sp04-3 - University of Colorado at Denver, Spring 2004 Econ...

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University of Colorado at Denver, Spring 2004 Econ 2022 Principles of Economics: Macroeconomics Instructor: Vijaya Sharma, Ph.D. Exam 3 Choose the best/correct answer for each of the 40 multiple-choice questions in this test. 1. In spite of continual increase in prices of final goods, wages can remain unchanged for some period. What would explain this? a. binding wage contracts between labor and management b. learning period for management and labor to demand revision in wages c. both a and b d. none of the above 2. Stagflation is a _________ equilibrium, which happens with a ___________ from an initial long run equilibrium situation. a. short-run equilibrium, decrease in AD b. long-run equilibrium, decrease in AD c. long-run equilibrium, decrease in SRAS d. short-run equilibrium, decrease in SRAS 3. Long-run aggregate supply (LRAS) is a. horizontal at the full employment level of GDP. b. vertical at the full employment level of GDP . c. upward-sloping to the right of the full employment GDP. d. downward-sloping to the left of the full employment GDP. 4. Which is not true at the long-run equilibrium in the goods and services market? a. actual GDP = full employment level of GDP b. actual unemployment = natural rate of unemployment c. actual inflation < anticipated inflation d. actual inflation = anticipated inflation 5. In a short run aggregate supply curve (SRAS), a. Wages and resource prices may be rising. b. Wages and resource prices may be declining. c. Wages and resource prices are considered fixed. d. Whether wages and resource prices are fixed or rising or declining is ambiguous. 6. Which is the long run equilibrium in the goods and services market? a. The point where AD and SRAS intersect. b. The point where AD and LRAS intersect c. The point where SRAS and LRAS intersect d. The point where AD, SRAS, and LRAS intersect 7. How is short run different from long run in the context of aggregate supply? a. Short run is a time period less than one year. b. Prices of nothing (labor, resources, or final goods) change in the short run, whereas prices of everything can change in the long run. c. Wages and resource prices do not change, but prices of final goods can change in the short run. d. Wages, resource prices, and also prices of final goods can change in the short run.
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8. Which is the outcome when AD shifts to the left from long run equilibrium? a. inflationary boom b. recession c. temporary supply boom d. stagflation 9. Consider an economy in inflationary phase. How would the economy adjust to long run equilibrium, according to classical economics? a. The economy needs government intervention for adjustment to long run equilibrium. b. Wages and resources prices would increase and thus decrease the short run aggregate supply to restore long run equilibrium.
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This note was uploaded on 02/07/2011 for the course ECON 3461 taught by Professor Spencer during the Spring '10 term at Golden West College.

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sp04-3 - University of Colorado at Denver, Spring 2004 Econ...

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