Question 1

Suppose that the real wage remained the same from year 1 to 2, but the nominal wage increased from $20 to $24.How was the price level affected? &#160;&#10;A)&#160;It rose by 25 percent.&#160;&#10;B)&#160;It rose by 20 percent.&#160;&#10;C)&#160;It fell by 20 percent.&#160;&#10;D)&#160;It fell by 10 percent.

Accepted Answer

The increase in the nominal wage from $20 to $24 indicates an increase of 20%, but since the real wage remained the same, that means the price level has also risen by the same amount of 20%.

Question 2

What is the key resource underlying aggregate supply? &#160;&#10;A)&#160;production incentives&#160;&#10;B)&#160;labour&#160;&#10;C)&#160;technology&#160;&#10;D)&#160;natural resources

Accepted Answer

Labour is a key resource in aggregate supply as it directly affects the production capacity of an economy.

Question 3

What is the term for wages in dollars as measured by the amount of goods and services that the dollars buy? &#160;&#10;A)&#160;real wages&#160;&#10;B)&#160;inflationary wages&#160;&#10;C)&#160;nominal wages&#160;&#10;D)&#160;normal wages

Accepted Answer

Real wages refer to the purchasing power of wages, that is, the amount of goods and services that can be purchased with a certain wage amount. It takes inflation into account and adjusts nominal wages for changes in the cost of living.

Question 4

What does potential output represent? &#160;&#10;A)&#160;the amount produced when firms' and workers' expectations about the price level are realized&#160;&#10;B)&#160;the amount produced when the actual price level is higher than workers expected&#160;&#10;C)&#160;the amount produced when firms and workers have the same expectations about the price level&#160;&#10;D)&#160;the amount produced when the actual price level remains constant

Accepted Answer

Potential output represents the level of output that an economy can produce when all factors of production are utilized at their normal rates, assuming that firms' and workers' expectations about the price level are realized. This concept is not directly related to the actual price level or the constancy of the price level, but rather to the optimal use of resources under expected conditions.

Question 5

Suppose the price level rises by 5 percent and the nominal wage rises by 3 percent.How is the real wage affected? &#160;&#10;A)&#160;It falls by 8 percent.&#160;&#10;B)&#160;It falls by 2 percent.&#160;&#10;C)&#160;It rises by 8 percent.&#160;&#10;D)&#160;It rises by 2 percent.

Accepted Answer

The real wage is calculated by dividing the nominal (or actual) wage by the price level. 
Real Wage = Nominal Wage / Price Level
If the price level rises by 5 percent and the nominal wage rises by 3 percent, then the real wage will decrease because the increase in the nominal wage is not enough to keep up with the increase in prices. 
Real Wage = (Nominal Wage * 1.03) / (Price Level * 1.05)
Real Wage = (Nominal Wage / Price Level) * 0.98
Real Wage will fall by approximately 2 percent:
Real Wage = (1/1) * 0.98 = 0.98 or -2%

Question 6

Suppose the economy is at its potential output level.Which of the following best characterizes the unemployment rate? &#160;&#10;A)&#160;It is at the natural rate.&#160;&#10;B)&#160;It is greater than its natural rate.&#160;&#10;C)&#160;It is less than its natural rate.&#160;&#10;D)&#160;It would include only those people who do NOT have enough work.

Accepted Answer

When the economy is at its potential output level, the unemployment rate is at its natural rate, which is the rate of unemployment that exists when the economy is at its potential output level. This rate includes only frictional and structural unemployment, which are considered to be inherent in any dynamic economy.

Question 7

Which of the following characterizes the relationship between wages and inflation? &#160;&#10;A)&#160;During periods of low inflation, real wages are constant and nominal wages decline.&#160;&#10;B)&#160;During periods of high inflation, real wages increase more than nominal wages.&#160;&#10;C)&#160;During periods of inflation, real wages will change if nominal wages are constant.&#160;&#10;D)&#160;During periods with a constant inflation rate, real wages will NOT change unless nominal wages do.

Accepted Answer

Inflation affects both nominal and real wages. Real wages are the purchasing power of nominal wages, so if inflation causes prices to increase, then real wages will decrease unless nominal wages also increase. Therefore, real wages will change if nominal wages are constant during periods of inflation. Option A is incorrect because nominal wages may increase during periods of low inflation, which would lead to an increase in real wages. Option B is incorrect because during periods of high inflation, nominal wages tend to increase at a slower rate than prices, leading to a decrease in real wages. Option D is incorrect because even during periods with a constant inflation rate, real wages will change if nominal wages do not keep up with inflation.

Question 8

What does the real wage represent? &#160;&#10;A)&#160;the quantity of goods and services a worker can purchase in exchange for performing work&#160;&#10;B)&#160;the dollar value of the goods and services a worker can purchase in exchange for performing work&#160;&#10;C)&#160;a worker's nominal wage minus taxes paid on wages&#160;&#10;D)&#160;the actual amount of income a worker receives after deductions for such things as taxes and insurance

Accepted Answer

The real wage represents the quantity of goods and services a worker can purchase in exchange for performing work, adjusted for inflation. It takes into consideration the purchasing power of their nominal wage.

Question 9

How is nominal wage measured? &#160;&#10;A)&#160;in constant dollars&#160;&#10;B)&#160;in terms of the goods it can buy&#160;&#10;C)&#160;in terms of the goods and services it can buy&#160;&#10;D)&#160;in current dollars rather than in constant dollars

Accepted Answer

Nominal wage is measured in current dollars rather than in constant dollars, reflecting the amount of money received by a worker at the current time without adjusting for inflation or changes in purchasing power.

Question 10

What does the nominal wage represent? &#160;&#10;A)&#160;the quantity of goods and services a worker can purchase in exchange for performing work&#160;&#10;B)&#160;the dollar value of the goods and services a worker can purchase in exchange for performing work&#160;&#10;C)&#160;a worker's real wages minus taxes paid on wages&#160;&#10;D)&#160;a worker's real wages divided by the price level

Accepted Answer

Nominal wage represents the dollar value of the goods and services a worker can purchase in exchange for performing work. It does not take into account the changes in purchasing power or inflation.

Question 11

Why is the expected price level significant? &#160;&#10;A)&#160;because it is the equilibrium price level in the short run&#160;&#10;B)&#160;because it determines the actual price level in the short run&#160;&#10;C)&#160;because it determines the actual price level in the long run&#160;&#10;D)&#160;because firms and resource owners make long-term agreements based on the expected price level

Accepted Answer

The answer of Why is the expected price level significant?...

Question 12

Which of the following characterizes the relationship between real wages and nominal wages? &#160;&#10;A)&#160;The real wage will be constant only if the inflation rate is constant.&#160;&#10;B)&#160;Changes in the nominal wage will be the same as changes in the real wage only if the price level is constant.&#160;&#10;C)&#160;The real wage will be constant only if the price level is constant.&#160;&#10;D)&#160;The real wage will be constant only if the nominal wage is constant.

Accepted Answer

The answer of Which of the following characterizes the relationship...

Question 13

Which of the following characterizes an economy that is at its potential output level? &#160;&#10;A)&#160;Firms' and workers' expectations about the price level are NOT realized.&#160;&#10;B)&#160;The nominal wage is NOT a good measure of the expected real wage.&#160;&#10;C)&#160;The unemployment rate is about 2 percent.&#160;&#10;D)&#160;The economy is producing its minimum sustainable output.

Accepted Answer

The answer of Which of the following characterizes an economy...

Question 14

Suppose the economy is at its potential output level.Which of the following best characterizes how the economy is producing? &#160;&#10;A)&#160;The economy is producing less than it is capable of producing.&#160;&#10;B)&#160;The economy is producing the maximum it can produce given resource constraints.&#160;&#10;C)&#160;The economy is producing beyond its productive capacity.&#160;&#10;D)&#160;The economy is producing at its minimum capacity.

Accepted Answer

The answer of Suppose the economy is at its potential...

Question 15

Other things constant, what relationship is expressed by aggregate supply? &#160;&#10;A)&#160;the relationship between the price level in the economy and the aggregate output that firms will produce&#160;&#10;B)&#160;the relationship between the price level and the aggregate amount that people will buy at that price level&#160;&#10;C)&#160;the relationship between the price level and the potential amount of output&#160;&#10;D)&#160;the relationship between the quantity of output that will be produced and that which will be sold in a one-year period

Accepted Answer

The answer of Other things constant, what relationship is expressed...

Question 16

What does the potential output of an economy represent? &#160;&#10;A)&#160;the level of output produced when the real wage equals the nominal wage&#160;&#10;B)&#160;the level of output produced when the price level is constant&#160;&#10;C)&#160;the level of output produced when the expected price level equals the unemployment rate&#160;&#10;D)&#160;the level of output produced when the expected price level equals the actual price level

Accepted Answer

The answer of What does the potential output of an...

Question 17

Which of the following describes the short-run aggregate supply curve? &#160;&#10;A)&#160;It shows an inverse relationship between the price level and real GDP.&#160;&#10;B)&#160;It shows the relationship between the price of labour and the aggregate quantity of labour that workers supply, other things constant.&#160;&#10;C)&#160;It shows the relationship between the interest rate and the quantity of capital goods that firms supply, other things constant.&#160;&#10;D)&#160;It shows the relationship between the price level and the quantity of aggregate output that firms supply, other things constant.

Accepted Answer

The answer of Which of the following describes the short-run...

Question 18

Suppose that the real wage remained unchanged between year 1 and 2 but the nominal wage was $20 in year 1 and $18 in year 2.How was the price level affected? &#160;&#10;A)&#160;It rose by 20 percent.&#160;&#10;B)&#160;It rose by 25 percent.&#160;&#10;C)&#160;It fell by 10 percent.&#160;&#10;D)&#160;It fell by 20 percent.

Accepted Answer

The answer of Suppose that the real wage remained unchanged...

Question 19

Suppose the price level rises by 4 percent and the nominal wage rises 6 percent.How is the real wage affected? &#160;&#10;A)&#160;It falls by 2 percent.&#160;&#10;B)&#160;It falls by 10 percent.&#160;&#10;C)&#160;It rises by 2 percent.&#160;&#10;D)&#160;It rises by 10 percent.

Accepted Answer

The answer of Suppose the price level rises by 4...

Question 20

Who makes the billions of production decisions reflected in aggregate supply? &#160;&#10;A)&#160;consumers&#160;&#10;B)&#160;all households and firms&#160;&#10;C)&#160;only the largest firms and the largest households&#160;&#10;D)&#160;resource suppliers and firms

Accepted Answer

The answer of Who makes the billions of production decisions...

Question 21

Which term refers to a wage rate above what is necessary to attract a sufficient number of workers? &#160;&#10;A)&#160;market-clearing wage&#160;&#10;B)&#160;efficiency wage&#160;&#10;C)&#160;marginal productivity wage&#160;&#10;D)&#160;minimum wage

Accepted Answer

The answer of Which term refers to a wage rate...

Question 22

In constructing the short-run aggregate supply curve, how would an economist define the short run? &#160;&#10;A)&#160;a period during which the price level is constant&#160;&#10;B)&#160;a period during which output is fixed&#160;&#10;C)&#160;a period during which profit is constant&#160;&#10;D)&#160;a period during which the costs of some resources are fixed

Accepted Answer

The answer of In constructing the short-run aggregate supply curve,...

Question 23

Which of the following best characterizes prices in the long run, but NOT in the short run? &#160;&#10;A)&#160;All prices are flexible.&#160;&#10;B)&#160;Prices are NOT flexible.&#160;&#10;C)&#160;Some resource prices are fixed.&#160;&#10;D)&#160;Only input prices are flexible.

Accepted Answer

The answer of Which of the following best characterizes prices...

Question 24

Suppose the price level is rising faster than expected.Which of the following is among the reasons a firm would find it profitable to expand output in the short run? &#160;&#10;A)&#160;All the firm's costs are contractually fixed.&#160;&#10;B)&#160;Prices for the firm's output are rising with the price level.&#160;&#10;C)&#160;The firm is interested in minimizing cost per unit, but NOT total profits.&#160;&#10;D)&#160;All of the firm's costs are variable.

Accepted Answer

The answer of Suppose the price level is rising faster...

Question 25

What does the long-run equilibrium price level represent? &#160;&#10;A)&#160;the price level the economy is expected to reach when the economy produces its potential output&#160;&#10;B)&#160;the price level the economy is expected to reach when interest rates are stabilized&#160;&#10;C)&#160;the price level the economy is expected to reach when the federal budget is balanced&#160;&#10;D)&#160;the price level the economy is expected to reach when the discount rate equals the prime rate

Accepted Answer

The answer of What does the long-run equilibrium price level...

Question 26

What do fixed resource prices help explain? &#160;&#10;A)&#160;why firms increase output in the short run when the price level increases&#160;&#10;B)&#160;why firms keep production levels constant in the short run when the price level decreases&#160;&#10;C)&#160;why firms sell output in the short run at fixed prices&#160;&#10;D)&#160;why firms increase output in the long run when the price level increases

Accepted Answer

The answer of What do fixed resource prices help explain?...

Question 27

What types of unemployment can exist in an economy that is at its potential output level? &#160;&#10;A)&#160;only cyclical unemployment&#160;&#10;B)&#160;only structural unemployment&#160;&#10;C)&#160;frictional, cyclical, and seasonal unemployment&#160;&#10;D)&#160;frictional, seasonal, and structural unemployment

Accepted Answer

The answer of What types of unemployment can exist in...

Question 28

Suppose the actual price level exceeds the expected price level reflected in long-term contracts.How will firms respond? &#160;&#10;A)&#160;Firms will find production more profitable than they had expected, and will increase the quantity of output supplied.&#160;&#10;B)&#160;Firms will find production less profitable than they had expected, and will decrease the quantity of output supplied.&#160;&#10;C)&#160;Firms will find production more profitable than they had expected, and will decrease the quantity of output supplied.&#160;&#10;D)&#160;Firms will find production less profitable than they had expected, and will increase the quantity of output supplied.

Accepted Answer

The answer of Suppose the actual price level exceeds the...

Question 29

Suppose the price level turns out to be higher than expected in the short run.Which of the following actions will businesses take? &#160;&#10;A)&#160;Businesses will increase production.&#160;&#10;B)&#160;Businesses will decrease production.&#160;&#10;C)&#160;Initially, the short-run aggregate supply curve will shift rightward, but later an upward movement will occur along that curve.&#160;&#10;D)&#160;Initially, the short-run aggregate supply curve will shift rightward, but later a downward movement will occur along that curve.

Accepted Answer

The answer of Suppose the price level turns out to...

Question 30

In theory what kind of unemployment can exist in the short run, but NOT in the long run? &#160;&#10;A)&#160;seasonal unemployment&#160;&#10;B)&#160;cyclical unemployment&#160;&#10;C)&#160;structural unemployment&#160;&#10;D)&#160;frictional unemployment

Accepted Answer

The answer of In theory what kind of unemployment can...

Question 31

What is the definition of the short run? &#160;&#10;A)&#160;a period of time when there is an expansionary gap and firms run their plants only for short periods&#160;&#10;B)&#160;a period of up to one year long&#160;&#10;C)&#160;a period of time when resource buyers and sellers can adjust fully to changes in the price level&#160;&#10;D)&#160;a period of time during which resource buyers and sellers CANNOT adjust fully to changes in the price level

Accepted Answer

The answer of What is the definition of the short...

Question 32

Which of the following is NOT a factor in determining potential output? &#160;&#10;A)&#160;the supply of labour&#160;&#10;B)&#160;labour productivity&#160;&#10;C)&#160;the technology in current use&#160;&#10;D)&#160;the number of consumers in the market

Accepted Answer

The answer of Which of the following is NOT a...

Question 33

Suppose the economy is at its potential output level.Which of the following best describes the price level? &#160;&#10;A)&#160;The actual price level is less than the expected price level.&#160;&#10;B)&#160;The actual price level is greater than the expected price level.&#160;&#10;C)&#160;The actual price level is the same as the expected price level.&#160;&#10;D)&#160;The actual price level is NOT the same as its expected price level.

Accepted Answer

The answer of Suppose the economy is at its potential...

Question 34

Why might a rising price level in the short run create an incentive for firms to increase production? &#160;&#10;A)&#160;because costs of production will increase&#160;&#10;B)&#160;because total sales revenue will decrease&#160;&#10;C)&#160;because profits will increase&#160;&#10;D)&#160;because costs of production will increase faster than total revenue

Accepted Answer

The answer of Why might a rising price level in...

Question 35

Which of the following will cause potential output to decrease? &#160;&#10;A)&#160;if the price level increases&#160;&#10;B)&#160;if the price level decreases&#160;&#10;C)&#160;if technological change increases labour productivity&#160;&#10;D)&#160;if workers choose shorter work schedules in order to enjoy more leisure time

Accepted Answer

The answer of Which of the following will cause potential...

Question 36

Suppose the economy is producing below its potential output level.Which of the following characterizes the unemployment situation? &#160;&#10;A)&#160;The actual unemployment rate would equal the natural rate.&#160;&#10;B)&#160;No cyclical unemployment would occur.&#160;&#10;C)&#160;Structural unemployment would be equal to zero.&#160;&#10;D)&#160;Some cyclical unemployment would occur.

Accepted Answer

The answer of Suppose the economy is producing below its...

Question 37

Some resource prices are assumed to be constant in the short run.How does this affect the shape of the short-run aggregate supply curve? &#160;&#10;A)&#160;The aggregate supply curve is horizontal in the short run.&#160;&#10;B)&#160;The aggregate supply curve is vertical in the short run.&#160;&#10;C)&#160;The aggregate supply curve slopes upward in the short run.&#160;&#10;D)&#160;The aggregate supply curve slopes downward in the short run.

Accepted Answer

The answer of Some resource prices are assumed to be...

Question 38

Suppose the economy is producing beyond its potential output level.Which of the following best describes the state of the economy? &#160;&#10;A)&#160;The economy is producing beyond the natural rate of unemployment.&#160;&#10;B)&#160;The economy is producing at its maximum capacity.&#160;&#10;C)&#160;The economy is producing less than its productive capacity.&#160;&#10;D)&#160;The economy is producing at less than its natural rate of unemployment.

Accepted Answer

The answer of Suppose the economy is producing beyond its...

Question 39

Suppose workers are willing to work more hours when the nominal wage increases.Which of the following characterizes the economic rationality of their decision? &#160;&#10;A)&#160;The decision is NOT economically rational, because it should be based on the real wage only.&#160;&#10;B)&#160;The decision could be rational if workers thought that the inflation rate would fall in the future.&#160;&#10;C)&#160;The decision could be rational if workers thought that the real wage had fallen.&#160;&#10;D)&#160;The decision could be rational if workers thought that the nominal wage and the real wage were equal.

Accepted Answer

The answer of Suppose workers are willing to work more...

Question 40

In constructing a short-run aggregate supply curve, what would an economist assume is the goal of business? &#160;&#10;A)&#160;to maximize sales revenue&#160;&#10;B)&#160;to maximize profit&#160;&#10;C)&#160;to maximize growth in sales&#160;&#10;D)&#160;to minimize cost

Accepted Answer

The answer of In constructing a short-run aggregate supply curve,...

Question 41

&#10;Refer to the table in the exhibit.Consider the aggregate demand and aggregate supply schedule #1.What is the equilibrium price level? &#160;&#10;A)&#160;110&#160;&#10;B)&#160;120&#160;&#10;C)&#160;130&#160;&#10;D)&#160;140

Accepted Answer

The answer of  &#10;Refer to the table in the...

Question 42

Suppose nominal wage rates increase by 5 percent per year and the price level increases by 3 percent per year.How will real wages be affected? &#160;&#10;A)&#160;Real wages will increase by 2 percent per year.&#160;&#10;B)&#160;Real wages will increase by 3 percent per year.&#160;&#10;C)&#160;Real wages will decrease by 2 percent per year.&#160;&#10;D)&#160;Real wages will decrease by 3 percent per year.

Accepted Answer

The answer of Suppose nominal wage rates increase by 5...

Question 43

On what does the steepness of the short-run aggregate supply curve primarily depend? &#160;&#10;A)&#160;on the length of time for which resource prices are fixed&#160;&#10;B)&#160;on the length of time for which output prices are fixed&#160;&#10;C)&#160;on the difference between the expected price level and the actual price level&#160;&#10;D)&#160;on how quickly production costs increase as output expands

Accepted Answer

The answer of On what does the steepness of the...

Question 44

&#10;Refer to the table in the exhibit.Consider the aggregate demand and aggregate supply schedule #1.What is the equilibrium level of output? &#160;&#10;A)&#160;$5.00&#160;&#10;B)&#160;$5.50&#160;&#10;C)&#160;$6.00&#160;&#10;D)&#160;$6.50

Accepted Answer

The answer of  &#10;Refer to the table in the...

Question 45

For the purpose of aggregate supply analysis, what is the definition of the long run? &#160;&#10;A)&#160;the period of time during which aggregate supply adjusts to equal aggregate demand&#160;&#10;B)&#160;the period of time during which excess aggregate demand is fulfilled&#160;&#10;C)&#160;the period of time during which real wages are constant&#160;&#10;D)&#160;the period of time during which all resource prices can be varied

Accepted Answer

The answer of For the purpose of aggregate supply analysis,...

Question 46

Suppose the actual price level exceeds the expected price level reflected in long-term contracts.How will unemployment be affected? &#160;&#10;A)&#160;Unemployment will increase.&#160;&#10;B)&#160;Unemployment will decrease.&#160;&#10;C)&#160;Unemployment will stay the same.&#160;&#10;D)&#160;Unemployment will become underemployment.

Accepted Answer

The answer of Suppose the actual price level exceeds the...

Question 47

Suppose the actual price level is less than the expected price level reflected in long-term contracts.How will profits and output be affected, all things equal? &#160;&#10;A)&#160;Firms will find production more profitable than they had expected, and will increase the quantity of output supplied.&#160;&#10;B)&#160;Firms will find production less profitable than they had expected, and will decrease the quantity of output supplied.&#160;&#10;C)&#160;Firms, because they are making less profit than they had expected, will increase the quantity of output supplied.&#160;&#10;D)&#160;Resource owners, because they are making a lower profit than they had expected, will decrease the quantity of output supplied.

Accepted Answer

The answer of Suppose the actual price level is less...

Question 48

&#10;Refer to the table in the exhibit.Consider the aggregate demand and the aggregate supply schedule #3.What is the equilibrium output level and price level? &#160;&#10;A)&#160;Output is $6.50, and price level is 120.&#160;&#10;B)&#160;Output is $6.00, and price level is 130.&#160;&#10;C)&#160;Output is $5.00, and price level is 150.&#160;&#10;D)&#160;Output is $5.50, and price level is 140.

Accepted Answer

The answer of  &#10;Refer to the table in the...

Question 49

What relationship is illustrated by the aggregate supply curve? &#160;&#10;A)&#160;the price of a particular good, and the quantity of that good supplied by all firms producing that good&#160;&#10;B)&#160;the price of a particular good, and the quantity of that good supplied by the aggregate economy&#160;&#10;C)&#160;the price level, and the quantity of all goods supplied in the economy&#160;&#10;D)&#160;the price level, and the quantity purchased of all goods in the economy

Accepted Answer

The answer of What relationship is illustrated by the aggregate...

Question 50

Suppose the price level is lower than expected.How will this affect output? &#160;&#10;A)&#160;Businesses will decrease production.&#160;&#10;B)&#160;Businesses will increase production.&#160;&#10;C)&#160;Initially, the short-run aggregate supply curve will shift leftward, but later the movement will be downward along the curve.&#160;&#10;D)&#160;Initially, the short-run aggregate supply curve will shift leftward, but later the movement will be upward along the curve.

Accepted Answer

The answer of Suppose the price level is lower than...

Question 51

Which of the following is fixed in the short run but NOT in the long run? &#160;&#10;A)&#160;output&#160;&#10;B)&#160;quantity of goods and services demanded&#160;&#10;C)&#160;all input prices&#160;&#10;D)&#160;at least one input price

Accepted Answer

The answer of Which of the following is fixed in...

Question 52

Suppose the actual price level is below the expected price level.Given implicit or explicit resource price agreements, what effect will this have on the short-run aggregate supply curve? &#160;&#10;A)&#160;The economy will move rightward along the short-run aggregate supply curve.&#160;&#10;B)&#160;The economy will move leftward along the short-run aggregate supply curve.&#160;&#10;C)&#160;The short-run aggregate supply curve will shift to the left.&#160;&#10;D)&#160;The short-run aggregate supply curve will become flatter.

Accepted Answer

The answer of Suppose the actual price level is below...

Question 53

Which of the following occurs as macroeconomic output expands in the short run? &#160;&#10;A)&#160;The nominal cost of labour decreases.&#160;&#10;B)&#160;The demand for nonlabour resources decreases.&#160;&#10;C)&#160;Equipment wears out faster.&#160;&#10;D)&#160;The nominal cost per unit of output falls.

Accepted Answer

The answer of Which of the following occurs as macroeconomic...

Question 54

Between 2004 and 2014, Jack's salary increased from $100,000 per year to $200,000 per year.The price index increased from 100 to 300 during the same period.Which statement best describes Jack's situation? &#160;&#10;A)&#160;Jack's real income increased, and his money income decreased.&#160;&#10;B)&#160;Jack's real income increased, and his money income increased.&#160;&#10;C)&#160;Jack's real income decreased, and his money income decreased.&#160;&#10;D)&#160;Jack's real income decreased, and his money income increased.

Accepted Answer

The answer of Between 2004 and 2014, Jack's salary increased...

Question 55

Why does the short-run aggregate supply curve slope upward? &#160;&#10;A)&#160;because quantity supplied increases when cost per unit falls&#160;&#10;B)&#160;because quantity supplied decreases when cost per unit falls&#160;&#10;C)&#160;because quantity supplied increases when the price level increases&#160;&#10;D)&#160;because quantity supplied increases when GDP decreases

Accepted Answer

The answer of Why does the short-run aggregate supply curve...

Question 56

Suppose nominal wage rates increase by 2 percent per year and the price level increases by 5 percent per year.How will real wages be affected? &#160;&#10;A)&#160;Real wages will increase by 5 percent per year.&#160;&#10;B)&#160;Real wages will increase by 3 percent per year.&#160;&#10;C)&#160;Real wages will decrease by 5 percent per year.&#160;&#10;D)&#160;Real wages will decrease by 3 percent per year.

Accepted Answer

The answer of Suppose nominal wage rates increase by 2...

Question 57

&#10;Refer to the table in the exhibit.Consider the aggregate demand and the aggregate supply schedule #2.What is the equilibrium output level and price level? &#160;&#10;A)&#160;Output is $7.00, and price level is 110.&#160;&#10;B)&#160;Output is $6.50, and price level is 120.&#160;&#10;C)&#160;Output is $6.00, and price level is 130.&#160;&#10;D)&#160;Output is $5.50, and price level is 140.

Accepted Answer

The answer of  &#10;Refer to the table in the...

Question 58

Suppose a firm is comparing its marginal revenue (MR) and marginal cost (MC).What circumstances would cause the firm to expand its production? &#160;&#10;A)&#160;if MR is greater than MC&#160;&#10;B)&#160;if MR is less than MC&#160;&#10;C)&#160;if MR equals MC&#160;&#10;D)&#160;if MR equals 0

Accepted Answer

The answer of Suppose a firm is comparing its marginal...

Question 59

Which of the following is NOT assumed to be constant along a short-run aggregate supply curve? &#160;&#10;A)&#160;the actual price level&#160;&#10;B)&#160;the state of technology&#160;&#10;C)&#160;the size and quality of the labour force&#160;&#10;D)&#160;the size and quality of the capital stock

Accepted Answer

The answer of Which of the following is NOT assumed...

Question 60

Which pair of variables has a positive relationship in the short run? &#160;&#10;A)&#160;inflation and unemployment&#160;&#10;B)&#160;inflation and real GDP&#160;&#10;C)&#160;the actual price level and aggregate quantity supplied&#160;&#10;D)&#160;the actual price level and unemployment

Accepted Answer

The answer of Which pair of variables has a positive...

Question 61

Suppose the actual and expected price levels are initially equal, and the expected price level falls.Which of the following will occur over the long run? &#160;&#10;A)&#160;The economy will move rightward along the short-run aggregate supply curve.&#160;&#10;B)&#160;The economy will move leftward along the short-run aggregate supply curve.&#160;&#10;C)&#160;The short-run aggregate supply curve will shift to the right.&#160;&#10;D)&#160;The short-run aggregate supply curve will shift to the left.

Accepted Answer

The answer of Suppose the actual and expected price levels...

Question 62

Refer to the graph in the exhibit.Suppose the actual price level exceeds the expected price level.What might the equilibrium output be in the short run? A) Y₁ B) Y₂ C) Y₃ D) 0

Accepted Answer

The answer of  &#10;Refer to the graph in the...

Question 63

Suppose government does NOT intervene in the economy.How would an expansionary gap be closed in the long run? &#160;&#10;A)&#160;by a rightward shift of the short-run aggregate supply curve&#160;&#10;B)&#160;by a leftward shift of the short-run aggregate supply curve&#160;&#10;C)&#160;by a movement to the right along a fixed short-run aggregate supply curve&#160;&#10;D)&#160;by a movement to the left along a fixed short-run aggregate supply curve

Accepted Answer

The answer of Suppose government does NOT intervene in the...

Question 64

Suppose the economy is experiencing an expansionary gap.Which of the following will occur in the long run? &#160;&#10;A)&#160;Workers will negotiate nominal wage increases that will shift the SRAS curve to the left.&#160;&#10;B)&#160;Workers will negotiate nominal wage increases that will shift the SRAS curve to the right.&#160;&#10;C)&#160;Employers will negotiate lower nominal wages, relative to prices, that will shift the SRAS curve to the right.&#160;&#10;D)&#160;Employers will negotiate lower nominal wages, relative to prices, that will shift the SRAS curve to the left.

Accepted Answer

The answer of Suppose the economy is experiencing an expansionary...

Deck 10: Aggregate Supply