Question 1

A wage in dollars measured by the goods and services the dollars buy is called the

Accepted Answer

A)  real wage
B)  imaginary wage
C)  inflationary wage
D)  nominal wage
E)  normal wageF) B) and D)
G) A) and B)

Question 2

The expected price level is significant because

Accepted Answer

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)  firms and resource owners make long-term agreements based on the expected price level
E)  the difference between the expected and actual price levels is equal to the actual inflation rateF) B) and D)
G) B) and C)

Question 3

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

Accepted Answer

A)  actual output can equal potential output
B)  cyclical unemployment can exist
C)  structural unemployment can exist
D)  frictional unemployment can exist
E)  real and nominal GDP can differF) B) and D)
G) C) and D)

Question 4

When the economy is at its potential output level, which of the following is not true?

Accepted Answer

A)  Firms' and workers' expectations about the price level are realized.
B)  The nominal wage is a good measure of the expected real wage.
C)  The unemployment rate is about 2 percent.
D)  The economy is producing its maximum sustainable output.
E)  The actual price level equals the expected price level.F) C) and E)
G) A) and D)

Question 5

Given the aggregate demand curve, a beneficial supply shock would

Accepted Answer

A)  increase output and the price level
B)  decrease output and the price level
C)  increase output and lower the price level
D)  decrease output and increase the price level
E)  cause no change in output or the price levelF) A) and B)
G) B) and C)

Question 6

Exhibit 11-7
 
-The movement in Exhibit 11-7 could be caused by

Accepted Answer

A)  a decrease in the real wage
B)  an increase in the economy's capital stock
C)  the actions of a cartel of resource suppliers
D)  a decrease in consumer spending
E)  an increase in labor productivityF) C) and D)
G) A) and C)

Question 7

Which of the following would cause the short-run aggregate supply curve to shift leftward?

Accepted Answer

A)  a drop in energy prices
B)  a drop in the actual price level
C)  workers opting for more leisure time and less time on the job
D)  new investment spending that is greater than depreciation of the capital stock
E)  a technological breakthrough with widespread practical applications that occurs in the microcomputer industryF) A) and B)
G) A) and C)

Question 8

Firms __________ output as long as the revenue from additional production __________ the cost of that production.

Accepted Answer

A)  expand, is less than
B)  contract, is less than
C)  contract, exceeds
D)  expand, exceeds
E)  expand, is equal toF) B) and C)
G) B) and E)

Question 9

In the short run, there is a positive relationship between

Accepted Answer

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

Question 10

During a recession,

Accepted Answer

A)  unemployment is below the natural rate
B)  actual output is above potential output
C)  both unemployment and the price level are too high
D)  contractionary gaps may persist if wages are not very flexible
E)  expansionary gaps may persist if wages are not very flexibleF) D) and E)
G) B) and E)

Question 11

Exhibit 11-9
 
-The graph in Exhibit 11-9 shows a(n)

Accepted Answer

A)  increase in short-run aggregate supply
B)  increase in long-run aggregate supply
C)  decrease in short-run aggregate supply
D)  decrease in long-run aggregate supply
E)  decrease in aggregate quantity demandedF) A) and B)
G) All of the above

Question 12

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

Accepted Answer

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 percentF) A) and B)
G) D) and E)

Question 13

Supply shocks are unexpected events that affect aggregate supply.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 11-3
 1 and Y2 is called A) an expansionary gap B) a contractionary gap C) an increase in potential output D) the natural rate of unemployment E) a decrease in potential output" class="answers-bank-image d-inline" rel="preload" >
-In Exhibit 11-3, the distance between Y1 and Y2 is called

Accepted Answer

A)  an expansionary gap
B)  a contractionary gap
C)  an increase in potential output
D)  the natural rate of unemployment
E)  a decrease in potential outputF) A) and B)
G) A) and C)

Question 15

Which of the following is generally true of nominal wages?

Accepted Answer

A)  In the long run, nominal and real wages tend to be equal.
B)  Nominal wages are more flexible downward than upward.
C)  Nominal wages are more flexible than prices.
D)  Sustained and continuous (cyclical)  unemployment suggests nominal wages do not fall quickly.
E)  Nominal wages do not rise during labor shortages.F) C) and D)
G) B) and D)

Question 16

Given a downward-sloping aggregate demand curve, if short-run aggregate supply increases, real GDP must increase and nominal GDP must fall.

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 11-4
 
-The graph in Exhibit 11-4 shows a(n)

Accepted Answer

A)  increase in short-run aggregate supply
B)  increase in long-run aggregate supply
C)  decrease in short-run aggregate supply
D)  decrease in long-run aggregate supply
E)  decrease in aggregate quantity demandedF) D) and E)
G) B) and C)

Question 18

Which of the following is true of a beneficial supply shock?

Accepted Answer

A)  It could lead to a lower price level.
B)  If the economy were initially in equilibrium, such a shock would create a contractionary gap.
C)  It will permanently decrease the economy's price level.
D)  It will cause the aggregate demand curve to shift rightward.
E)  It will cause the aggregate demand curve to shift leftward.F) A) and D)
G) B) and E)

Question 19

The steepness of the short-run aggregate supply curve depends primarily on

Accepted Answer

A)  the length of time for which resource prices are fixed
B)  the length of time for which output prices are fixed
C)  the difference between the expected and the actual price levels
D)  how quickly employment increases as output expands
E)  how quickly production costs increase as output expandsF) C) and D)
G) B) and C)

Question 20

Aggregate supply is the relationship between aggregate demand and the quantities of aggregate output firms are willing and able to produce, other things constant.

Accepted Answer

A) True 
 B)False

Exam 12: Aggregate Supply

Which of the following is generally true of nominal wages?

Correct AnswerverifiedShow Answer

The steepness of the short-run aggregate supply curve depends primarily on

Correct AnswerverifiedShow Answer

Exhibit 11-9 -The graph in Exhibit 11-9 shows a(n)

Correct AnswerverifiedShow Answer

During a recession,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the economy is at its potential output level, which of the following is not true?

Correct AnswerverifiedShow Answer

Which of the following would cause the short-run aggregate supply curve to shift leftward?

Correct AnswerverifiedShow Answer

Which of the following is true of a beneficial supply shock?

Correct AnswerverifiedShow Answer

Firms __________ output as long as the revenue from additional production __________ the cost of that production.

Correct AnswerverifiedShow Answer

Exhibit 11-3 -In Exhibit 11-3, the distance between Y1 and Y2 is called

Correct AnswerverifiedShow Answer

Aggregate supply is the relationship between aggregate demand and the quantities of aggregate output firms are willing and able to produce, other things constant.

Correct AnswerverifiedShow Answer

A wage in dollars measured by the goods and services the dollars buy is called the

Correct AnswerverifiedShow Answer

Exhibit 11-4 -The graph in Exhibit 11-4 shows a(n)

Correct AnswerverifiedShow Answer

The expected price level is significant because

Correct AnswerverifiedShow Answer

In the short run, there is a positive relationship between

Correct AnswerverifiedShow Answer

Given a downward-sloping aggregate demand curve, if short-run aggregate supply increases, real GDP must increase and nominal GDP must fall.

Correct AnswerverifiedShow Answer

Exhibit 11-7 -The movement in Exhibit 11-7 could be caused by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Supply shocks are unexpected events that affect aggregate supply.

Correct AnswerverifiedShow Answer

Given the aggregate demand curve, a beneficial supply shock would

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Firms output as long as the revenue from additional production the cost of that production.

Correct Answer
verified

Exhibit 11-3 -In Exhibit 11-3, the distance between Y₁ and Y₂ is called

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified