Question 1

Which of the following statements is true?

Accepted Answer

A)   The short-run aggregate supply curve is downsloping.
B)   The short-run aggregate supply curve is vertical.
C)   The long-run aggregate supply curve is vertical.
D)   The long-run aggregate supply curve is upsloping.E) A) and B)
F) A) and C)

Question 2

Refer to the diagram. Assume that the natural rate of unemployment is 5 percent and that the economy is initially operating at point c, where the expected and actual rates of inﬂation are each 4
Percent. If the actual rate of inﬂation unexpectedly rises from 4 percent to 6 percent, the economy
Will

Accepted Answer

A)   move from a to b and eventually to c.
B)   move directly from c to b.
C)   remain at a.
D)   move from c to d and eventually to a.E) B) and C)
F) All of the above

Question 3

A Congressional representative who calls for a decrease in tax rates in order to increase saving, work effort, and economic growth would most likely be advocating

Accepted Answer

A)   an easy money policy.
B)   a tight money policy.
C)   a supply-side ﬁscal policy.
D)   a contractionary ﬁscal policy.E) B) and D)
F) B) and C)

Question 4

Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1, 120 to 130 in year 2, and 130 to 140 in year 3. We could conclude that this economy is experiencing

Accepted Answer

A)   accelerating inﬂation.
B)   deﬂation.
C)   disinﬂation.
D)   a constant rate of inﬂation.E) A) and B)
F) A) and C)

Question 5

A rightward and upward shift of the Phillips Curve is consistent with the occurrence of stagﬂation.

Accepted Answer

A) True 
 B)False

Question 6

If the government uses expansionary, monetary, or ﬁscal policies to counter the output effects of cost-push inﬂation, then the economy is likely to experience

Accepted Answer

A)   a decline in nominal wages.
B)   an inﬂationary spiral.
C)   a recession.
D)   disinﬂation.E) B) and C)
F) None of the above

Question 7

What is disinﬂation?

Accepted Answer

Disinﬂation is a red...

Question 8

If wages and other input prices are inﬂexible, then the economy will not automatically adjust to full
employment in the long run.

Accepted Answer

A) True 
 B)False

Question 9

Refer to the diagram for a speciﬁc economy. The shape of this curve suggests that

Accepted Answer

A)   the price level rises at a diminishing rate as the level of aggregate demand increases.
B)   full employment and price stability are compatible goals only when aggregate demand is falling.
C)   each successive unit of decline in the unemployment rate is accompanied by a smaller increase in the rate of inﬂation.
D)   each successive unit of decline in the unemployment rate is accompanied by a larger increase in the rate of inﬂation.E) All of the above
F) B) and C)

Question 10

In the short run, nominal wages and other input prices are assumed to be

Accepted Answer

A)   unresponsive to product price-level changes, but in the long run they are assumed to be responsive.
B)   unresponsive to product price-level changes, and in the long run they are assumed to be unresponsive also.
C)   responsive to product price-level changes, but in the long run they are assumed to be unresponsive.
D)   responsive to product price-level changes, and in the long run they are assumed to be responsive also.E) A) and B)
F) All of the above

Question 11

Refer to the diagram. The move of the economy from c to e on short-run Phillips Curve PC2 would be explained by an

Accepted Answer

A)   increase in aggregate demand in the economy.
B)   increase in aggregate supply in the economy.
C)   actual rate of inﬂation that is less than the expected rate.
D)   actual rate of inﬂation that exceeds the expected rate.E) None of the above
F) C) and D)

Question 12

What are three signiﬁcant generalizations supported by results from the extended AD-AS model?

Accepted Answer

The three signiﬁcant generalizations fro...

Question 13

(Last Word) List the four motivating factors behind signiﬁcant tax changes as found by Romer and
Romer.

Accepted Answer

The four motivating factors behind signi...

Question 14

Accepted Answer

A)   a shift of the aggregate demand curve from AD  AD1 to AD2A D _ { 1 } 	ext { to } A D _ { 2 }AD1​ to AD2​ 
B)   a move from d to b to a.
C)   a move directly from d to a.
D)   a shift of the aggregate supply curve from A  AS1 to AS2\mathrm { AS } _ { 1 } 	ext { to } \mathrm { AS } _ { 2 }AS1​ to AS2​E) B) and D)
F) C) and D)

Question 15

Refer to the graphs. An increase in the economy's human capital would shift curve

Accepted Answer

A)   AB to CD and curve Y to X.
B)   CD to AB and curve X to Y.
C)   X to Y, while leaving curve AB in place.
D)   AB to CD and curve X to Y.E) A) and D)
F) A) and C)

Question 16

In the short run, output increases in response to a rising price level, but not in the long run.

Accepted Answer

A) True 
 B)False

Question 17

The long-run Phillips Curve is vertical at

Accepted Answer

A)   a price level of 100.
B)   the natural rate of unemployment.
C)   the natural rate of inﬂation.
D)   potential GDP.E) All of the above
F) B) and C)

Question 18

A potential cause of stagﬂation is

Accepted Answer

A)   agricultural surpluses.
B)   declining productivity.
C)   improving labor productivity.
D)   a rise in the value of the dollar.E) C) and D)
F) A) and D)

Question 19

Inﬂation accompanied by falling real output and employment is known as

Accepted Answer

A)   Laffer's law.
B)   Okun's law.
C)   stagﬂation.
D)   the Phillips Curve.E) All of the above
F) B) and C)

Question 20

Inﬂation in the short run is most likely to result from a(n)

Accepted Answer

A)   increase in aggregate demand or aggregate supply.
B)   decrease in aggregate demand or aggregate supply.
C)   increase in aggregate demand or a decrease in aggregate supply.
D)   decrease in aggregate demand or an increase in aggregate supply.E) A) and C)
F) None of the above

Exam 18: Extending the Analysis of Aggregate Supply

A potential cause of stagﬂation is

Correct Answer
verified

In the short run, nominal wages and other input prices are assumed to be

Correct Answer
verified

A Congressional representative who calls for a decrease in tax rates in order to increase saving, work effort, and economic growth would most likely be advocating

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

If wages and other input prices are inﬂexible, then the economy will not automatically adjust to full employment in the long run.

Correct Answer
verified

Correct Answer
verified

Refer to the graphs. An increase in the economy's human capital would shift curve

Correct Answer
verified

A rightward and upward shift of the Phillips Curve is consistent with the occurrence of stagﬂation.

Correct Answer
verified

Inﬂation accompanied by falling real output and employment is known as

Correct Answer
verified

Refer to the diagram. The move of the economy from c to e on short-run Phillips Curve PC2 would be explained by an

Correct Answer
verified

What are three signiﬁcant generalizations supported by results from the extended AD-AS model?

Correct Answer
verified
The three signiﬁcant generalizations fro...
View Answer

(Last Word) List the four motivating factors behind signiﬁcant tax changes as found by Romer and Romer.

Correct Answer
verified
The four motivating factors behind signi...
View Answer

Refer to the diagram for a speciﬁc economy. The shape of this curve suggests that

Correct Answer
verified

Inﬂation in the short run is most likely to result from a(n)

Correct Answer
verified

$A) a shift of the aggregate demand curve from AD A D _ { 1 } \text { to } A D _ { 2 } B) a move from d to b to a. C) a move directly from d to a. D) a shift of the aggregate supply curve from A \mathrm { AS } _ { 1 } \text { to } \mathrm { AS } _ { 2 }$

Correct Answer
verified

Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1, 120 to 130 in year 2, and 130 to 140 in year 3. We could conclude that this economy is experiencing

Correct Answer
verified

In the short run, output increases in response to a rising price level, but not in the long run.

Correct Answer
verified

The long-run Phillips Curve is vertical at

Correct Answer
verified

If the government uses expansionary, monetary, or ﬁscal policies to counter the output effects of cost-push inﬂation, then the economy is likely to experience

Correct Answer
verified

What is disinﬂation?

Correct Answer
verified
Disinﬂation is a red...
View Answer

Exam 18: Extending the Analysis of Aggregate Supply

A potential cause of stagﬂation is

Correct AnswerverifiedShow Answer

In the short run, nominal wages and other input prices are assumed to be

Correct AnswerverifiedShow Answer

A Congressional representative who calls for a decrease in tax rates in order to increase saving, work effort, and economic growth would most likely be advocating

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

If wages and other input prices are inﬂexible, then the economy will not automatically adjust to full employment in the long run.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the graphs. An increase in the economy's human capital would shift curve

Correct AnswerverifiedShow Answer

A rightward and upward shift of the Phillips Curve is consistent with the occurrence of stagﬂation.

Correct AnswerverifiedShow Answer

Inﬂation accompanied by falling real output and employment is known as

Correct AnswerverifiedShow Answer

Refer to the diagram. The move of the economy from c to e on short-run Phillips Curve PC2 would be explained by an

Correct AnswerverifiedShow Answer

What are three signiﬁcant generalizations supported by results from the extended AD-AS model?

Correct AnswerverifiedThe three signiﬁcant generalizations fro...View AnswerShow Answer

(Last Word) List the four motivating factors behind signiﬁcant tax changes as found by Romer and Romer.

Correct AnswerverifiedThe four motivating factors behind signi...View AnswerShow Answer

Refer to the diagram for a speciﬁc economy. The shape of this curve suggests that

Correct AnswerverifiedShow Answer

Inﬂation in the short run is most likely to result from a(n)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1, 120 to 130 in year 2, and 130 to 140 in year 3. We could conclude that this economy is experiencing

Correct AnswerverifiedShow Answer

In the short run, output increases in response to a rising price level, but not in the long run.

Correct AnswerverifiedShow Answer

The long-run Phillips Curve is vertical at

Correct AnswerverifiedShow Answer

If the government uses expansionary, monetary, or ﬁscal policies to counter the output effects of cost-push inﬂation, then the economy is likely to experience

Correct AnswerverifiedShow Answer

What is disinﬂation?

Correct AnswerverifiedDisinﬂation is a red...View AnswerShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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The three signiﬁcant generalizations fro...
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Correct Answer
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The four motivating factors behind signi...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Disinﬂation is a red...
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