Exam 4: Introduction to Macroeconomics

Because prices change too slowly in the short-run and as a result, they do not quickly equalize the quantity demanded and quantity supplied of goods and services, the short-run response of the economy to a demand shock is through:

Which of the following is not an economic investment?

Assuming inflexible prices, if the demand for many goods and services falls across the entire economy and for an extended period of time:

To explain the short-run fluctuations in the real-world economies, economists refer to:

The short-run fluctuations in output and unemployment that we see in the real world are the result of:

Economic growth is defined as:

To study macroeconomics, one needs various models with different assumptions about the flexibility and/or stickiness of price levels. This is because:

If the unexpected short-run fluctuations in demand begin to look permanent:

Commodities such as airline tickets, and gasoline have sticky prices. Subtopic: How sticky are prices

-Refer to the above diagram. Curve (a) is the current production possibilities frontier for the economy. Other things being equal, society's current choice of point P on curve (a) means:

According to researchers, there is a direct link between unemployment and:

Today, the vast differences in the living standard between rich and poor countries are mainly the result of:

Modern economic growth in a country implies that output per person increases.

Unemployment occurs when a person cannot get a job despite being willing to work and actively seeking work.

The concept of "real GDP" refers to:

In response to an unexpected change in demand, if the prices are free to adjust quickly:

In reality, all the prices in the economy are inflexible and are not able to change rapidly when demand changes unexpectedly. Subtopic: Demand shocks and inflexible prices

Several factors contribute to short-run price stickiness. These include: