Deck 10: Aggregate Supply.

Question 1

Which of the following is true?

A) The nominal wage will be constant only if the inflation rate is constant.
B) The real wage will be greater than the nominal wage only if the inflation rate is constant.
C) The nominal wage and the real wage will change by the same amount if the price level is constant.
D) The real wage will be equal to one only if the price level is zero.
E) The real wage will be constant only if the nominal wage is constant.

Answer 1

The nominal wage and the real wage will change by the same amount if the price level is constant.

Question 2

How much of production costs does labor account for?

A) 30 percent
B) 55 percent
C) 65 percent
D) 70 percent
E) 75 percent

Answer 2

70 percent

Question 3

Suppose the price level increases by 5 percent and the nominal wages of workers increase by 3 percent during a particular year. This implies that the real wage has _____

A) declined by 2 percent.
B) declined by 8 percent.
C) also increased by 2 percent.
D) also increased by 8 percent.
E) remained constant.

Answer 3

declined by 2 percent.

Question 4

Which of the following is true about real wages?

A) Only workers care more about the real wage than the nominal wage.
B) Only employers care more about the real wage than the nominal wage.
C) Both workers and employers care more about the real wage than the nominal wage.
D) Both workers and employers care more about the nominal wage than the real wage.
E) Neither workers nor employers care about the real wage or the nominal wage.

Question 5

Suppose the real wage of a worker remains unchanged between Year 1 and Year 2 but the nominal wage decreases from $20 in Year 1 to $18 in Year 2. This implies that the price level has _____

A) increased by 20 percent.
B) increased by 25 percent.
C) remained unchanged.
D) fallen by 10 percent.
E) fallen by 20 percent.

Question 6

In a particular year, if the price level rises by 4 percent and the nominal wage of workers rises by 6 percent, we can conclude that the real wage has _____

A) fallen by 2 percent.
B) fallen by 10 percent.
C) increased by 2 percent.
D) increased by 10 percent.
E) remained constant.

Question 7

Identify the correct statement.

A) In periods of low inflation, real wages are constant but nominal wages decline.
B) If the price level increases, real wages will increase.
C) If the price level increases, nominal wages will fall.
D) In periods of high inflation, real wages change even if nominal wages remain constant.
E) If the inflation rate is high, real wages and nominal wages change by the same amount.

Question 8

The nominal wage represents _____

A) the wage measured in terms of the quantity of goods and services a worker can purchase with it.
B) the wage measured in terms of the dollar value of the goods and services a worker can purchase with it.
C) the real wage from which personal taxes have been deducted.
D) the standard of living of workers across time.
E) the change in real wage brought about by changes in aggregate supply.

Question 9

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

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 10

Which of the following is true of a lower price level?

A) The lower the price level, any given money wage purchases less, so the wage is less attractive to workers.
B) The lower the price level, any given money wage purchases more, so the wage is more attractive to workers.
C) The lower the price level, any given money wage purchases more, so the wage is less attractive to workers.
D) The lower the price level, any given money wage purchases less, so the wage is more attractive to workers.
E) There is no relationship between the price level and money wages.

Question 11

Which of the following is true about wage agreements?

A) Implicit wage agreements are based on a labor contract.
B) Explicit wage agreements are based on based on labor market practices.
C) Explicit wage agreements are based on a labor contract and implicit wage agreements are based on labor market practices.
D) Both explicit wage agreements and implicit wage agreements are based on a labor contract.
E) Neither explicit wage agreements nor implicit wage agreements are based on labor market practices.

Question 12

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

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 13

What does aggregate supply reflect?

A) It reflects billions of production decisions made by millions of individual resource suppliers and firms in the economy.
B) It reflects billions of production decisions made by millions of individual households in the economy.
C) It shows the relation between the interest rate and the quantity of capital goods firms supply.
D) It shows the relation between investment and the quantity of capital goods firms supply.
E) It shows an inverse relationship between the price level and real GDP.

