Question 1

A change in the expected price level is likely to cause which of the following?

Accepted Answer

A)  a shift in the short-run aggregate supply curve and long-run aggregate supply curve
B)  a shift in the short run aggregate supply curve
C)  a shift in the aggregate demand curve
D)  a shift in the long-run aggregate supply curveE) C) and D)
F) B) and D)

Question 2

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what it produce had

Accepted Answer

A)  increased,so it would increase production.
B)  increased,so it would decrease production.
C)  decreased,so it would increase production.
D)  decreased,so it would decrease production.E) A) and C)
F) A) and B)

Question 3

Other things the same,if the long-run aggregate supply curve shifts right,prices

Accepted Answer

A)  and output both increase.
B)  and output both decrease.
C)  increase and output decreases.
D)  decrease and output increases.E) B) and C)
F) None of the above

Question 4

A candidate for political office announces the following policies which,she says,economics clearly demonstrates will lead to higher output in the long run: 1.increase immigration from abroad 2.make trade more open between the US and other countries.

Accepted Answer

A)  1 and 2 both shift long-run aggregate supply right.
B)  1 and 2 both shift long-run aggregate supply left.
C)  1 shifts long-run aggregate supply right,2 shifts long-run aggregate supply left.
D)  1 shifts long-run aggregate supply left,2 shifts long-run aggregate supply right.E) All of the above
F) A) and D)

Question 5

If the price level is higher than expected,firms might raise their production in the short run if

Accepted Answer

A)  the nominal wage they pay their employees was set based on the expected price level.
B)  prices are costly to adjust and they have set their price at some time in the past but are not ready to change it.
C)  they believe that the price of their product has risen relative to the price of other products,when in fact the rise in the price of their product reflects an increase in the general price level.
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 6

Which of the following shifts both short-run and long-run aggregate supply left?

Accepted Answer

A)  a decrease in the actual price level
B)  a decrease in the expected price level
C)  a decrease in the capital stock
D)  a decrease in the money supplyE) A) and D)
F) All of the above

Question 7

Other things the same,continued increases in technology lead to

Accepted Answer

A)  continued increases in the price level and real GDP.
B)  continued decreases in the price level and real GDP.
C)  continued increases in real GDP and continued increases in the price level.
D)  continued increases in real GDP and continued decreases in the price level.E) None of the above
F) B) and D)

Question 8

Which of the following shifts short-run,but not long-run aggregate supply right?

Accepted Answer

A)  a decrease in the actual price level
B)  a decrease in the expected price level
C)  a decrease in the capital stock
D)  an increase in the money supplyE) A) and B)
F) A) and C)

Question 9

When the actual change in the price level differs from its expected change,which of the following can explain why firms might change their production?

Accepted Answer

A)  both menu costs and mistaking a price level change for a change in relative prices
B)  menu costs but not mistaking a price level change for a change in relative prices
C)  mistaking a price level change for a change in relative price but not menu costs
D)  neither menu costs nor mistaking a price level change for a change in relative pricesE) B) and D)
F) None of the above

Question 10

When the price level rises more than expected,a firm with a sticky price will sell its output at a price that is

Accepted Answer

A)  less than it desires and increase its production.
B)  less than it desires and decrease its production.
C)  more than it desires and increase its production.
D)  less than it desires and decrease its productionE) A) and B)
F) A) and C)

Question 11

The position of the long-run aggregate supply curve

Accepted Answer

A)  is determined by resource usage and technology.
B)  is at the point where the unemployment rate is zero.
C)  shifts to the right when the money supply increases.
D)  is at the point where the economy would cease to grow.E) B) and D)
F) None of the above

Question 12

If the actual price level is 165,but people had been expecting it to be 160,then

Accepted Answer

A)  the quantity of output supplied rises,but only in the short run.
B)  the quantity of output supplied rises in the short run and the long run.
C)  the quantity of output supplied falls,but only in the short run.
D)  the quantity of output supplied falls in the short run and the long run.E) B) and C)
F) All of the above

Question 13

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Accepted Answer

A)  nominal wages are slow to adjust to changing economic conditions
B)  as the price level falls,the exchange rate falls
C)  an increase in the money supply lowers the interest rate
D)  an increase in the interest rate increases investment spendingE) B) and C)
F) C) and D)

Question 14

The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% and people were expecting it to rise by 2%,then firms have

Accepted Answer

A)  higher than desired prices,which leads to an increase in the aggregate quantity of goods and services supplied.
B)  higher than desired prices,which leads to a decrease in the aggregate quantity of goods and services supplied.
C)  lower than desired prices,which leads to an increase in the aggregate quantity of goods and services supplied.
D)  lower than desired prices,which leads to a decrease in the aggregate quantity of goods and services supplied.E) B) and D)
F) B) and C)

Question 15

The aggregate supply curve is

Accepted Answer

A)  vertical in the long run and slopes upward in the short run.
B)  upward sloping in the long run and vertical in the short run.
C)  vertical in the short run and in the long run.
D)  upward sloping in the short run and in the long run.E) A) and C)
F) B) and C)

Exam 20: Aggregate Demand and Aggregate Supply: The Aggregate-Supply Curve

The position of the long-run aggregate supply curve

Correct Answer
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The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% and people were expecting it to rise by 2%,then firms have

Correct Answer
verified

The aggregate supply curve is

Correct Answer
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When the actual change in the price level differs from its expected change,which of the following can explain why firms might change their production?

Correct Answer
verified

Which of the following shifts short-run,but not long-run aggregate supply right?

Correct Answer
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Which of the following can explain the upward slope of the short-run aggregate supply curve?

Correct Answer
verified

When the price level rises more than expected,a firm with a sticky price will sell its output at a price that is

Correct Answer
verified

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what it produce had

Correct Answer
verified

A candidate for political office announces the following policies which,she says,economics clearly demonstrates will lead to higher output in the long run: 1.increase immigration from abroad 2.make trade more open between the US and other countries.

Correct Answer
verified

Which of the following shifts both short-run and long-run aggregate supply left?

Correct Answer
verified

If the actual price level is 165,but people had been expecting it to be 160,then

Correct Answer
verified

Other things the same,if the long-run aggregate supply curve shifts right,prices

Correct Answer
verified

Other things the same,continued increases in technology lead to

Correct Answer
verified

A change in the expected price level is likely to cause which of the following?

Correct Answer
verified

If the price level is higher than expected,firms might raise their production in the short run if

Correct Answer
verified

Exam 20: Aggregate Demand and Aggregate Supply: The Aggregate-Supply Curve

The position of the long-run aggregate supply curve

Correct AnswerverifiedShow Answer

The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% and people were expecting it to rise by 2%,then firms have

Correct AnswerverifiedShow Answer

The aggregate supply curve is

Correct AnswerverifiedShow Answer

When the actual change in the price level differs from its expected change,which of the following can explain why firms might change their production?

Correct AnswerverifiedShow Answer

Which of the following shifts short-run,but not long-run aggregate supply right?

Correct AnswerverifiedShow Answer

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Correct AnswerverifiedShow Answer

When the price level rises more than expected,a firm with a sticky price will sell its output at a price that is

Correct AnswerverifiedShow Answer

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what it produce had

Correct AnswerverifiedShow Answer

A candidate for political office announces the following policies which,she says,economics clearly demonstrates will lead to higher output in the long run: 1.increase immigration from abroad 2.make trade more open between the US and other countries.

Correct AnswerverifiedShow Answer

Which of the following shifts both short-run and long-run aggregate supply left?

Correct AnswerverifiedShow Answer

If the actual price level is 165,but people had been expecting it to be 160,then

Correct AnswerverifiedShow Answer

Other things the same,if the long-run aggregate supply curve shifts right,prices

Correct AnswerverifiedShow Answer

Other things the same,continued increases in technology lead to

Correct AnswerverifiedShow Answer

A change in the expected price level is likely to cause which of the following?

Correct AnswerverifiedShow Answer

If the price level is higher than expected,firms might raise their production in the short run if

Correct AnswerverifiedShow Answer

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