Question 1

In the period from 1996-2000,the United States economy experienced the unusual combination of

Accepted Answer

A)   high unemployment and high inflation.
B)   high unemployment and low inflation.
C)   low unemployment and high inflation.
D)   low unemployment and low inflation.E) A) and D)
F) None of the above

Question 2

The aggregate supply curve will shift to the left if

Accepted Answer

A)   energy prices fall.
B)   technology and productivity increase in the economy.
C)   the capital stock of the economy increases.
D)   the money wage rate increases.E) B) and D)
F) None of the above

Question 3

When an inflationary gap exists,the job prospects of new college graduates are

Accepted Answer

A)   very dim.
B)   somewhat encouraging.
C)   worse in comparison to a recessionary gap.
D)   excellent.E) C) and D)
F) B) and D)

Question 4

If scientific research produces a technological breakthrough in the production of computer memory,then

Accepted Answer

A)   business costs will increase, profits will fall, and production will decrease.
B)   business costs will fall, but profits will also fall, and production will decrease.
C)   business costs will fall, profits will improve, and production will increase.
D)   profits will increase, allowing businesses to cut back production.E) All of the above
F) C) and D)

Question 5

One complication that tends to prolong recessionary gaps is that wages

Accepted Answer

A)   are fixed by unions, which represent nearly all workers in the United States.
B)   tend to rise rapidly.
C)   rarely fall.
D)   tend to move in the opposite direction from prices.E) A) and B)
F) A) and C)

Question 6

When the expenditure schedule is too high,the result is a(n)

Accepted Answer

A)   unemployment surplus.
B)   inflationary gap.
C)   recessionary gap.
D)   budgetary gap.E) All of the above
F) A) and B)

Question 7

The case for government stabilization policy is made more compelling if the

Accepted Answer

A)   self-correcting mechanism works very slowly.
B)   self-correcting mechanism works too fast.
C)   value of the multiplier is very small.
D)   aggregate supply curve is very flat.E) A) and B)
F) A) and C)

Question 8

Recessionary gap arises when

Accepted Answer

A)   inventory stock falls.
B)   government spending increases.
C)   when the general price level increases.
D)   there is less spending than desired.E) A) and B)
F) A) and C)

Question 9

An inflationary gap exists when consumers and businesses are demanding more output than the economy is capable of producing at full employment.

Accepted Answer

A) True 
 B)False

Question 10

The years 2002 through 2007 can be described as a period of

Accepted Answer

A)   falling output accompanied by increasing inflation.
B)   falling output accompanied by decreasing inflation.
C)   rising output accompanied by increasing inflation.
D)   rising output accompanied by decreasing inflation.E) None of the above
F) C) and D)

Question 11

One complication in the process of reducing inflation by creating recessions is that the price level

Accepted Answer

A)   adjusts more quickly to recessionary gaps than to inflationary gaps.
B)   does not apply as it does in inflationary gaps.
C)   always rises.
D)   rarely falls.E) A) and B)
F) A) and C)

Question 12

Assume an economy with an upward-sloping aggregate supply curve and an MPC of .80.An increase in investment spending of $50 billion will most likely increase total income by

Accepted Answer

A)   $200 billion.
B)   $40 billion.
C)   more than $200 billion.
D)   more than $50 billion but less than $250 billion.E) A) and B)
F) A) and C)

Question 13

Economists generally assume that there is a short-run trade-off between

Accepted Answer

A)   output and employment.
B)   inflation and employment.
C)   deflation and unemployment.
D)   inflation and unemployment.
E)   output and growth.F) B) and E)
G) B) and D)

Question 14

If the price level decreases,what will happen to the level of real GDP supplied?

Accepted Answer

A)   It will usually decrease.
B)   It will usually increase.
C)   Nothing.
D)   It will decrease at first and then increase.E) A) and B)
F) None of the above

Question 15

Figure 10-1
 
-In Figure 10-1,what is the equilibrium level of real GDP and equilibrium price?

Accepted Answer

A)   $6,000 billion real GDP and price level of 110
B)   $5,000 billion real GDP and price level of 120
C)   $5,000 billion real GDP and price level of 110
D)   $7,500 billion real GDP and price level of 100E) A) and B)
F) A) and C)

Question 16

The post-World War II record shows that recessionary gaps may be long-lasting because ____ tends not to occur.

Accepted Answer

A)   deflation
B)   reflation
C)   stagflation
D)   disinflationE) A) and D)
F) All of the above

Question 17

Many economists describe the 2007-2009 period in the United States as being a condition of a(n)

Accepted Answer

A)   deflationary gap.
B)   recessionary gap.
C)   inflationary gap.
D)   reflationary gap.E) A) and B)
F) B) and D)

Question 18

The price of imported oil decreased in 2001.How did this affect the aggregate supply curve?

Accepted Answer

A)   It became steeper.
B)   It became flatter.
C)   It shifted inward.
D)   It shifted outward.E) B) and C)
F) None of the above

Question 19

An increase in the money wage rate will cause the aggregate supply curve to shift

Accepted Answer

A)   outward, which means the quantity supplied at any price level decreases.
B)   outward, which means the quantity supplied at any price level increases.
C)   inward, which means the quantity supplied at any price level increases.
D)   inward, which means the quantity supplied at any price level decreases.E) B) and C)
F) All of the above

Question 20

Labor contracts often fix wages for more than one year.

Accepted Answer

A) True 
 B)False

Exam 10: Bringing in the Supply Side: Unemployment and Inflation?

The price of imported oil decreased in 2001.How did this affect the aggregate supply curve?

Correct AnswerverifiedShow Answer

An inflationary gap exists when consumers and businesses are demanding more output than the economy is capable of producing at full employment.

Correct AnswerverifiedShow Answer

An increase in the money wage rate will cause the aggregate supply curve to shift

Correct AnswerverifiedShow Answer

Many economists describe the 2007-2009 period in the United States as being a condition of a(n)

Correct AnswerverifiedShow Answer

When the expenditure schedule is too high,the result is a(n)

Correct AnswerverifiedShow Answer

If the price level decreases,what will happen to the level of real GDP supplied?

Correct AnswerverifiedShow Answer

Labor contracts often fix wages for more than one year.

Correct AnswerverifiedShow Answer

Economists generally assume that there is a short-run trade-off between

Correct AnswerverifiedShow Answer

In the period from 1996-2000,the United States economy experienced the unusual combination of

Correct AnswerverifiedShow Answer

The years 2002 through 2007 can be described as a period of

Correct AnswerverifiedShow Answer

One complication in the process of reducing inflation by creating recessions is that the price level

Correct AnswerverifiedShow Answer

The case for government stabilization policy is made more compelling if the

Correct AnswerverifiedShow Answer

The post-World War II record shows that recessionary gaps may be long-lasting because ____ tends not to occur.

Correct AnswerverifiedShow Answer

One complication that tends to prolong recessionary gaps is that wages

Correct AnswerverifiedShow Answer

When an inflationary gap exists,the job prospects of new college graduates are

Correct AnswerverifiedShow Answer

If scientific research produces a technological breakthrough in the production of computer memory,then

Correct AnswerverifiedShow Answer

Figure 10-1 -In Figure 10-1,what is the equilibrium level of real GDP and equilibrium price?

Correct AnswerverifiedShow Answer

Recessionary gap arises when

Correct AnswerverifiedShow Answer

The aggregate supply curve will shift to the left if

Correct AnswerverifiedShow Answer

Assume an economy with an upward-sloping aggregate supply curve and an MPC of .80.An increase in investment spending of $50 billion will most likely increase total income by

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified