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| 1 | |
If we compare a market supply curve with the aggregate supply curve discussed in this chapter we realize that |
| | A) | the AS-curve is vertical in the long run and horizontal in the very short run |
| | B) | the AS-curve is vertical in the very short run and horizontal in the long run |
| | C) | the AS-curve can never be upward sloping |
| | D) | a market supply curve is more elastic in the short run and less elastic in the long run |
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| 2 | |
The Keynesian AS-curve implies that |
| | A) | the economy is always at the full-employment level of output |
| | B) | the AS-curve is completely vertical |
| | C) | wages and prices are completely flexible |
| | D) | a change in spending will affect the level of GDP but not the price level |
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| 3 | |
In the Keynesian AS-curve case, if the government cuts welfare payments, then |
| | A) | the price level will decrease, but the economy will remain at the full-employment level of output |
| | B) | the level of output will decrease but the price level will remain the same |
| | C) | the levels of output and prices will decrease |
| | D) | unemployment will increase, since wages and prices are completely flexible |
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| 4 | |
The slope of the AS-curve becomes steeper |
| | A) | as wages and prices become more flexible |
| | B) | as wages become more rigid |
| | C) | as the economy moves further away from full employment |
| | D) | as the government implements expansionary fiscal policy |
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| 5 | |
If the unemployment rate is assumed to be at its natural rate, then |
| | A) | inflation cannot exist |
| | B) | the unemployment rate is zero |
| | C) | the unemployment rate is positive but at a level that exists when GDP is at its potential level |
| | D) | all unemployment is cyclical in nature |
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| 6 | |
In the medium run, an increase in oil prices will |
| | A) | increase the price level but reduce the level of output |
| | B) | lead to a decrease in aggregate demand |
| | C) | lead to an increase in aggregate demand |
| | D) | not affect the level of real output |
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| 7 | |
The income velocity of money can be calculated in the following way: |
| | A) | V = M/Y |
| | B) | V = Y/M |
| | C) | V = M/(PY) |
| | D) | V = (PY)/M |
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| 8 | |
In an AD-AS diagram, an increase in nominal money supply is represented by |
| | A) | a shift of the AS-curve to the right |
| | B) | a shift of the AD-curve to the right |
| | C) | movement along the AD-curve from right to left |
| | D) | movement along the AD-curve from left to right |
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| 9 | |
Supply-side economics |
| | A) | only affects the AS-curve significantly, even in the short run, and therefore is bound to lead to a decrease in prices and unemployment |
| | B) | is mostly "voodoo economics" that is sold by politicians as a simple way to fix the economy but has no real economic impact |
| | C) | entails tax cuts, other ways to achieve technological advances, and reductions of government regulation |
| | D) | is designed to shift the AS-curve to the right, but in actuality will only shift the AD-curve to the right |
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| 10 | |
As potential GDP grows over time |
| | A) | the level of output is essentially determined by shifts in the vertical AS-curve |
| | B) | the price level remains constant |
| | C) | the AD-curve shifts to the right due to a change in the average price level |
| | D) | the level of actual output can only change if the AD-curve shifts accordingly |
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