A) "The decrease in consumer spending may lead to a recession."
B) "The increase in consumer spending is expected to lead to inflation, without any increase in real GDP."
C) "Recent higher wage settlements are expected to cause higher inflation this year."
D) "Growth has been unusually high the last few years due to more women entering the work force."
E) "The recent tornadoes destroyed many factories in Calgary and Edmonton."
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A) foreigners.
B) households.
C) suppliers.
D) governments.
E) firms.
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A) The price level decreases.
B) The level of real GDP decreases in the short run.
C) A recessionary gap arises.
D) Factor prices decrease in the long run, shifting the short-run aggregate supply curve rightward.
E) The long-run aggregate supply curve shifts leftward to create the new long-run equilibrium.
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A) does not change; does not change
B) decreases; does not change;
C) increases; does not change;
D) increases; increases
E) decreases; does not change
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A) the price level rises to 90.
B) real GDP is $600 billion.
C) the actual unemployment rate exceeds the natural unemployment rate.
D) potential GDP decreases.
E) the SAS curve shifts rightward.
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A) the money wage rate to fall.
B) the money wage rate to rise.
C) potential GDP to increase.
D) potential GDP to decrease.
E) the expected future inflation rate to decrease.
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A) increases; decreases
B) increases; increases
C) decreases; decreases
D) decreases; increases
E) does not change; does not change
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A) a change in factor prices
B) a change in the quantity of capital
C) an advance in technology
D) an increase in the full-employment quantity of labour
E) none of the above
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A) not in short-run equilibrium.
B) in a recessionary equilibrium.
C) in an above full-employment equilibrium.
D) in a below full-employment equilibrium.
E) in long-run equilibrium.
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A) policies that actively offset changes in long-run aggregate supply that result in negative economic growth.
B) an increase in the quantity of money to offset decreases in aggregate demand and a decrease in the quantity of money to offset increases in aggregate demand.
C) policies that actively offset changes in aggregate demand that bring recession.
D) policies that minimize the disincentive effects of taxes on employment, investment, and technological change.
E) all of the above
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A) there is a below full-employment equilibrium.
B) the actual unemployment rate is less than the natural unemployment rate.
C) potential GDP is greater than equilibrium GDP.
D) the actual unemployment rate is equal to the natural unemployment rate.
E) there is a recessionary gap.
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A) (a) only
B) (b) only
C) (c) only
D) (d) only
E) Both (a) and (c)
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A) (a)
B) (b)
C) (c)
D) (d)
E) (a) and (b)
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A) Real GDP increases and the price level rises.
B) Real GDP decreases and the price level falls.
C) Real GDP increases and the price level falls.
D) Real GDP decreases and the price level rises.
E) There is no change in either real GDP or the price level.
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A) Technological change is the most significant influence on both aggregate demand and aggregate supply.
B) To achieve and maintain full employment, active help from fiscal policy and monetary policy is required.
C) Expectations are based on "animal spirits."
D) The money wage rate is extremely sticky in the downward direction so there is no automatic mechanism for eliminating a recessionary gap.
E) Expectations are the most significant influence on aggregate demand.
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A) shifts the aggregate demand curve rightward.
B) shifts the aggregate demand curve leftward.
C) shifts the short-run aggregate supply curve leftward.
D) shifts the long-run aggregate supply curve rightward.
E) creates a movement up along the aggregate demand curve.
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