 
D) resource owners, because they are making a lower profit than they had expected, will decrease the quantity of output supplied 
E) unemployment will increase

Question 11

In the long run, a decrease in aggregate demand will cause a(n)

Accepted Answer

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

Question 12

Exhibit 11-1
  
-Given aggregate demand and aggregate supply schedule #2 in Exhibit 11-1, the equilibrium output level and price level are $7.0 and 110

Accepted Answer

A) True 
 B)False

Question 13

Suppose that the real wage remained unchanged between year 1 and 2 but the nominal wage was $20 in year 1 and $18 in year 2. What is true about the price level?

Accepted Answer

A) It rose by 20 percent. 
B) It rose by 25 percent. 
C) It remained unchanged. 
D) It fell by 10 percent. 
E) It fell by 20 percent. 
A) It rose by 20 percent. 
B) It rose by 25 percent. 
C) It remained unchanged. 
D) It fell by 10 percent. 
E) It fell by 20 percent.

In the short run, but not in the long run,

Exhibit 11-6 -In Exhibit 11-6, long-run equilibrium would be established by

As an expansionary gap is closed in the long run,

If nominal wage rates increase by 5 percent per year and the price level increases by 3 percent per year, which of the following is correct?

Exhibit 11-5 -If the economy is at point M in Exhibit 11-5,

As macroeconomic output expands, the cost of additional output increases.

Exhibit 11-2 -In Exhibit 11-2, a contractionary gap would be represented by the distance

The long-run aggregate supply curve is vertical because potential real GDP is determined by resource availabilities and productivities.

The short run is a period of time

If the actual price level is less than the expected price level reflected in long-term contracts,

In the long run, a decrease in aggregate demand will cause a(n)

Exhibit 11-1 -Given aggregate demand and aggregate supply schedule #2 in Exhibit 11-1, the equilibrium output level and price level are $7.0 and 110

Suppose that the real wage remained unchanged between year 1 and 2 but the nominal wage was $20 in year 1 and $18 in year 2. What is true about the price level?

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

Aggregate Expenditure and 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

Exam 12: Aggregate Supply

In the short run, but not in the long run,

Exhibit 11-6 -In Exhibit 11-6, long-run equilibrium would be established by

As an expansionary gap is closed in the long run,

If nominal wage rates increase by 5 percent per year and the price level increases by 3 percent per year, which of the following is correct?

Exhibit 11-5 -If the economy is at point M in Exhibit 11-5,

As macroeconomic output expands, the cost of additional output increases.

Exhibit 11-2 -In Exhibit 11-2, a contractionary gap would be represented by the distance

The long-run aggregate supply curve is vertical because potential real GDP is determined by resource availabilities and productivities.

The short run is a period of time

If the actual price level is less than the expected price level reflected in long-term contracts,

In the long run, a decrease in aggregate demand will cause a(n)

Exhibit 11-1 -Given aggregate demand and aggregate supply schedule #2 in Exhibit 11-1, the equilibrium output level and price level are $7.0 and 110

Suppose that the real wage remained unchanged between year 1 and 2 but the nominal wage was $20 in year 1 and $18 in year 2. What is true about the price level?

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

Aggregate Expenditure and 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