5 Written questions
5 Matching questions
- If oil prices rise unexpectedly,
a. there will be a movement up and to the right along a stationary aggregate supply curve.
b. there will be a movement down and to the left along a stationary aggregate supply curve.
c. the short-run aggregate supply curve will shift to the left.
d. the short-run aggregate supply curve will shift to the right
- The level of real GDP in the long run is called
A) short run GDP.
B) low capacity GDP.
C) frictional GDP.
D) potential GDP.
- . Suppose the economy is at full employment and firms become more optimistic about the future profitability of
new investment. Which of the following will happen in the short run?
A) Prices will decline.
B) Aggregate demand will shift to the left.
C) Unemployment will decline.
D) Output will decline.
- What is the impact of an increase in the price level on the short-run aggregate supply curve?
a. a shift of the curve to the right
b. a shift of the curve to the left
c. a movement up and to the right along a stationary curve
d. a combination of a movement along the curve and a shift of the curve
- . In the long run,
A) LRAS and SRAS lie on the same line.
B) GDP = potential GDP
C) Unemployment is below its natural rate.
D) Unemployment is above its natural rate.
- a D) potential GDP.
- b c. a movement up and to the right along a stationary curve
- c c. the short-run aggregate supply curve will shift to the left.
- d B) GDP = potential GDP
- e C) Unemployment will decline
5 Multiple choice questions
- c. the costs to firms of changing prices
- c. Both a. and b.
- b. Steel demand and steel prices begin to rise rapidly, but the price of coal—an input into the
production of steel—remains fixed by contract.
- D) an unexpected increase in the price of natural gas
- As the price level increases, the real value of household wealth falls, and
so will consumption. In contrast, if the price level declines, real household wealth rises and so
5 True/False questions
If the exchange rate between the dollar and foreign currencies rises (the dollar rises in value versus
foreign currencies), the price in foreign currency of U.S. products will _________ and the U.S.
aggregate demand curve will shift to the _________.
a. rise; right
b. rise; left
c. fall; right
d. fall; left → d. all of the above
What is stagflation? → an
unexpected event that causes the short-run aggregate supply curve to shift
Stagflation is often a result of
A) a decrease in aggregate demand.
B) an increase in aggregate demand.
C) a negative supply shock.
D) an increase in aggregate supply. → C) a negative supply shock
. If short-run aggregate supply increases (shifts to the right) by less than long-run aggregate supply, then, at the
A) GDP will be above potential GDP.
B) aggregate demand will increase.
C) GDP will be below potential GDP.
D) GDP will be equal to potential GDP. → b. shifts to the right as technological change occurs.
A supply shock will
a. increase the real GDP in the short-run.
b. not change real GDP in the long-run.
c. shift the long-run aggregate supply curve to the right.
d. decrease both the price level and real GDP in the short-run → B) GDP = potential GDP