Question 1

The years 2002 through 2007 can be described as a period of

Accepted Answer

A)   falling output accompanied by increasing inflation.
B)   falling output accompanied by decreasing inflation.
C)   rising output accompanied by increasing inflation.
D)   rising output accompanied by decreasing inflation.

Question 2

How is it possible for the economy to have an inflationary gap?

Accepted Answer

A)   Equilibrium is at a GDP level below full employment.
B)   Equilibrium is at a GDP level equal to full employment.
C)   Equilibrium is at a GDP level above full employment.
D)   GDP is rising at full employment.
E)   GDP is falling at full employment.

Question 3

The aggregate supply curve will shift to the left if

Accepted Answer

A)   energy prices fall.
B)   technology and productivity increase in the economy.
C)   the capital stock of the economy increases.
D)   the money wage rate increases.

Question 4

If the selling price falls and input costs are fixed,profit margins will increase.

Accepted Answer

A) True 
 B)False

Question 5

Discuss some of the arguments that help explain why wages and prices rarely fall in a modern economy.

Accepted Answer

Institutional factors such as minimum wa...

Question 6

Figure 10-1 
-If the price level in Figure 10-1 were 120,

Accepted Answer

A)   there would be excess goods on the market.
B)   firms would have to raise their prices.
C)   inventories would be disappearing.
D)   aggregate quantity demanded would exceed aggregate quantity supplied.

Question 7

As the multiplier process is working on the demand side:

Accepted Answer

A)   ​firms will meet the additional demand without raising prices
B)   ​​firms will meet the additional demand only by raising prices
C)   ​firms will not meet the additional demand
D)   ​the multiplier process will cease creating demand

Question 8

The investment and capital spending boom of the late 1990s most likely resulted in a(n)

Accepted Answer

A)   increase in aggregate supply.
B)   decrease in aggregate supply.
C)   steeper aggregate supply curve.
D)   flatter aggregate supply curve.

Question 9

In Table 10-1,what is the equilibrium level of real output and the equilibrium price?

Accepted Answer

A)   $3,100 real output and a price of 75
B)   $3,250 real output and a price of 110
C)   $3,350 real output and a price of 90
D)   $3,400 real output and a price of 75

Question 10

Figure 10-8 
-Figure 10-8 illustrates a period of

Accepted Answer

A)   low unemployment and high inflation.
B)   low unemployment and low inflation.
C)   high unemployment and high inflation.
D)   high unemployment and low inflation.

Question 11

The post-World War II record shows that recessionary gaps may be long-lasting because ____ tends not to occur.

Accepted Answer

A)   deflation
B)   reflation
C)   stagflation
D)   disinflation

Question 12

In response to the demands of environmentalists,large sections of timberlands are put off limits to logging.What effect will this have on the aggregate supply curve?

Accepted Answer

A)   Shift it outward.
B)   Shift it inward.
C)   Move the economy up along the curve.
D)   Move the economy down along the curve.

Question 13

The aggregate supply curve shows the relationship between ____ and ____,holding all other factors constant.

Accepted Answer

A)   price level; quantity of real GDP supplied
B)   price level; supply of nominal GDP
C)   nominal GDP; price level of real GDP
D)   price level; amount of nominal GDP supplied

Question 14

The aggregate supply curve is the relationship between the price level and the quantity of real GDP purchased.

Accepted Answer

A) True 
 B)False

Question 15

In the period from 1996-2000,the United States economy experienced the unusual combination of

Accepted Answer

A)   high unemployment and high inflation.
B)   high unemployment and low inflation.
C)   low unemployment and high inflation.
D)   low unemployment and low inflation.

Question 16

A recession can be expected to reduce inflation in the economy if the recession is caused by a(n)

Accepted Answer

A)   increase in aggregate demand.
B)   increase in aggregate supply.
C)   decrease in aggregate demand.
D)   decrease in aggregate supply.

Question 17

What would be the likely result of a recessionary gap? If this leads to a fall in the nominal wage what impact it would have on the aggregate supply curve and on recessionary gap?

Accepted Answer

With equilibrium GDP below potential GDP...

Question 18

Figure 10-5 
-In Figure 10-5,which graph best illustrates the situation of an economy with high unemployment that experiences an increase in investment spending?

Accepted Answer

A)   (1) 
B)   (2) 
C)   (3) 
D)   (4)

Question 19

When inflation occurs,net exports will

Accepted Answer

A)   increase as imports decrease.
B)   increase as exports increase.
C)   decrease as imports decrease.
D)   decrease as imports increase.

Question 20

Economists generally assume that there is a short-run trade-off between

Accepted Answer

A)   output and employment.
B)   inflation and employment.
C)   deflation and unemployment.
D)   inflation and unemployment.
E)   output and growth.

Exam 10: Bringing In The Supply Side Unemployment and Inflation

A recession can be expected to reduce inflation in the economy if the recession is caused by a(n)

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If the selling price falls and input costs are fixed,profit margins will increase.

Correct AnswerverifiedShow Answer

In the period from 1996-2000,the United States economy experienced the unusual combination of

Correct AnswerverifiedShow Answer

As the multiplier process is working on the demand side:

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Figure 10-1 -If the price level in Figure 10-1 were 120,

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In Table 10-1,what is the equilibrium level of real output and the equilibrium price?

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What would be the likely result of a recessionary gap? If this leads to a fall in the nominal wage what impact it would have on the aggregate supply curve and on recessionary gap?

Correct AnswerverifiedWith equilibrium GDP below potential GDP...View AnswerShow Answer

Figure 10-8 -Figure 10-8 illustrates a period of

Correct AnswerverifiedShow Answer

The aggregate supply curve is the relationship between the price level and the quantity of real GDP purchased.

Correct AnswerverifiedShow Answer

The years 2002 through 2007 can be described as a period of

Correct AnswerverifiedShow Answer

Economists generally assume that there is a short-run trade-off between

Correct AnswerverifiedShow Answer

The aggregate supply curve shows the relationship between ____ and ____,holding all other factors constant.

Correct AnswerverifiedShow Answer

The aggregate supply curve will shift to the left if

Correct AnswerverifiedShow Answer

The investment and capital spending boom of the late 1990s most likely resulted in a(n)

Correct AnswerverifiedShow Answer

In response to the demands of environmentalists,large sections of timberlands are put off limits to logging.What effect will this have on the aggregate supply curve?

Correct AnswerverifiedShow Answer

How is it possible for the economy to have an inflationary gap?

Correct AnswerverifiedShow Answer

The post-World War II record shows that recessionary gaps may be long-lasting because ____ tends not to occur.

Correct AnswerverifiedShow Answer

Figure 10-5 -In Figure 10-5,which graph best illustrates the situation of an economy with high unemployment that experiences an increase in investment spending?

Correct AnswerverifiedShow Answer

When inflation occurs,net exports will

Correct AnswerverifiedShow Answer

Discuss some of the arguments that help explain why wages and prices rarely fall in a modern economy.

Correct AnswerverifiedInstitutional factors such as minimum wa...View AnswerShow Answer

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With equilibrium GDP below potential GDP...
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The aggregate supply curve shows the relationship between and ,holding all other factors constant.

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Institutional factors such as minimum wa...
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