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The short-run aggregate supply curve is upward sloping because higher price levelsMultiple Choice lower interest rates and
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In terms of aggregate supply, the short run is a period in whichMultiple Choice the price level is constant. employment is
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In terms of aggregate supply, a period in which nominal wages and other resource prices are fully responsive to price-level
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In the extended aggregate demand-aggregate supply model,Multiple Choice long-run equilibrium occurs wherever the aggregate
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In the extended analysis of aggregate supply, the short-run aggregate supply curve isMultiple Choice vertical and the long-run
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The natural rate of unemploymentMultiple Choice can vary over time and defines the location of the long-run aggregate supply
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In situations of sticky prices and negative demand shocks, we would expect firms toMultiple Choice deplete inventories before
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Which of the following is an example of a demand shock?Multiple Choice Hurricane Helene knocks out oil drilling platforms in the
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Shocks to the economy occur whenMultiple Choice stock prices rise by more than 10 percent per year. government takes a more
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Prices tend to become more flexible over time, so that as time passes,Multiple Choice the economy can react to demand shocks
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Which of the following correctly identifies components that cause shifts of aggregate supply?A. Changes in the price of inputs,
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Potential output is best defined as __________.A. An estimate of what an economy could feasibly produce when it fully employs
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Which of the following could potentially cause a negative demand shock?A. Foreign consumers demand more US goods and services
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A change in which of the following would cause the aggregate demand curve to shift?A. Government purchases B. Productivity C.
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Which of the following descriptions best models an economy in long-run equilibrium?A. All three curves—AD, SRAS, and
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Which of the following statements is true in an economy that is operating at potential output?A. The economy is underutilizing
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What component of short-run aggregate supply is affected when the federal government passes a bill to increase the minimum wage?
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The self-correcting nature of markets draw the economy back to long-run equilibrium. This is because in the long run,
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Potential output is best defined as __________.A. An estimate of what an economy could feasibly produce when it fully employs
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2. 10 views
An effect of short-run fluctuations due to a negative demand shock is __________.A. lower price level B. lower unemployment
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Which of the following will cause a negative demand shock?A. A rising stock market increases the wealth of consumers. B. The
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2. 12 views
If an economy is operating below potential output as a result of decreased investment spending, the economy is experiencing a(n)
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Which of the following correctly identifies components that cause shifts of aggregate supply?A. Changes in the price of inputs,
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A recessionary gap is the gap between __________ and __________.A. long-run disequilibrium; short-run equilibrium B. long-run
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An effect of short-run fluctuations due to a negative demand shock is __________.A. lower price level B. lower unemployment
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A __________ is a case in which aggregate demand turns out to be lower than expected, while a __________ is a case in which
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Which of the following are the most likely short-run effects of a negative demand shock?Real Gross Domestic Product(RGDP) Price
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2. 14 views
Which of the following correctly identifies components that cause shifts of aggregate demand?A. Changes in the price of inputs,
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2. 9 views
intersection of the short-run aggregate supply, aggregate demand, and long-run aggregate supply represents __________.
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An effect of short-run fluctuations due to a positive demand shock is __________.A. higher price level B. higher unemployment
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At points Y2 and PL2, the economy is experiencing which of the following economic conditions?A. Recession B. Inflation C.
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Long-run equilibrium means the economy __________.A. is operating at potential output B. is experiencing cyclical unemployment
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Which of the following will cause a positive demand shock?A. A rising stock market increases the wealth of consumers. B. The
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Which of the following would cause an economic shock?I. Stock market crash II. Natural disaster III. Increase in exports A. I
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What happens to an economy when its increases in long-run aggregate supply are less than increases in aggregate demand?Multiple
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Which of the following are responsible for economies having low, continuous positive inflation rates?Multiple select question.
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Over longer periods of time, any inflation that arises concurrently with economic growth is the result of which of the
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Other things equal and assuming product and resource prices are downwardly flexible, an expansion of long-run aggregate supply
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What happens to an economy when its increases in long-run aggregate supply are less than increases in aggregate demand?Multiple
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When the government takes a hands-off approach to cost-push inflation, it does which of the following?Multiple choice question.
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In the long run, which assumption allows the economy to return to full employment without government intervention?Multiple
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According to the extended AD-AS model, the U.S. growth experience is most accurately described as which of the following?Multipl
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According to one application of the extended AD-AS model, a decrease in aggregate demand causes which of the following?Multiple
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True or false: By themselves, expansions of long-run aggregate supply in the economy are inflationary.True false question. True
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The assumption that wages and prices are downwardly flexible in the long run allows for which of the following?Multiple choice
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Which of the following are responsible for economies having low, continuous positive inflation rates?Multiple select question.
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When a recession occurs, policymakers have which of the following options?Multiple select question. Conduct active monetary or
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What is the likely consequence of the government failing to intervene when cost-push inflation arises?Multiple choice question.
