Question 1

The main effect of an increase in the capital stock is a(n)

Accepted Answer

A)   rightward shift of the long-run aggregate supply curve
B)   rightward shift of the aggregate demand curve
C)   leftward shift of the long-run aggregate supply curve
D)   leftward shift of the aggregate demand curve
E)   increase in price and output levelsF) D) and E)
G) A) and B)

Question 2

Exhibit 11-1
 
-Given aggregate demand and aggregate supply schedule #1 in Exhibit 11-1,the equilibrium price level is

Accepted Answer

A)   110
B)   120
C)   130
D)   140
E)   150F) B) and E)
G) A) and D)

Question 3

In long-run equilibrium,

Accepted Answer

A)   actual output can exceed potential output
B)   potential output can exceed actual output
C)   actual output must equal potential output
D)   actual price levels can exceed expected price levels
E)   expected price levels can exceed actual price levelsF) A) and B)
G) C) and D)

Question 4

The aggregate supply curve reflects the relationship between the

Accepted Answer

A)   price of a particular good and the quantity supplied by all firms producing that good
B)   price of a particular good and the quantity supplied by the aggregate economy
C)   price level and the quantity of all goods supplied in the economy
D)   price level and the quantity purchased of all goods in the economy
E)   price level and investment spendingF) None of the above
G) A) and E)

Question 5

If the expected price level exceeds the actual price level

Accepted Answer

A)   the inflation rate is negative
B)   the inflation rate is positive
C)   production becomes less attractive to firms
D)   production becomes more attractive to firms
E)   the short-run aggregate supply curve is negatively slopedF) A) and E)
G) A) and D)

Question 6

Real wages are nominal wages adjusted for price changes.

Accepted Answer

A) True 
 B)False

Question 7

Among the reasons firms find it profitable to expand output in the short run when the price level is rising faster than expected is that

Accepted Answer

A)   all firms' costs are contractually fixed
B)   prices for firms' output are rising with the price level
C)   firms are interested in minimizing cost per unit,not total profits
D)   all firms' costs are variable
E)   the quantity of resources available to the economy is fixedF) C) and D)
G) D) and E)

Question 8

Compensation is usually negotiated in terms of the nominal wage because wage agreements are based on expected price levels.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)   cyclical unemployment can exist
B)   structural unemployment can exist
C)   frictional unemployment can exist
D)   the actual rate of unemployment equals the natural rate of unemployment
E)   actual output can exceed potential outputF) D) and E)
G) A) and E)

Question 10

Which of the following is true in the long run?

Accepted Answer

A)   The aggregate demand curve determines the level of potential output.
B)   The long-run aggregate supply curve is vertical.
C)   The actual price level is greater than the expected price level.
D)   Cyclical unemployment is between 5 percent and 6 percent.
E)   The price level is determined entirely by the long-run aggregate supply curve.F) A) and C)
G) A) and E)

Question 11

Suppose that the actual and expected price levels are initially equal,and that the expected price level rises.Which of the following will occur over the long run? (Hint: Recall the actual price level is on the vertical axis.)

Accepted Answer

A)   The economy will move rightward along the short-run aggregate supply curve.
B)   The economy will move leftward 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.F) A) and D)
G) B) and D)

Question 12

Exhibit 11-2 2 - Y1 B)  Y3 - Y1 C)  Y2 - Y3 D)  P3 - P1 E)  P2 - P3" class="answers-bank-image d-inline" rel="preload" >
-In Exhibit 11-2,an expansionary gap would be represented by the distance

Accepted Answer

A)   Y2 - Y1
B)   Y3 - Y1
C)   Y2 - Y3
D)   P3 - P1
E)   P2 - P3F) A) and B)
G) D) and E)

Question 13

Exhibit 11-2 1 - Y2 B)  Y1 - Y3 C)  Y2 - Y3 D)  P3 - P1 E)  P3 - P2" class="answers-bank-image d-inline" rel="preload" >
-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 - P2F) A) and D)
G) A) and C)

Question 14

If the actual price level is higher than the expected price level,the economy will expand in the short run.

