Quiz - Chapters 27 and 28 (Practice)

Quiz - Chapters 27 and 28 (Practice) - Points Awarded...

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Points Awarded 140.00 Points Missed 60.00 Percentage 70.0% 1. The long-run aggregate supply curve is vertical because A) at full employment prices are stable. B) there is no cyclical inflation. C) potential GDP is independent of the price level. D) the money wage rate increases faster than the price level. Points Earned: 5.0/5.0 Correct Answer(s): C 2. A recessionary gap occurs when A) real GDP is less than potential GDP. B) nominal GDP is less than potential GDP. C) high rates of inflation occur. D) nominal GDP is greater than potential GDP. Points Earned: 5.0/5.0 Correct Answer(s): A
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3. In the above figure, B is the current long-run aggregate supply curve and E is the current short-run aggregate supply curve. If there is an increase in the full-employment quantity of labor, then the long-run aggregate supply curve and the short-run aggregate supply curve A) remain B and E. B) shift to A and D, respectively. C) shift to C and F, respectively. D) shift to A and F, respectively. Points Earned: 5.0/5.0 Correct Answer(s): C 4. Which of the following shifts the aggregate demand curve rightward? A) a decrease in consumption B) an increase in investment expenditures C) a decrease in net exports D) a decrease in government purchases of goods and services Points Earned: 5.0/5.0 Correct Answer(s): B
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5. Substitution effects help explain the slope of the aggregate demand curve. One substitution effect refers to the A) inverse relationship between the interest rate and the price level. B) direct relationship between the interest rate and the real value of wealth. C) effect on investment expenditures that result from a change in interest rates produced by a change in the price level. D) change in wealth that results from a change in the interest rate. Points Earned: 0.0/5.0 Correct Answer(s): C 6. When the quantity of capital increases, then the A) LAS curve shifts rightward and the SAS curve does not shift. B) SAS curve shifts rightward and the LAS curve does not shift. C) SAS curve shifts rightward and the LAS curve shifts rightward. D) SAS curve shifts rightward and the LAS curve does shifts leftward. Points Earned: 5.0/5.0 Correct Answer(s): C
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7. If the economy is in long run equilibrium and then aggregate demand increases, in the long run the increase in aggregate demand means that the A) price level will be higher but real GDP will be unaffected. B) real GDP will be larger but the price level will be unaffected. C) the price level will be higher and real GDP will be larger. D) neither the price level nor real GDP will be unaffected. Points Earned: 0.0/5.0 Correct Answer(s): A 8. The short-run aggregate supply curve is upward sloping because in the short run the A) money wage rate changes but the price level does not. B) price level changes but the money wage rate does not.
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This note was uploaded on 09/13/2011 for the course ECON 206 taught by Professor Parkin during the Spring '11 term at Buena Vista.

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Quiz - Chapters 27 and 28 (Practice) - Points Awarded...

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