Question 1

If the expected price level exceeds the actual price level

Accepted Answer

The answer of If the expected price level exceeds the...

Question 2

Exhibit 10-4 -The graph in Exhibit 10-4,when aggregate supply is AS,the equilibrium output and price level will be Y₂ and P₂.

Accepted Answer

The equilibrium output and price level depend on the intersection of aggregate supply (AS) and aggregate demand (AD) curves, which is not specified in the statement.

Question 3

Wage agreements may cause costs to be __________ flexible than prices so that __________ in the price level cause __________ in aggregate quantity supplied.

Accepted Answer

The answer of Wage agreements may cause costs to be...

Question 4

Suppose firms are continually surprised by higher-than-expected price levels.Which of the following might be true?

Accepted Answer

The answer of Suppose firms are continually surprised by higher-than-expected...

Question 5

Exhibit 10-4 
-Exhibit 10-4 shows that the

Accepted Answer

The answer of Exhibit 10-4 
-Exhibit 10-4 shows that the
...

Question 6

The amount by which actual output falls short of potential output is called an expansionary gap.

Accepted Answer

The amount by which actual output falls short of potential output is called a recessionary gap. An expansionary gap occurs when actual output exceeds potential output.

Question 7

An increase in short-run aggregate supply could decrease nominal GDP.

Accepted Answer

An increase in short-run aggregate supply can lead to a decrease in prices, which in turn could decrease nominal GDP if quantity produced and sold also decreases. This can happen if demand for goods and services does not increase to match the increase in supply.

Question 8

An increase in short-run aggregate supply that increases the price level will increase the inflation rate as well.

Accepted Answer

An increase in short-run aggregate supply typically leads to a decrease in the price level, not an increase, which would not increase the inflation rate.

Question 9

Exhibit 10-5 
-If the economy is at point M in Exhibit 10-5,

Accepted Answer

The actual price level being higher than expected with a $200 billion expansionary gap indicates that the economy is producing beyond its potential output, leading to higher prices.

Question 10

Exhibit 10-5 
-If the economy is at point M in Exhibit 10-5,

Accepted Answer

The answer of Exhibit 10-5 
-If the economy is at...

Question 11

If the expected price level exceeds the actual price level,then firms will

Accepted Answer

The answer of If the expected price level exceeds the...

Question 12

Given a downward-sloping aggregate demand curve,if short-run aggregate supply increases,real GDP must increase and nominal GDP must fall.

Accepted Answer

If short-run aggregate supply increases, it shifts to the right, causing a decrease in price level and an increase in real GDP and nominal GDP. Therefore, the statement is false.

Question 13

If the expected price level exceeds the actual price level,

Accepted Answer

The answer of If the expected price level exceeds the...

Question 14

Exhibit 10-4 
-The graph in Exhibit 10-4 shows a(n)

Accepted Answer

The graph shows an increase in short-run aggregate supply because the aggregate supply curve shifts to the right.

Question 15

Exhibit 10-4 
-The shift from AS to AS' in Exhibit 10-4 would occur when the actual price level is higher than expectations.

Accepted Answer

The answer of Exhibit 10-4 
-The shift from AS to...

Question 16

Exhibit 10-4 
-The various output levels produced at different price levels is reflected in the

Accepted Answer

The short-run aggregate supply curve shows the various output levels that can be produced at different price levels in the short run. As prices increase, firms will be willing to supply more output, resulting in a higher level of aggregate supply. Therefore, the answer is (A) short-run aggregate supply curve.

Question 17

A decrease in the expected price level will shift the short-run aggregate supply curve.

Accepted Answer

A decrease in the expected price level will lead to a decrease in production costs for firms, which will cause an increase in the quantity of goods and services supplied at every given price level. This shift will cause the short-run aggregate supply curve to shift to the right.

Question 18

Suppose that the actual and expected price levels are initially equal,and that the expected price level rises.Which of the following will occur over the long run? (Hint: Recall the actual price level is on the vertical axis.)

Accepted Answer

When the expected price level rises, firms will increase their prices and the actual price level will eventually rise as well. This causes a decrease in the purchasing power of money, which reduces the demand for goods and services, causing a decrease in output and employment. In the long run, wages and other input prices will adjust to the higher price level, shifting the short-run aggregate supply curve to the left. Therefore, choice D is the best answer.

Question 19

If the economy is simultaneously in long-run and short-run equilibrium,which of the following is not true?

