Econ2105Test4 - Name: _ Date: _ Use the following to answer...

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Name: __________________________ Date: _____________ Use the following to answer questions 1-2: Figure: AD-AS Model 2 1. (Figure: AD-AS Model 2) As the size of the labor force increases over time, which of the following will take place? A) LRAS will shift to the right. B) LRAS will shift to the left. C) AD curve will shift to the left. D) AD curve will shift to the right. 2. (Figure: AD-AS Model 2) If the price level increases, which of the following will take place? A) SRAS curve will shift to the left. B) SRAS curve will shift to the right. C) AD curve will shift to the left. D) None of the above will take place. 3. The short-run aggregate supply curve is positively sloped because: A) wages and other costs of production respond immediately to changes in prices. B) profit is lower when prices increase, so output decreases. C) workers are willing to work for lower wages rather than be laid off. D) higher prices lead to higher profit and higher output. Page 1
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4. Which of the following represent the three consequences of the decline in demand during the Great Depression? A) fall in prices, decline in output, and a surge in unemployment B) rise in prices, decline in output, and a surge in unemployment C) rise in prices, increase in output, and a surge in unemployment D) fall in prices, increase in output, and a surge in unemployment 5. If there is an inflationary gap, which of the following accurately describes the adjustment to long-run equilibrium? A) Nominal wages decrease, and the aggregate demand curve shifts left until the economy reaches long-run equilibrium. B) Nominal wages increase, and the aggregate demand curve shifts right until the economy reaches long-run equilibrium. C) Nominal wages decrease, and the short-run aggregate supply curve shifts right until the economy reaches long-run equilibrium. D) Nominal wages increase, and the short-run aggregate supply curve shifts left until the economy reaches long-run equilibrium. 6. Which of the following is NOT one of the reasons that the aggregate demand curve slopes downward? A) the wealth effect
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This test prep was uploaded on 04/21/2008 for the course ECON 2105 taught by Professor Iacopetta during the Spring '08 term at Georgia Institute of Technology.

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Econ2105Test4 - Name: _ Date: _ Use the following to answer...

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