Question 14

Suppose Jack's salary increased from $100,000 to $200,000 per year between 2004 and 2014 and the price index increased from 100 to 300 during the same period. Which of the following statements best describes Jack's situation?

A) His real income and money income have both increased.
B) His real income has increased and money income has decreased.
C) His real income and money income have both decreased.
D) His real income has decreased and money income has increased.
E) His real income has remained unchanged.

Question 15

Suppose the real wage remains unchanged between Year 1 and Year 2 but the nominal wage increases from $20 to $24. Based on this information, we can conclude that the price level has _____

A) increased by 20 percent.
B) increased by 25 percent.
C) remained unchanged.
D) decreased by 10 percent.
E) decreased by 20 percent.

Question 16

Which of these is true of the expected price level in a labor market?

A) It is the equilibrium price level in the short run.
B) It determines the actual price level in the short run.
C) It determines the actual price level in the long run.
D) It allows firms and resource owners to make long-term wage agreements.
E) The difference between the expected and actual price levels is equal to the actual inflation rate.

Question 17

The real wage is equal to the _____

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 18

Which of the following is true of a higher price level?

A) The higher the price level, any given money wage purchases less, so the wage is less attractive to workers.
B) The higher the price level, any given money wage purchases more, so the wage is more attractive to workers.
C) The higher the price level, any given money wage purchases more, so the wage is less attractive to workers.
D) The higher the price level, any given money wage purchases less, so the wage is more attractive to workers.
E) There is no relationship between the price level and money wages.

Question 19

The nominal wage is _____

A) always equal to the legal minimum wage.
B) the same as the efficiency wage.
C) measured in terms of the amount of goods and services it can purchase.
D) measured in current dollars rather than in constant dollars.
E) measured in constant dollars rather than in current dollars.

Question 20

What is the relationship between wages and the supply of labor?

A) The higher the wage, other things constant, the more labor supplied.
B) The higher the wage, other things constant, the less labor supplied.
C) The higher the wage, other things constant, firms hire more workers.
D) The higher the wage, other things constant, firms hire fewer workers.
E) There is no relationship between wages and labor.

Question 21

Cyclical unemployment in an economy will be zero when _____

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 22

When an economy is producing its potential output, which of the following is true?

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 23

The potential output of an economy is _____

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 24

When the economy's actual price level exceeds the expected price level in the short run, _____

A) the nominal wages of workers decline.
B) the nominal wages of workers increase.
C) firms decrease output below the potential level.
D) the economy produces the natural rate of output.
E) cyclical unemployment in the economy falls to zero.

Question 25

If the price level in the current year is much higher than the expected price level in an economy, _____

A) firms will increase production beyond the economy's potential level.
B) the natural rate of unemployment rate will increase.
C) firms will decrease production below the economy's potential level.
D) the short-run aggregate supply curve will become steeper.
E) the unemployment rate will fall to zero.

Question 26

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?

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

Question 27

Which of the following types of unemployment is likely to exist in an economy that is at its potential output level?

A) cyclical unemployment
B) structural unemployment
C) frictional, cyclical, and seasonal unemployment
D) frictional, structural, and seasonal unemployment
E) seasonal unemployment

Question 28

If the actual price level is higher than the expected price level in an economy, the economy will _____

A) have no structural unemployment.
B) experience a recession.
C) experience stagflation.
D) expand output in the short run.
E) have no seasonal unemployment.

Question 29

If the price level in the current year is much lower than the expected price level in an economy, _____

A) firms will increase production beyond the economy's potential level.
B) the natural rate of unemployment rate will increase.
C) firms will decrease production below the economy's potential level.
D) the short-run aggregate supply curve will become steeper.
E) the unemployment rate will fall to zero.

Question 30

When an economy produces its potential output, _____ is zero.