Accepted Answer

A) True 
 B)False

Question 15

Wage agreements may cause costs to be __________ flexible than prices so that __________ in the price level cause __________ in aggregate quantity supplied.

Accepted Answer

A)   more; decreases; decreases
B)   more; increases; decreases
C)   less; increases; decreases
D)   less; decreases; increases
E)   less; decreases; decreasesF) A) and B)
G) B) and E)

Question 16

Which of the following is true of a contractionary gap?

Accepted Answer

A)   It develops when the expected price level is less than the actual price level.
B)   In the long run,this gap will close when resource suppliers negotiate lower resource payments.
C)   It measures the amount by which actual output is greater than the economy's potential output.
D)   In the long run,this gap will close when the short-run aggregate supply curve shifts rightward.
E)   In the long run,this gap will close when the aggregate demand curve shifts rightward.F) A) and D)
G) A) and E)

Exam 11: Aggregate Supply

Wage agreements may cause costs to be flexible than prices so that in the price level cause __ in aggregate quantity supplied.

Correct Answer
verified

Among the reasons firms find it profitable to expand output in the short run when the price level is rising faster than expected is that

Correct Answer
verified

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

Correct Answer
verified

Which of the following is true in the long run?

Correct Answer
verified

The main effect of an increase in the capital stock is a(n)

Correct Answer
verified

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

Correct Answer
verified

Which of the following is true of a contractionary gap?

Correct Answer
verified

Exhibit 11-2 -In Exhibit 11-2,an expansionary gap would be represented by the distance

Correct Answer
verified

If the expected price level exceeds the actual price level

Correct Answer
verified

Real wages are nominal wages adjusted for price changes.

Correct Answer
verified

The aggregate supply curve reflects the relationship between the

Correct Answer
verified

Compensation is usually negotiated in terms of the nominal wage because wage agreements are based on expected price levels.

Correct Answer
verified

Exhibit 11-1 -Given aggregate demand and aggregate supply schedule #1 in Exhibit 11-1,the equilibrium price level is

Correct Answer
verified

If the actual price level is higher than the expected price level,the economy will expand in the short run.

Correct Answer
verified

In long-run equilibrium,

Correct Answer
verified

Suppose that the actual and expected price levels are initially equal,and that the expected price level rises.Which of the following will occur over the long run? (Hint: Recall the actual price level is on the vertical axis.)

Correct Answer
verified

Exam 11: Aggregate Supply

Wage agreements may cause costs to be __________ flexible than prices so that __________ in the price level cause __________ in aggregate quantity supplied.

Correct AnswerverifiedShow Answer

Among the reasons firms find it profitable to expand output in the short run when the price level is rising faster than expected is that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is true in the long run?

Correct AnswerverifiedShow Answer

The main effect of an increase in the capital stock is a(n)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is true of a contractionary gap?

Correct AnswerverifiedShow Answer

Exhibit 11-2 -In Exhibit 11-2,an expansionary gap would be represented by the distance

Correct AnswerverifiedShow Answer

If the expected price level exceeds the actual price level

Correct AnswerverifiedShow Answer

Real wages are nominal wages adjusted for price changes.

Correct AnswerverifiedShow Answer

The aggregate supply curve reflects the relationship between the

Correct AnswerverifiedShow Answer

Compensation is usually negotiated in terms of the nominal wage because wage agreements are based on expected price levels.

Correct AnswerverifiedShow Answer

Exhibit 11-1 -Given aggregate demand and aggregate supply schedule #1 in Exhibit 11-1,the equilibrium price level is

Correct AnswerverifiedShow Answer

If the actual price level is higher than the expected price level,the economy will expand in the short run.

Correct AnswerverifiedShow Answer

In long-run equilibrium,

Correct AnswerverifiedShow Answer

Suppose that the actual and expected price levels are initially equal,and that the expected price level rises.Which of the following will occur over the long run? (Hint: Recall the actual price level is on the vertical axis.)

Correct AnswerverifiedShow Answer

Wage agreements may cause costs to be flexible than prices so that in the price level cause __ in aggregate quantity supplied.

Correct Answer
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