Question 1

When there is an inflationary gap in the economy,what is occurring to real output in relation to the natural level of output?

Accepted Answer

A)  Real output exceeds the natural level of output.
B)  Real output is equal to the natural level of output.
C)  Real output may exceed or may be less than the natural level of output.
D)  Real output is less than the natural level of output.

Question 2

What impact will higher production costs have on short-run aggregate supply?

Accepted Answer

A)  It will decrease, illustrated by a rightward shift in the SRAS curve.
B)  It will increase, illustrated by a leftward shift in the SRAS curve.
C)  It will decrease, illustrated by a leftward shift in the SRAS curve.
D)  It will increase, illustrated by a rightward shift in the SRAS curve.

Question 3

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 4

What could a recession result from?

Accepted Answer

A)  an increase in long-run aggregate supply
B)  a decrease in aggregate demand
C)  an increase in short-run aggregate supply
D)  an increase in aggregate demand

Question 5

When does cost-push inflation occur?

Accepted Answer

A)  when the aggregate demand curve shifts rightward and aggregate supply is fixed
B)  when the short-run aggregate supply curve shifts leftward while aggregate demand is fixed
C)  when the short-run aggregate supply curve shifts rightward
D)  when the aggregate demand curve shifts leftward at a faster rate than short-run aggregate supply

Question 6

The aggregate supply curves show how much a nation's businesses are willing and able to produce at each price level.

Accepted Answer

A) True 
 B)False

Question 7

The quantity of real GDP supplied will decrease in both the short run and long run when the price level falls.

Accepted Answer

A) True 
 B)False

Question 8

What impact will an increase in aggregate demand have on real output?

Accepted Answer

A)  It will not increase real output in either the short run or the long run.
B)  It will increase real output in both the short run and long run.
C)  It will increase real output only in the short run.
D)  It will increase real output only in the long run.

Question 9

If the price level rises,what will happen to the quantity of real GDP produced along the long-run aggregate supply curve?

Accepted Answer

A)  It will increase.
B)  It will stay the same.
C)  It will usually increase, but not always.
D)  It will decrease.

Question 10

Suppose that personal income rises from $3000 to $4000 per month,and consumption rises from $2000 to $2600 per month.If taxes are 25 percent of income,what must marginal propensity to save be?

Accepted Answer

A)  0.10
B)  0.20
C)  0.30
D)  0.40

Question 11

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

Accepted Answer

A) True 
 B)False

Question 12

How can the long-run,or natural,level of real output be represented?

Accepted Answer

A)  by a LRAS that is an upward-sloping line
B)  by a LRAS that is a downward-sloping line
C)  by a LRAS that is a horizontal line
D)  by a LRAS that is a vertical line

Exam 9: Aggregate Supply and Macroeconomic Equilibrium

When there is an inflationary gap in the economy,what is occurring to real output in relation to the natural level of output?

Correct Answer
verified

Suppose that personal income rises from $3000 to $4000 per month,and consumption rises from $2000 to $2600 per month.If taxes are 25 percent of income,what must marginal propensity to save be?

Correct Answer
verified

What impact will an increase in aggregate demand have on real output?

Correct Answer
verified

When does cost-push inflation occur?

Correct Answer
verified

The quantity of real GDP supplied will decrease in both the short run and long run when the price level falls.

Correct Answer
verified

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

Correct Answer
verified

How can the long-run,or natural,level of real output be represented?

Correct Answer
verified

What could a recession result from?

Correct Answer
verified

What impact will higher production costs have on short-run aggregate supply?

Correct Answer
verified

If the price level rises,what will happen to the quantity of real GDP produced along the long-run aggregate supply curve?

Correct Answer
verified

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

Correct Answer
verified

The aggregate supply curves show how much a nation's businesses are willing and able to produce at each price level.

Correct Answer
verified

Exam 9: Aggregate Supply and Macroeconomic Equilibrium

When there is an inflationary gap in the economy,what is occurring to real output in relation to the natural level of output?

Correct AnswerverifiedShow Answer

Suppose that personal income rises from $3000 to $4000 per month,and consumption rises from $2000 to $2600 per month.If taxes are 25 percent of income,what must marginal propensity to save be?

Correct AnswerverifiedShow Answer

What impact will an increase in aggregate demand have on real output?

Correct AnswerverifiedShow Answer

When does cost-push inflation occur?

Correct AnswerverifiedShow Answer

The quantity of real GDP supplied will decrease in both the short run and long run when the price level falls.

Correct AnswerverifiedShow Answer

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

Correct AnswerverifiedShow Answer

How can the long-run,or natural,level of real output be represented?

Correct AnswerverifiedShow Answer

What could a recession result from?

Correct AnswerverifiedShow Answer

What impact will higher production costs have on short-run aggregate supply?

Correct AnswerverifiedShow Answer

If the price level rises,what will happen to the quantity of real GDP produced along the long-run aggregate supply curve?

Correct AnswerverifiedShow Answer

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

Correct AnswerverifiedShow Answer

The aggregate supply curves show how much a nation's businesses are willing and able to produce at each price level.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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