EC140 Midterm 2 Practice Questions

A 27 upposethattheeconomyisinitiallyinalong

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Unformatted text preview: es in labour productivity, then unit I labour costs will A) all and the AS curve will shift right. f B) ise and the AS curve will shift right. r C) all and the AS curve will shift left. f D) ot change because only total labour costs change. n E) ise and the AS curve will shift left. r 23) ______ FIGURE 24-1 24) efer to Figure 24-1. If the economy is currently in a short-run R equilibrium at Y0, the economy is experiencing 24) ______ A) recessionary output gap. a B) otential output growth. p C) labour shortage. a D) long-run equilibrium. a E) n inflationary output gap. a 25) efer to Figure 24-1. If the economy is currently producing output of Y0 R , the economyʹs automatic adjustment process will have the A) vertical line at Y* shifting to the left until it gets to Y0 . B) D curve shifting to the right until point B is reached. A C) conomy remaining where it is. e D) S curve shifting to the right until point A is reached. A E) one of the above. n 25) ______ 7 26) s the macro economy adjusts from the short run to the long run, A A) ages and other factor prices adjust to close output gaps. w B) ages and other factor prices remain constant. w C) otential output is adjusting to close inflationary or recessionary p gaps. D) ggregate demand shocks cause deviations from potential output. a E) ggregate supply shocks cause deviations from potential output. a 27) uppose that the economy is initially in a long-run macroeconomic S equilibrium. A shock then hits the economy and we observe that the unemployment rate decreases and the price level increases. We can conclude that there is now A) n inflationary gap but no change in prices a B) n inflationary gap and a permanent increase in prices a C) recessionary gap and a permanent decrease in prices. a D) n inflationary gap and a temporary increase in prices. a E) recessionary gap an...
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This note was uploaded on 08/14/2013 for the course EC 140 taught by Professor Peter during the Winter '10 term at Wilfred Laurier University .

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