A) frictional unemployment
B) cyclical unemployment
C) seasonal unemployment
D) structural unemployment
E) disguised unemployment

Question 31

In constructing the short-run aggregate supply curve, we define the short run as the period in which _____

A) the price level is constant.
B) output is fixed.
C) profit is constant.
D) the costs of some resources are fixed.
E) the economic growth rate is less than 4 percent.

Question 32

The fact that some resource prices are fixed by contracts helps explain why firms _____

A) increase output in the short run when the price level increases.
B) keep production levels constant in the short run when the price level decreases.
C) sell output in the short run at fixed prices.
D) increase output in the long run when the price level increases.
E) decrease production when nominal wages fall in the long run.

Question 33

Which of the following is true in the short run but not in the long run?

A) Actual output is equal to potential output.
B) Actual output can exceed potential output.
C) Structural unemployment can exist.
D) Frictional unemployment can exist.
E) Real and nominal GDP can differ.

Question 34

What is the correct definition of the short run?

A) a period during which some resource prices, especially those for labor, remain fixed
B) a period during which some resource prices, especially those for labor, are variable
C) a period during which some resource prices, especially those for labor, are less than expected
D) a period during which some resource prices, especially those for labor, are more than expected
E) a period during which some resource prices, especially those for labor, can be renegotiated

Question 35

Potential output depends on all of the following except one. Which is the exception?

A) the supply of labor
B) labor productivity
C) the stock of capital
D) the technology in current use
E) the number of consumers in the market

Question 36

When an economy is not producing at its potential output, which of the following is likely?

A) The actual price level is unexpected.
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 economy is producing its minimum sustainable output.

Question 37

In constructing the short-run aggregate supply curve, we assume that the goal of business is to _____

A) maximize sales revenue.
B) maximize profit.
C) maximize the growth in assets.
D) maximize the growth in sales.
E) minimize cost.

Question 38

If nominal wage rates increase by 2 percent per year and the price level increases by 5 percent per year, real wages will _____

A) increase by 3 percent per year.
B) increase by 5 percent per year.
C) increase by 2 percent per year.
D) decrease by 5 percent per year.
E) decrease by 3 percent per year.

Question 39

Potential output is the amount produced when _____

A) firms' and workers' expectations about the price level are realized.
B) the actual price level is higher than the price level expected by workers.
C) firms and workers have the same expectations about the price level.
D) the actual price level remains constant.
E) the actual price level is lower than the price level expected by firms.

Question 40

The potential output of an economy is the level of output produced when the _____

A) real wage equals the nominal wage.
B) price level is constant.
C) expected real wage equals the nominal wage.
D) seasonal unemployment rate is zero.
E) expected price level equals the actual price level.

Question 41

The short-run aggregate supply curve shows a(n) _____

A) direct relationship between the expected price level and nominal GDP supplied.
B) inverse relationship between the actual price level and real GDP supplied.
C) direct relationship between the actual price level and nominal GDP supplied.
D) direct relationship between the actual price level and real GDP supplied.
E) inverse relationship between the expected price level and real GDP supplied.

Question 42

The short-run aggregate supply curve _____

A) is positively sloped.
B) is negatively sloped.
C) is a vertical line parallel to the price level axis.
D) is a horizontal line parallel to the output axis.
E) is a ray from the origin with a slope exactly equal to 1.

Question 43

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

A) increase the quantity supplied more than the economy's potential output.
B) decrease the quantity supplied less than the economy's potential output.
C) produce the quantity supplied the same as the economy's potential output.
D) decrease the quantity supplied.
E) a recessionary gap develops.

Question 44

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. At a price of P₂, firms will _____

A) supply less than potential output.
B) supply more than potential output.
C) supply potential output.
D) increase prices.
E) decrease prices.

Question 45

When the actual price level in an economy turns out to be lower than that expected in the short run, _____

A) businesses cut back production.
B) the potential output level decreases.
C) the aggregate supply curve shifts leftward.
D) the aggregate supply curve shifts rightward.
E) an expansionary gap develops.

