Chapter 10.1

The short-run aggregate supply curve shows:

a direct relationship between the price level and the quantity of real GDP supplied

The term "short run" refers to:

a period of time during which some resource prices remain fixed.

The natural rate of unemployment prevails when:

cyclical unemployment is zero

The _____ measures a worker's earnings in today's dollars, or the amount on a worker's paycheck, while the _____ measures the wage in constant dollars, or the purchasing power of the worker's earnings.

nominal wage; real wage

In the short run, there is a direct relationship between:

the actual price level and the real GDP supplied, other things remaining constant

The higher the price level, _____.

the lower the real wage and the less attractive that wage is to workers

If the firms produce beyond an economy's potential output level, _____.

the nominal cost of labor increases in the short run

At higher rates of output, _____.

the per-unit cost of additional output increases

The natural rate of unemployment refers to:

the unemployment rate that occurs when an economy's real GDP is equal to its potential output.

If an economy produces its potential output level, _____.

there is no tendency for price or output to change