ECON 204 - LECTURE 10

If the economy starts at A and moves to D in the short run, the economy a. moves to C in the long run b. moves to A in the long run c. moves to B in the long run d. stays at D in the long run

a. moves to C in the long run

Suppose the economy starts at Z. If charges occur that move the economy to a new short run equilibrium of P1 and Y1, then it must be the case that a. short run aggregate supply has increased b. aggregate demand has decreased c. short-run aggregate supply has decreased d. aggregate demand has increased

b. aggregate demand has decreased

Imagine that in 2019 the economy is in long run equilibrium. Then stock prices rise more than expected and stay high for some time. which curve shifts and in which direction a. aggregate supply shifts left b. aggregate demand shifts right c. aggregate supply shifts right d. aggregate demand shifts left

b. aggregate demand shifts right

In the short an increase in the costs of production makes a. both output and prices rise b. output rise and prices fall c. both output and prices fall d. output fall and prices rise

d. output fall and prices rise

Other things the same, if technology increases, then in the long run a. output is higher and prices are lower b. output is lower and prices are higher c. both output and prices are lower d. both output and prices are higher

a. output is higher and prices are lower

Imagine that in 2019 the economy is in long run equilibrium . Then stock prices rise more than expected and stay high for some time. in the long run, what happens to the expected price level and what impact does this have on wage bargaining? a. the expected price level rises. New wage contracts are negotiated at higher wages b. the expected price level falls. New wage contracts are negotiated at lower wages c. the expected price level falls. New wages contracts are negotiated at higher wages d. the expected price level rises. New wage contracts are negotiated at lower wages

a. the expected price level rises. New wage contracts are negotiated at higher wages

The price level rises in the short run if a. aggregate demand or aggregate supply shifts right b. aggregate demand shifts right or aggregate supply shifts left c. aggregate demand or aggregate supply shifts left d. aggregate demand shifts left or aggregate supply shifts right

b. aggregate demand shifts right or aggregate supply shifts left

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift a. aggregate supply to the left b. aggregate demand to the right c. aggregate supply to the right d. aggregate demand to the left

b. aggregate demand to the right

Economic expansion in Europe and China would cause the US price level a. and real GDP to fall b. and real GDP to rise c. to fall and real GDP to rise d. to rise and real GDP to fall

b. and real GDP to rise

According to the misperceptions theory of short-run aggregate supply, if a firm thought that inflation was going to be 5% and actual inflation was 6%, then the firm would believe that the relative price of what it produce had a. decreased, so it would decrease production b. increased, so it would increase production c. decreased, so it would increase production d. increased, so it would decreased production

b. increased, so it would increase production

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is temporarily a. high and so supply a smaller quantity of labour b. low and so supply a smaller quantity of labour c. high and so supply a larger quantity of labour d. low and so supply a larger quantity of labour

b. low and so supply a smaller quantity of labour

The effect of an increase in the price level on the aggregate demand curve is represented by a a. shift to the left of the aggregate demand curve b. movement to the left along a given aggregate demand curve c. shift to the right of the aggregate demand curve d. movement to the right along a given aggregate demand curve

b. movement to the left along a given aggregate demand curve

In figure 33-3, point B represents a a. short run equilibrium and a long run equilibrium b. short run equilibrium and, Point A represents a long run equilibrium c. long run equilibrium, and Point A represent a short run equilibrium d. long run equilibrium, and Point C represents a short run equilibrium

b. short run equilibrium and, Point A represents a long run equilibrium

An increase in the expected price level shifts a. both the short run and long run aggregate supply curves to the left b. the short run aggregate supply curve to the left but does not affect the long run aggregate supply curve c. the long run aggregate supply curve to the left but does not affect the short run aggregate supply curve d. neither the long run aggregate supply curve nor the short run aggregate supply supply curve to the left

b. the short run aggregate supply curve to the left but does not affect the long run aggregate supply curve

In 2009, Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right? a. only the increased funding for states b. only tax cuts c. both the increased funding for states and tax cuts d. neither the increased funding for states nor the tax cuts

c. both the increased funding for states and tax cuts

The shift of the short run aggregate supply curve from SRAS 1 to SRAS 2 a. could be caused by an outbreak of war in the Middle East b. causes the economy to experience stagflation c. could be caused by a decrease in the expected price level d. causes the economy to experience an increase in the unemployment

c. could be caused by a decrease in the expected price level