test 4 - Name: __________________________ Date:...

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Unformatted text preview: Name: __________________________ Date: _____________ 1. 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 2. 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. 3. Which of the following is NOT one of the reasons that the aggregate demand curve slopes downward? A) the wealth effect B) the interest rate effect C) the substitution effect D) None of the above is correct. 4. Which of the following will cause short-run aggregate supply to increase? A) a law that requires employers to provide health insurance for all employees B) an increase in the aggregate price level C) a large decrease in the price of oil D) an increase in the minimum wage 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. Page 1 6. The short-run aggregate supply curve will decrease if: A) the aggregate price level falls. B) commodity prices rise. C) government tax revenues fall....
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This note was uploaded on 04/23/2008 for the course ECON 2105 taught by Professor Iacopetta during the Spring '08 term at Georgia Institute of Technology.

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test 4 - Name: __________________________ Date:...

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