Question 46

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

A) firms 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 47

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. At a price of P₁, firms will _____

A) supply less than potential output.
B) supply more than potential output.
C) supply potential output.
D) increase prices.
E) decrease prices.

Question 48

The slope of the short-run aggregate supply curve depends on how sharply _____

A) the marginal cost of production rises as real GDP expands.
B) the average cost of production rises as real GDP expands.
C) real GDP increases as the price level rises.
D) nominal GDP increases as the price level rises.
E) product prices change as the price level rises.

Question 49

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

A) firms will find production more profitable in the short run than they had expected and will decrease the quantity of output supplied.
B) firms will find production less profitable in the short run than they had expected and will decrease the quantity of output supplied.
C) firms will find production more profitable in the short run than they had expected and will increase the quantity of output supplied.
D) resource owners will earn higher returns in the short run than they had expected and will decrease the quantity of resources supplied.
E) unemployment will increase in the short run as firms will substitute labor with capital.

Question 50

Which of the following is true in the short run?

A) The aggregate supply curve is horizontal.
B) The aggregate supply curve is vertical.
C) Per-unit costs do not increase as much as output prices when the price level rises.
D) An increase in price per unit results in a decrease in profit per unit for firms.
E) Firms' total costs of production decrease as output expands beyond the potential level.

Question 51

Which of the following explains the shape of the short-run aggregate supply curve?

A) the inverse relationship between quantity supplied and cost per unit
B) the direct relationship between quantity supplied and cost per unit
C) the direct relationship between quantity supplied and price level
D) the inverse relationship between quantity supplied and GDP
E) the inverse relationship between quantity supplied and profit per unit

Question 52

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. To the left of Y₁, _____

A) output levels are at the economy's potential.
B) output levels are more than the economy's potential.
C) output levels are less than the economy's potential.
D) unemployment is at the natural rate.
E) unemployment is lower than the natural rate.

Question 53

In the short run, there is a positive relationship between _____

A) inflation and unemployment.
B) inflation and real GDP.
C) the actual price level and the aggregate quantity supplied.
D) the actual price level and unemployment.
E) the actual price level and consumption spending.

Question 54

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. At a price of P₃, firms will _____

A) supply less than potential output.
B) supply more than potential output.
C) supply potential output.
D) increase prices.
E) decrease prices.

Question 55

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. If output is at Y₁, _____

A) the economy produces its potential output and unemployment is at the natural rate.
B) the economy produces its potential output and unemployment is higher than the natural rate.
C) the economy produces its potential output and unemployment is lower than the natural rate.
D) the economy is less than its potential output and unemployment is at the natural rate.
E) the economy is more than its potential output and unemployment is at the natural rate.

Question 56

Which of the following is true if marginal costs increase at a slow rate as output increases?

A) The short-run aggregate supply curve is relatively steep.
B) The short-run aggregate supply curve becomes vertical.
C) The short-run aggregate supply curve is relatively flat.
D) The long-run aggregate supply curve becomes horizontal.
E) The long-run aggregate supply curve becomes downward sloping.

Question 57

Which of these is not assumed to be constant along a short-run aggregate supply curve?

A) the actual price level
B) the state of technology
C) the size and quality of the labor force
D) the expected price level
E) the size and quality of the capital stock

Question 58

Given implicit or explicit resource price agreements, if the actual price level is below the expected price level in an economy, the _____

A) economy will move upward along the short-run aggregate supply curve.
B) economy will move downward along the short-run aggregate supply curve.
C) short-run aggregate supply curve will shift to the left.
D) long-run aggregate supply curve will become steeper.
E) short-run aggregate supply curve will become flatter.

Question 59

When the actual price level in an economy turns out to be lower than that expected in the short run, firms _____

A) produce less than the economy's potential output.
B) produce more than the economy's potential output.
C) produce the same as the economy's potential output.
D) increase the quantity supplied.
E) an expansionary gap develops.

Question 60

The short run is a period of time during which _____

A) there is an expansionary gap that cannot be corrected using the passive approach.
B) actual output equals potential output.
C) there is a recessionary gap that cannot be corrected through discretionary policy.
D) resource buyers and sellers cannot adjust fully to changes in the price level.
E) resource buyers and sellers can adjust fully to changes in the price level.

Question 61

Table 10.2

Refer to Table 10.2, which shows the aggregate demand and aggregate supply in an economy. In schedule #2, the equilibrium output and price level for the economy are _____

A) $7.0 and 110, respectively.
B) $6.5 and 120, respectively.
C) $6.0 and 130, respectively.
D) $5.5 and 140, respectively.
E) $5.0 and 150, respectively.

Question 62

Does an expansionary gap or a recessionary gap exist if short-run output is $18.2 trillion and potential output is $18.0 trillion?

A) an expansionary gap
B) a recessionary gap
C) both an expansionary gap and a recessionary gap
D) neither an expansionary gap nor a recessionary gap
E) The actual gap is equal to potential output.

Question 63

Suppose the actual and expected price levels in an economy are initially equal. However, the actual price level falls eventually due to a change in economic conditions. Which of the following will occur in the long run?

A) The economy will move upward along the short-run aggregate supply curve.
B) The economy will move downward along the short-run aggregate supply curve.
C) The short-run aggregate supply curve will shift to the right.
D) The short-run aggregate supply curve will shift to the left.
E) The short-run aggregate supply curve will become flatter.

Question 64

Table 10.1
$$\begin{array}{l}\text { Table } 10.1\\\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Aggregate Output } \\\text { Demanded (\$) }\end{array} & \begin{array} { c } \text { Price } \\\text { Level }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { Aggregate Output } \\\text { Supplied (\$) }\end{array} \\\hline 7.0 & 110 & 5.0 \\\hline 6.5 & 120 & 5.5 \\\hline 6.0 & 130 & 6.0 \\\hline 5.5 & 140 & 6.5 \\\hline 5.0 & 150 & 7.0 \\\hline\end{array}\end{array}$$

-Refer to Table 10.1, which shows the aggregate demand and aggregate supply in an economy. What is quantity supplied if the price level is at 150?

A) $7.0
B) $6.5
C) $6.0
D) $5.5
E) $5.0

Question 65

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. What happens to short run aggregate supply if prices are lower than expected?

A) SRAS shifts right.
B) SRAS shifts left.
C) There is an upward movement along SRAS to Y₃.
D) There is a downward movement along SRAS to Y₂.
E) Nothing happens in the short run.

Question 66

In the aggregate demand-aggregate supply model, which of these changes is most likely when the cost of production increases in the long run?

A) a leftward shift of the short-run aggregate supply curve
B) a leftward shift of the short-run aggregate demand curve
C) a rightward shift of the short-run aggregate supply curve
D) an increase in the potential output level
E) a decrease in the actual price level

Question 67

Suppose the actual and expected price levels in an economy are initially equal. However, the actual price level becomes higher due to some change in economic conditions. Which of the following will occur eventually?

A) The economy will move upward along the short-run aggregate supply curve.
B) The economy will move downward along the short-run aggregate supply curve.
C) The short-run aggregate supply curve will shift to the right.
D) The short-run aggregate supply curve will shift to the left.
E) The short-run aggregate supply curve will become flatter.

Question 68

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. To the right of Y₁, _____

A) output levels are at the economy's potential.
B) output levels are more than the economy's potential.
C) output levels are less than the economy's potential.
D) unemployment is at the natural rate.
E) unemployment is higher than the natural rate.

Question 69

An expansionary gap is equal to _____

A) real GDP minus nominal GDP.
B) nominal GDP minus real GDP.
C) the actual short-run output minus potential output.
D) the actual price level minus the expected price level.
E) the actual long-run real GDP minus the actual short-run disposable income.

Question 70

The long run is the period of time during which _____

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 are variable.

Question 71

Table 10.1
$$\begin{array}{l}\text { Table } 10.1\\\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Aggregate Output } \\\text { Demanded (\$) }\end{array} & \begin{array} { c } \text { Price } \\\text { Level }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { Aggregate Output } \\\text { Supplied (\$) }\end{array} \\\hline 7.0 & 110 & 5.0 \\\hline 6.5 & 120 & 5.5 \\\hline 6.0 & 130 & 6.0 \\\hline 5.5 & 140 & 6.5 \\\hline 5.0 & 150 & 7.0 \\\hline\end{array}\end{array}$$

-Refer to Table 10.1, which shows the aggregate demand and aggregate supply in an economy. What is quantity supplied if the price levels is at 110?

A) $7.0
B) $6.5
C) $6.0
D) $5.5
E) $5.0

Question 72

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. What happens to short-run aggregate supply if prices are higher than expected?

A) SRAS shifts right.
B) SRAS shifts left.
C) There is an upward movement along SRAS to Y₃.
D) There is a downward movement along SRAS to Y₂.
E) Nothing happens in the short run.

Question 73

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. At Y₃, _____

A) output levels are at the economy's potential.
B) output levels are less than the economy's potential.
C) unemployment is at the natural rate.
D) unemployment is higher than the natural rate.
E) unemployment is lower than the natural rate.

Question 74

How much is the output gap if short-run output is $18.0 trillion and potential output is $18.0 trillion?

A) $18.2 trillion
B) $18.0 trillion
C) +$0.2 trillion
D) -$0.2 trillion
E) $0

Question 75

When actual output exceeds potential output, _____

A) more resources become unemployed.
B) prices remain constant.
C) prices tend to increase.
D) nominal GDP decreases.
E) resource prices decrease.

Question 76

Table 10.2

Refer to Table 10.2, which shows the aggregate demand and aggregate supply in an economy. In schedule #3, the equilibrium output and price level for the economy are _____

A) $7.0 and 110, respectively.
B) $6.5 and 120, respectively.
C) $6.0 and 130, respectively.
D) $5.5 and 140, respectively.
E) $5.0 and 150, respectively.

Question 77

Table 10.2

Refer to Table 10.2, which shows the aggregate demand and aggregate supply in an economy. In schedule #1, the equilibrium output and price level for the economy are _____

A) $7.0 and 110, respectively.
B) $6.5 and 120, respectively.
C) $6.0 and 130, respectively.
D) $5.5 and 140, respectively.
E) $5.0 and 150, respectively.

Question 78

Table 10.1
$$\begin{array}{l}\text { Table } 10.1\\\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Aggregate Output } \\\text { Demanded (\$) }\end{array} & \begin{array} { c } \text { Price } \\\text { Level }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { Aggregate Output } \\\text { Supplied (\$) }\end{array} \\\hline 7.0 & 110 & 5.0 \\\hline 6.5 & 120 & 5.5 \\\hline 6.0 & 130 & 6.0 \\\hline 5.5 & 140 & 6.5 \\\hline 5.0 & 150 & 7.0 \\\hline\end{array}\end{array}$$

-Refer to Table 10.1, which shows the aggregate demand and aggregate supply in an economy. The equilibrium output and price level for the economy are _____

A) $7.0 and 110, respectively.
B) $6.5 and 120, respectively.
C) $6.0 and 130, respectively.
D) $5.5 and 140, respectively.
E) $5.0 and 150, respectively.

Question 79

Exhibit 10.1

Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. At Y₂, _____

A) output levels are at the economy's potential.
B) output levels are more than the economy's potential.
C) unemployment is at the natural rate.
D) unemployment is higher than the natural rate.
E) unemployment is lower than the natural rate.

Question 80

How much is the output gap if short-run output is $18.2 trillion and potential output is $18.0 trillion?

A) $18.2 trillion
B) $18.0 trillion
C) +$0.2 trillion
D) -$0.2 trillion
E) $0