Accepted Answer

If the economy is in long-run and short-run equilibrium, the aggregate demand curve is not necessarily horizontal at the potential output level. It can be upward sloping or downward sloping depending on the specific circumstances of the economy. Therefore, choice E is not necessarily true in this situation. The other choices are true because long-run equilibrium implies that aggregate quantity supplied equals potential output and short-run equilibrium implies that aggregate quantity demanded equals aggregate quantity supplied, which is also equal to potential output in this case. Additionally, the price level is expected to be equal to the actual price level in equilibrium.

Question 20

The amount by which actual output falls short of potential output is called an contractionary gap.

Accepted Answer

The amount by which actual output falls short of potential output is called a "output gap" or a "negative output gap". An "expansionary gap" is the amount by which actual output exceeds potential output.

Quiz 11: Aggregate Supply

If the expected price level exceeds the actual price level

Exhibit 10-4 -The graph in Exhibit 10-4,when aggregate supply is AS,the equilibrium output and price level will be Y₂ and P₂.

Wage agreements may cause costs to be flexible than prices so that in the price level cause __ in aggregate quantity supplied.

Suppose firms are continually surprised by higher-than-expected price levels.Which of the following might be true?

Exhibit 10-4 -Exhibit 10-4 shows that the

The amount by which actual output falls short of potential output is called an expansionary gap.

An increase in short-run aggregate supply could decrease nominal GDP.

An increase in short-run aggregate supply that increases the price level will increase the inflation rate as well.

Exhibit 10-5 -If the economy is at point M in Exhibit 10-5,

Exhibit 10-5 -If the economy is at point M in Exhibit 10-5,

If the expected price level exceeds the actual price level,then firms will

Given a downward-sloping aggregate demand curve,if short-run aggregate supply increases,real GDP must increase and nominal GDP must fall.

If the expected price level exceeds the actual price level,

Exhibit 10-4 -The graph in Exhibit 10-4 shows a(n)

Exhibit 10-4 -The shift from AS to AS' in Exhibit 10-4 would occur when the actual price level is higher than expectations.

Exhibit 10-4 -The various output levels produced at different price levels is reflected in the

A decrease in the expected price level will shift the short-run aggregate supply curve.

Suppose that the actual and expected price levels are initially equal,and that the expected price level rises.Which of the following will occur over the long run? (Hint: Recall the actual price level is on the vertical axis.)

If the economy is simultaneously in long-run and short-run equilibrium,which of the following is not true?

The amount by which actual output falls short of potential output is called an contractionary gap.

Quiz 11: Aggregate Supply

If the expected price level exceeds the actual price level

Exhibit 10-4 -The graph in Exhibit 10-4,when aggregate supply is AS,the equilibrium output and price level will be Y2 and P2.

Wage agreements may cause costs to be __________ flexible than prices so that __________ in the price level cause __________ in aggregate quantity supplied.

Suppose firms are continually surprised by higher-than-expected price levels.Which of the following might be true?

Exhibit 10-4 -Exhibit 10-4 shows that the

The amount by which actual output falls short of potential output is called an expansionary gap.

An increase in short-run aggregate supply could decrease nominal GDP.

An increase in short-run aggregate supply that increases the price level will increase the inflation rate as well.

Exhibit 10-5 -If the economy is at point M in Exhibit 10-5,

Exhibit 10-5 -If the economy is at point M in Exhibit 10-5,

If the expected price level exceeds the actual price level,then firms will

Given a downward-sloping aggregate demand curve,if short-run aggregate supply increases,real GDP must increase and nominal GDP must fall.

If the expected price level exceeds the actual price level,

Exhibit 10-4 -The graph in Exhibit 10-4 shows a(n)

Exhibit 10-4 -The shift from AS to AS' in Exhibit 10-4 would occur when the actual price level is higher than expectations.

Exhibit 10-4 -The various output levels produced at different price levels is reflected in the

A decrease in the expected price level will shift the short-run aggregate supply curve.

Suppose that the actual and expected price levels are initially equal,and that the expected price level rises.Which of the following will occur over the long run? (Hint: Recall the actual price level is on the vertical axis.)

If the economy is simultaneously in long-run and short-run equilibrium,which of the following is not true?

The amount by which actual output falls short of potential output is called an contractionary gap.

Exhibit 10-4 -The graph in Exhibit 10-4,when aggregate supply is AS,the equilibrium output and price level will be Y₂ and P₂.

Wage agreements may cause costs to be flexible than prices so that in the price level cause __ in aggregate quantity supplied.