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True or false: The extended AD-AS model predicts that the economy will, in the long run, adjust to a recession caused by
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Which of the following creates a dilemma for the government when it is considering implementing expansionary policy?Multiple
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Which of the following actions could cause a recession?Multiple choice question. An increase in aggregate demand An increase in
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Higher costs of production result in which of the following?Multiple select question. A decrease in the equilibrium price level
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In the extended AD-AS model, which of the following is required to facilitate the economy's return to full employment in the
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Demand-pull inflation refers to a Blank______ in the short run.Multiple choice question. constant price level and a constant
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What is the likely outcome when a government handles a recession by remaining passive while the economy returns to full
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Which of the following statements is true when the economy is at equilibrium in the short run?Multiple select question. Neither
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When the government takes a hands-off approach to cost-push inflation, it does which of the following?Multiple choice question.
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In the extended AD-AS model, what eventually happens following an increase in price level associated with an economy exceeding
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Which of the following is likely to happen if the government attempts to maintain full employment during a period of cost-push
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Demand-pull inflation is the result of which of the following?Multiple choice question. The AS curve shifting to the left The AD
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An increase in the costs of inputs, such as wages, leads to Blank______.Multiple choice question. cost-push inflation
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Which of the following are true of an economy in its long-run equilibrium?Multiple select question. There may be a positive or
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Which of the following are short-run effects of demand-pull inflation?Multiple select question. An unaffected real output A rise
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When is equilibrium achieved in the short run?Multiple choice question. When the GDP gap is neither negative nor positive When
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According to the extended AD-AS model, what happens when aggregate demand increases in the short run?Multiple choice question.
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Why is the long-run aggregate supply curve vertical at the full-employment level of GDP?Multiple choice question. Because the
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When the price level rises because the AD curve shifts rightward, the economy experiences which of the following?Multiple choice
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When output falls below the economy's full-employment output level, which of the following adjustments will occur?Multiple
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An economy in long-run equilibrium has which of the following characteristics?Multiple select question. A vertical aggregate
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Which of the following shifts the short-run aggregate supply curve to the left?Multiple select question. Decreased labor demand
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Which of the following statements is true when the economy is at equilibrium in the short run?Multiple select question. A
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Which of the following allows an economy to operate beyond its full employment level?Multiple choice question. Operating with
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In the long run, when the price level rises or falls, real output will do which of the following?Multiple choice question. Move
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If the price level rises in the short run, which of the following will result?Multiple choice question. Firms' total output will
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Over the long run, falling nominal wages will shift the short-run aggregate supply curve to the Blank______, which causes output
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What happens to nominal wages in the short run when the price level decreases?Multiple choice question. They decrease. They
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The short-run aggregate supply curve is based on the assumption that firms and workers have established nominal wages, with the
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2. 7 views
If an economy is producing beyond its full employment output, nominal wages will start to increase, which causes the short-run
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In macroeconomics, input prices are assumed to be inflexible or even fixed in the .
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Prices that are inflexible in the very short run are referred to as Blank______; while prices in the long run are referred to as
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If the price level rises in the short run, nominal wages will Blank______, and firms' profits will therefore Blank______.Multipl
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True or false: A fear of "price wars" is one factor that increases short-run price stickiness.True false question. True False
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Which of the following is true of nominal wages when price levels rise in the short run?Multiple choice question. They remain
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Which of the following helps to explain how unexpected changes in demand lead to fluctuations in GDP and employment?Multiple
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The short-run aggregate supply curve is based on which of the following assumptions?Multiple select question. The price level is
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In macroeconomics, the short run assumes that input prices are Blank______ while output prices are Blank______.Multiple choice
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The short run in macroeconomics is the period in which Blank______.Multiple choice question. no contracts or agreements exist to
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After a demand shock, prices are completely inflexible, or stuck, only in the very run.
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Many firms that do not change their prices immediately after a change in demand will eventually do so primarily to Blank______.M
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Which of the following are factors that increase short-run price stickiness?Multiple select question. Collusion between rivals
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True or false: Flexible prices help to explain how unexpected changes in demand lead to the fluctuations in GDP and employment
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Which good or service generally has the most flexible prices?Multiple choice question. airline tickets haircuts washing machines
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In the short run Blank______.Multiple choice question. prices are flexible increases in the money supply have no effect on GDP
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What type of prices take months to change?Multiple choice question. Flexible prices Sticky prices Inelastic prices Elastic
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Why does price stickiness moderate over time?Multiple choice question. Firms that choose a fixed-price policy in the short run
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Which of the following helps to explain how unexpected changes in demand lead to fluctuations in GDP and employment?Multiple
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What is an example of a good that has flexible prices?Multiple choice question. a coin-operated laundry magazines haircuts
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As a result of shocks and things not going to plan there are Blank______.Multiple choice question. fluctuations in output and
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Fill in the blank question.prices react within seconds to changing supply and demand while sticky prices sometimes take months
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When demand is unexpectedly high, inventories will Blank______ as the quantity demanded Blank______ the factory's optimal
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