hw 9

n the aggregate demand-aggregate supply model, short-run equilibrium occurs at the combination of output and prices where: Select one: a. aggregate demand equals long-run aggregate supply. b. aggregate demand equals short-run aggregate supply. c. aggregate demand equals short-run and long-run aggregate supply. d. short-run aggregate supply equals long-run aggregate supply.

aggregate demand equals short-run aggregate supply.

In the aggregate demand-aggregate supply model, long-run equilibrium occurs at the combination of output and prices where: Select one: a. aggregate demand is greater than long-run aggregate supply. b. aggregate demand equals short-run aggregate supply. c. aggregate demand equals short-run and long-run aggregate supply. d. short-run aggregate supply equals long-run aggregate supply.

aggregate demand equals short-run and long-run aggregate supply

n the long run, the level of output is determined by the: Select one: a. interaction of supply and demand. b. money supply and the levels of government spending and taxation. c. amounts of capital and labor and the available technology. d. preferences of the public.

amounts of capital and labor and the available technology.

A favorable supply shock occurs when: Select one: a. environmental protection laws raise costs of production. b. the Fed increases the money supply. c. unions push wages up. d. an oil cartel breaks up and oil prices fall.

an oil cartel breaks up and oil prices fall.

When GDP growth declines, investment spending typically ______ and consumption spending typically ______. Select one: a. increases; increases b. increases; decreases c. decreases; decreases CorrectCorrect d. decreases; increases

decreases; decreases

A difference between the economic long run and the short run is that: Select one: a. the classical dichotomy holds in the short run but not in the long run. b. monetary and fiscal policy affect output only in the long run. c. demand can affect output and employment in the short run, whereas supply is the ruling force in the long run. d. prices and wages are sticky in the long run only.

demand can affect output and employment in the short run, whereas supply is the ruling force in the long run.

The short run refers to a period: Select one: a. of several days. b. during which prices are sticky and unemployment may occur. c. during which capital and labor are fully employed. d. during which there are no fluctuations.

during which prices are sticky and unemployment may occur.

Most economists believe that prices are: Select one: a. flexible in the short run but many are sticky in the long run. b. flexible in the long run but many are sticky in the short run. c. sticky in both the short and long runs. d. flexible in both the short and long runs.

flexible in the long run but many are sticky in the short run

Over the business cycle, investment spending ______ consumption spending. Select one: a. is inversely correlated with b. is more volatile than c. has about the same volatility as d. is less volatile than

is more volatile than

Okun's law is the ______ relationship between real GDP and the ______. Select one: a. negative; unemployment rate b. negative; inflation rate c. positive; unemployment rate d. positive; inflation rate

negative; unemployment rate

Looking at the aggregate demand curve alone, one can tell ______ that will prevail in the economy. Select one: a. the quantity of output and the price level b. the quantity of output c. the price level d. neither the quantity of output nor the price level

neither the quantity of output nor the price level

Aggregate supply is the relationship between the quantity of goods and services supplied and the: Select one: a. money supply. b. unemployment rate. c. interest rate. d. price level.

price level

A short-run aggregate supply curve shows fixed ______, and a long-run aggregate supply curve shows fixed ______. Select one: a. output; output b. prices; prices c. prices; output d. output; prices

prices; output

The natural level of output is: Select one: a. affected by aggregate demand. b. the level of output at which the unemployment rate is zero. c. the level of output at which the unemployment rate is at its natural level. d. permanent and unchangeable.

the level of output at which the unemployment rate is at its natural level.