Question 1

Which of the following would shift the long-run aggregate supply curve right?

Accepted Answer

A) both an increase in the capital stock and an increase in the price level 
B) an increase in the capital stock,but not an increase in the price level 
C) an increase in the money supply,but not an increase in the capital stock 
D) neither an increase in the money supply nor an increase in the capital stock 
A) both an increase in the capital stock and an increase in the price level 
B) an increase in the capital stock,but not an increase in the price level 
C) an increase in the money supply,but not an increase in the capital stock 
D) neither an increase in the money supply nor an increase in the capital stock B

Question 2

Which of the following shifts short-run aggregate supply right?

Accepted Answer

A) an increase in the minimum wage 
B) an increase in immigration from abroad 
C) an increase in the price of oil 
D) an increase in the actual price level 
A) an increase in the minimum wage 
B) an increase in immigration from abroad 
C) an increase in the price of oil 
D) an increase in the actual price level B

Question 3

An increase in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A) right,and an increase in the actual price level shifts short-run aggregate supply to the right. 
B) right,and an increase in the actual price level does not shift short-run aggregate supply. 
C) left,and an increase in the actual price level shifts short-run aggregate supply to the left. 
D) left,and an increase in the actual price level does not shift short-run aggregate supply. 
A) right,and an increase in the actual price level shifts short-run aggregate supply to the right. 
B) right,and an increase in the actual price level does not shift short-run aggregate supply. 
C) left,and an increase in the actual price level shifts short-run aggregate supply to the left. 
D) left,and an increase in the actual price level does not shift short-run aggregate supply. D

Question 4

Other things the same,if workers and firms expected inflation to be 2%,but it is only 1% then

Accepted Answer

A) employment and production rise. 
B) employment rises and production falls. 
C) employment falls and production rises. 
D) employment and production fall. 
A) employment and production rise. 
B) employment rises and production falls. 
C) employment falls and production rises. 
D) employment and production fall.

Question 5

People had been expecting the price level to be 120 but it turns out to be 122.In response Robinson Tire Company increases the number of workers it employs.What could explain this?

Accepted Answer

A) both sticky price theory and sticky wage theory 
B) sticky price theory but not sticky wage theory 
C) sticky wage theory but not sticky price theory 
D) neither sticky wage theory nor sticky price theory 
A) both sticky price theory and sticky wage theory 
B) sticky price theory but not sticky wage theory 
C) sticky wage theory but not sticky price theory 
D) neither sticky wage theory nor sticky price theory

Question 6

Which of the following shifts the long-run aggregate supply curve to the right?

Accepted Answer

A) both an increase in the capital stock and technological improvements 
B) an increase in the capital stock but not technological improvements. 
C) an increase in the capital stock but not technological improvements 
D) neither an increase in the capital stock nor an technological improvements 
A) both an increase in the capital stock and technological improvements 
B) an increase in the capital stock but not technological improvements. 
C) an increase in the capital stock but not technological improvements 
D) neither an increase in the capital stock nor an technological improvements

Question 7

Which of the following is correct?

Accepted Answer

A) The short-run,but not the long-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
B) The long-run,but not the short-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
C) The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables. 
D) Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables. 
A) The short-run,but not the long-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
B) The long-run,but not the short-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
C) The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables. 
D) Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables.

Question 8

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

Accepted Answer

A) in the price level and output. 
B) in the price level,but not output. 
C) in output,but not the price level. 
D) in neither the price level nor output. 
A) in the price level and output. 
B) in the price level,but not output. 
C) in output,but not the price level. 
D) in neither the price level nor output.

Question 9

According to the misperceptions theory of the short-run aggregate supply curve,if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent,then the firm would believe that the relative price of what it produces had

Accepted Answer

A) increased,so it would increase production. 
B) increased,so it would decrease production. 
C) decreased,so it would increase production. 
D) decreased,so it would decrease production. 
A) increased,so it would increase production. 
B) increased,so it would decrease production. 
C) decreased,so it would increase production. 
D) decreased,so it would decrease production.

Question 10

The long-run aggregate supply curve

Accepted Answer

A) is vertical. 
B) is a graphical representation of the classical dichotomy. 
C) indicates monetary neutrality in the long run. 
D) All of the above are correct. 
A) is vertical. 
B) is a graphical representation of the classical dichotomy. 
C) indicates monetary neutrality in the long run. 
D) All of the above are correct.

Question 11

The classical dichotomy and monetary neutrality are represented graphically by

Accepted Answer

A) an upward-sloping long-run aggregate-supply curve. 
B) a vertical long-run aggregate-supply curve. 
C) an upward-sloping short-run aggregate-curve. 
D) a downward-sloping aggregate-demand curve. 
A) an upward-sloping long-run aggregate-supply curve. 
B) a vertical long-run aggregate-supply curve. 
C) an upward-sloping short-run aggregate-curve. 
D) a downward-sloping aggregate-demand curve.

Question 12

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage.They may infer that the reward to working is

Accepted Answer

A) temporarily low and so supply a smaller quantity of labor. 
B) temporarily low and so supply a larger quantity of labor. 
C) temporarily high and so supply a smaller quantity of labor. 
D) temporarily high and so supply a larger quantity of labor. 
A) temporarily low and so supply a smaller quantity of labor. 
B) temporarily low and so supply a larger quantity of labor. 
C) temporarily high and so supply a smaller quantity of labor. 
D) temporarily high and so supply a larger quantity of labor.

Question 13

Assuming that a is positive,theories of short-run aggregate supply are expressed mathematically as

Accepted Answer

A) quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B) quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C) quantity of output supplied = a(actual price level -expected price level)- natural rate of output. 
D) quantity of output supplied = a(expected price level - actual price level)- natural rate of output. 
A) quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B) quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C) quantity of output supplied = a(actual price level -expected price level)- natural rate of output. 
D) quantity of output supplied = a(expected price level - actual price level)- natural rate of output.

Question 14

The long-run aggregate supply curve would shift right if the government were to

Accepted Answer

A) reduce the minimum-wage. 
B) make unemployment benefits more generous. 
C) raise taxes on investment spending. 
D) All of the above are correct. 
A) reduce the minimum-wage. 
B) make unemployment benefits more generous. 
C) raise taxes on investment spending. 
D) All of the above are correct.

Question 15

The sticky-price theory implies that

Accepted Answer

A) the short-run aggregate-supply curve is upward-sloping. 
B) an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce. 
C) menu costs influence the speed of adjustment of prices. 
D) All of the above are correct. 
A) the short-run aggregate-supply curve is upward-sloping. 
B) an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce. 
C) menu costs influence the speed of adjustment of prices. 
D) All of the above are correct.

Question 16

The aggregate supply curve is upward sloping in

Accepted Answer

A) the short and long run. 
B) neither the short nor long run. 
C) the long run,but not the short run. 
D) the short run,but not the long run. 
A) the short and long run. 
B) neither the short nor long run. 
C) the long run,but not the short run. 
D) the short run,but not the long run.

Question 17

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will have

Accepted Answer

A) higher than desired prices,which leads to an increase in the aggregate quantity of goods and services supplied. 
B) higher than desired prices,which leads to a decrease in the aggregate quantity of goods and service supplied. 
C) lower than desired prices,which leads to an increase in the aggregate quantity of goods and services supplied. 
D) lower than desired prices,which leads to a decrease in the aggregate quantity of goods and services supplied 
A) higher than desired prices,which leads to an increase in the aggregate quantity of goods and services supplied. 
B) higher than desired prices,which leads to a decrease in the aggregate quantity of goods and service supplied. 
C) lower than desired prices,which leads to an increase in the aggregate quantity of goods and services supplied. 
D) lower than desired prices,which leads to a decrease in the aggregate quantity of goods and services supplied

Question 18

The long-run aggregate supply curve shifts right if

Accepted Answer

A) technology improves. 
B) the price level decreases. 
C) the money supply increases. 
D) All of the above are correct. 
A) technology improves. 
B) the price level decreases. 
C) the money supply increases. 
D) All of the above are correct.

Question 19

The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level

Accepted Answer

A) ​decreases by more than expected so that firms believe the relative price of their output has decreased. 
B) ​decreases by more than expected so that firms believe the relative price of their output has increased. 
C) ​decreases by less than expected so that firms believe the relative price of their output has decreased. 
D) ​decreases by less than expected so that firms believe the relative price of their output has increased. 
A) ​decreases by more than expected so that firms believe the relative price of their output has decreased. 
B) ​decreases by more than expected so that firms believe the relative price of their output has increased. 
C) ​decreases by less than expected so that firms believe the relative price of their output has decreased. 
D) ​decreases by less than expected so that firms believe the relative price of their output has increased.

Question 20

An increase in the expected price level shifts the

Accepted Answer

A) short-run and long-run aggregate supply curves left. 
B) the short-run but not the long-run aggregate supply curve left. 
C) the long-run but not the short-run aggregate supply curve left. 
D) neither the long-run nor the short-run aggregate supply curve left. 
A) short-run and long-run aggregate supply curves left. 
B) the short-run but not the long-run aggregate supply curve left. 
C) the long-run but not the short-run aggregate supply curve left. 
D) neither the long-run nor the short-run aggregate supply curve left.

Exam 20: Aggregate Demand and Aggregate Supply: The Aggregate-Supply Curve

Which of the following would shift the long-run aggregate supply curve right?

Which of the following shifts short-run aggregate supply right?

An increase in the expected price level shifts short-run aggregate supply to the

Other things the same,if workers and firms expected inflation to be 2%,but it is only 1% then

People had been expecting the price level to be 120 but it turns out to be 122.In response Robinson Tire Company increases the number of workers it employs.What could explain this?

Which of the following shifts the long-run aggregate supply curve to the right?

Which of the following is correct?

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

According to the misperceptions theory of the short-run aggregate supply curve,if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent,then the firm would believe that the relative price of what it produces had

The long-run aggregate supply curve

The classical dichotomy and monetary neutrality are represented graphically by

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage.They may infer that the reward to working is

Assuming that a is positive,theories of short-run aggregate supply are expressed mathematically as

The long-run aggregate supply curve would shift right if the government were to

The sticky-price theory implies that

The aggregate supply curve is upward sloping in

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will have

The long-run aggregate supply curve shifts right if

The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level

An increase in the expected price level shifts the

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion