Question 1

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If unusually bad weather leads to decreased production of wheat,corn,and other crops,at which point is the economy most likely to end up in the short run?

Accepted Answer

The answer of 
-Refer to Exhibit 8-1.Assume the economy is...

Question 2

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If foreign real national income rises,at which point is the economy most likely to end up in the short run?

Accepted Answer

An increase in foreign real national income would likely lead to an increase in demand for domestic exports. This would shift the aggregate demand curve to the right, moving the equilibrium from point A to point B in the short run, indicating an increase in both the price level and real GDP.

Question 3

-Refer to Exhibit 8-1.If we assume that the unemployment rate and Real GDP are inversely related,which of the points on this graph is most likely representative of the lowest unemployment rate?

Accepted Answer

The answer of 
-Refer to Exhibit 8-1.If we assume that...

Question 4

A change in labor productivity shifts the __________ curve and a change in the exchange rate shifts the __________ curve.

Accepted Answer

A change in labor productivity shifts the Short-Run Aggregate Supply (SRAS) curve because it directly affects the quantity of goods and services an economy can produce at a given price level. A change in the exchange rate shifts the Aggregate Demand (AD) curve because it affects the cost of domestic goods for foreign buyers and the cost of foreign goods for domestic buyers, influencing the overall demand for goods and services in the economy.

Question 5

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,at which point is the economy most likely to end up in the short run?

Accepted Answer

If businesses become more optimistic about future sales, they will increase production, which will shift the aggregate supply curve to the right. This will lead to a new equilibrium at point B, where output and employment are higher and the price level is lower.

Question 6

Velocity is the average number of times a dollar is spent to buy

Accepted Answer

Velocity is a measure of how fast money circulates in an economy. It is calculated by dividing the nominal gross domestic product (GDP) by the money supply. Since GDP only includes final goods and services, and not intermediate goods, and since velocity is a measure of how frequently a dollar is spent, it follows that velocity is the average number of times a dollar is spent to buy final goods and services in a year.

Question 7

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If wage rates rise,at which point is the economy most likely to end up in the short run?

Accepted Answer

The answer of 
-Refer to Exhibit 8-1.Assume the economy is...

Question 8

-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (5)and blank (6),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Accepted Answer

In the short run, an increase in aggregate demand leads to higher output and price levels, hence "rises" fits blank (5). However, an increase in aggregate supply results in higher output but lower price levels, making "falls" appropriate for blank (6).

Question 9

-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (1)and blank (2),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Accepted Answer

The increase in government spending will shift the aggregate demand curve to the right, leading to an increase in both output and the price level.

Question 10

In short-run equilibrium,it is always true that

Accepted Answer

In short-run equilibrium, quantity demanded of Real GDP equals quantity supplied of Real GDP. This means that there is no excess demand or excess supply of goods and services, and the economy is operating at the level of output where there is neither inflation nor recession. Natural Real GDP may not necessarily be the same as short-run equilibrium output.

Question 11

-Refer to Exhibit 8-1.If we assume that Real GDP and the unemployment rate are inversely related,which of the points on this graph is most likely representative of the highest unemployment rate?

Accepted Answer

Point D would represent the highest unemployment rate because it would correspond to the lowest level of Real GDP, given the inverse relationship between Real GDP and unemployment rate.

Question 12

__________ identifies the level of Real GDP the economy produces when all economywide adjustments have taken place and there are no misperceptions on the part of workers.

Accepted Answer

Long-run equilibrium identifies the level of Real GDP the economy produces when all economy-wide adjustments have taken place, and there are no misperceptions on the part of workers. In long-run equilibrium, the economy produces at its potential output, which is determined by the factors of production and technology available.

Question 13

Suppose the following: (1)the wage rate rises,(2)the interest rate rises,(3)any change in AD is greater than any change in SRAS.Based on this information,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

The answer of Suppose the following: (1)the wage rate rises,(2)the...

Question 14

-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (9)and blank (10),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Accepted Answer

The answer of 
-Refer to Exhibit 8-2.What word (rises or...

Question 15

-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (11)and blank (12),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Accepted Answer

The answer of 
-Refer to Exhibit 8-2.What word (rises or...

Question 16

-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (3)and blank (4),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Accepted Answer

In the context of macroeconomic analysis, an increase in aggregate demand typically leads to a rise in the price level (inflation) and an increase in output in the short run, as firms increase production to meet higher demand. Therefore, the correct words to fill in the blanks would be "rises" for the impact on the price level (blank 3) and "rises" for the impact on output (blank 4), indicating an increase in both due to higher aggregate demand. However, without the specific details from Exhibit 8-2, the explanation assumes a standard economic model where an increase in aggregate demand leads to both higher prices and higher output in the short run. If the exhibit suggests a different scenario or includes specific interventions or contexts that would alter this outcome, the answer could vary.

Question 17

-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (7)and blank (8),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Accepted Answer

The answer of 
-Refer to Exhibit 8-2.What word (rises or...

Question 18

Suppose the following: (1)the wage rate falls,(2)business taxes decline,(3)any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

In the short run, a decrease in wage rates and business taxes would cause a decrease in production costs, leading to a rightward shift of the short-run aggregate supply (SRAS) curve. As the change in SRAS is greater than the change in aggregate demand (AD), the equilibrium point would move to the right, causing an increase in real GDP and a decrease in the price level. Therefore, the correct answer is D, rise in GDP and fall in the price level.

Question 19

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point B.If businesses become pessimistic about future sales,at which point is the economy most likely to end up in the short run?

Accepted Answer

When businesses become pessimistic about future sales, they are likely to reduce investment spending. This decrease in investment spending shifts the aggregate demand curve to the left, leading to a new equilibrium at a lower level of output and possibly a lower price level, which corresponds to point A in a typical aggregate demand and supply model.

Question 20

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If the price of oil rises,at which point is the economy most likely to end up in the short run?

Accepted Answer

The answer of 
-Refer to Exhibit 8-1.Assume the economy is...

Quiz 8: Production and Costs

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If unusually bad weather leads to decreased production of wheat,corn,and other crops,at which point is the economy most likely to end up in the short run?

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If foreign real national income rises,at which point is the economy most likely to end up in the short run?

-Refer to Exhibit 8-1.If we assume that the unemployment rate and Real GDP are inversely related,which of the points on this graph is most likely representative of the lowest unemployment rate?

A change in labor productivity shifts the curve and a change in the exchange rate shifts the curve.

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,at which point is the economy most likely to end up in the short run?

Velocity is the average number of times a dollar is spent to buy

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If wage rates rise,at which point is the economy most likely to end up in the short run?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (5) and blank (6) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (1) and blank (2) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

In short-run equilibrium,it is always true that

-Refer to Exhibit 8-1.If we assume that Real GDP and the unemployment rate are inversely related,which of the points on this graph is most likely representative of the highest unemployment rate?

__________ identifies the level of Real GDP the economy produces when all economywide adjustments have taken place and there are no misperceptions on the part of workers.

Suppose the following: (1) the wage rate rises,(2) the interest rate rises,(3) any change in AD is greater than any change in SRAS.Based on this information,in the short run Real GDP will and the price level will .

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (9) and blank (10) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (11) and blank (12) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (3) and blank (4) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (7) and blank (8) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Suppose the following: (1) the wage rate falls,(2) business taxes decline,(3) any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will and the price level will .

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point B.If businesses become pessimistic about future sales,at which point is the economy most likely to end up in the short run?

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If the price of oil rises,at which point is the economy most likely to end up in the short run?

Quiz 8: Production and Costs

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If unusually bad weather leads to decreased production of wheat,corn,and other crops,at which point is the economy most likely to end up in the short run?

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If foreign real national income rises,at which point is the economy most likely to end up in the short run?

-Refer to Exhibit 8-1.If we assume that the unemployment rate and Real GDP are inversely related,which of the points on this graph is most likely representative of the lowest unemployment rate?

A change in labor productivity shifts the __________ curve and a change in the exchange rate shifts the __________ curve.

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,at which point is the economy most likely to end up in the short run?

Velocity is the average number of times a dollar is spent to buy

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If wage rates rise,at which point is the economy most likely to end up in the short run?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (5) and blank (6) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (1) and blank (2) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

In short-run equilibrium,it is always true that

-Refer to Exhibit 8-1.If we assume that Real GDP and the unemployment rate are inversely related,which of the points on this graph is most likely representative of the highest unemployment rate?

__________ identifies the level of Real GDP the economy produces when all economywide adjustments have taken place and there are no misperceptions on the part of workers.

Suppose the following: (1) the wage rate rises,(2) the interest rate rises,(3) any change in AD is greater than any change in SRAS.Based on this information,in the short run Real GDP will __________ and the price level will __________.

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (9) and blank (10) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (11) and blank (12) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (3) and blank (4) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (7) and blank (8) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Suppose the following: (1) the wage rate falls,(2) business taxes decline,(3) any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will __________ and the price level will __________.

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point B.If businesses become pessimistic about future sales,at which point is the economy most likely to end up in the short run?

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If the price of oil rises,at which point is the economy most likely to end up in the short run?

A change in labor productivity shifts the curve and a change in the exchange rate shifts the curve.

Suppose the following: (1) the wage rate rises,(2) the interest rate rises,(3) any change in AD is greater than any change in SRAS.Based on this information,in the short run Real GDP will and the price level will .

Suppose the following: (1) the wage rate falls,(2) business taxes decline,(3) any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will and the price level will .