Pre-Test Chapter 15 ed17

Pre-Test Chapter 15 ed17 - Pre-Test Chapter 15 ed17...

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Prof Keep Econ Chap 15 ed 17 Pre Test Chap 15 Page 1 of 9 Pre-Test Chapter 15 ed17 Multiple Choice Questions 1. The extended AD-AS model: A. distinguishes between short-run and long-run aggregate demand. B. explains inflation but not recession. C. includes G and X n whereas the simple AD-AD model does not. D. distinguishes between short-run and long-run aggregate supply. 2. The Laffer Curve is a central concept in: A. monetarism. B. Keynesianism. C. welfare economics. D. supply-side economics. 3. Refer to the above diagram. If drawn, the long-run aggregate supply curve would include points: A. v , w , and u . B. w , u and y . C. t , w , and z . D. y , w , and x .
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Prof Keep Econ Chap 15 ed 17 Pre Test Chap 15 Page 2 of 9 Suppose the natural level of real output ( Q ) for a hypothetical economy is $500, the price level ( P ) initially is 100, and that prices and wages are flexible both upward and downward. Use the following short-run aggregate supply schedules to answer the next question(s). 4. Refer to the information above. In the long run, a fall in the price level from 100 to 75 will: A. decrease real output from $500 to $440. B. increase real output from $500 to $620. C. change the aggregate supply schedule from (a) to (c) and produce an equilibrium level of real output of $500. D. change the aggregate supply schedule from (a) to (b) and produce an equilibrium level of real output of $500. 5. Refer to the above diagram and assume the economy is initially at point b 1 . The long-run relationship between the unemployment rate and the rate of inflation is represented by: A. the line connecting b 1 and c 1 . B. the line through b 1 , b 2 , b 3 , and b 4 . C. the line connecting c 1 and b 2 . D. any line parallel to the horizontal axis. 6. Refer to the information above. If the price level unexpectedly declines from 100 to 75, the level of real output in the short run will: A. rise from $500 to $560. B. fall from $500 to $440. C. fall from $560 to $500. D. rise from $440 to $500.
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Prof Keep Econ Chap 15 ed 17 Pre Test Chap 15 Page 3 of 9 7. In the extended aggregate demand-aggregate supply model: A. long-run equilibrium occurs wherever the aggregate demand curve intersects the short-run aggregate supply curve. B. the long-run aggregate supply curve is horizontal. C. the level of real output is the same in the long run regardless of the location of the aggregate demand curve. D. the short-run aggregate supply curve is downsloping.
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Pre-Test Chapter 15 ed17 - Pre-Test Chapter 15 ed17...

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