ECO - Quiz for Chapter 13

A rightward shift of the long-run aggregate supply curve means there has been_______

an economic growth.

Based on the figure, which points represent short-run equilibrium but not long-run equilibrium?

B and D. The LR Equilibrium must be where LRAS = SRAS = AD.

Based on the figure, starting at point A, if there is an increase in government spending, then in the short run we would move to point ________ and in the long run to point ________.

B; E

Suppose the economy was in a long-run equilibrium. Then, in a short span of time, there is a sharp decrease in the stock market (like right now), In the short run, what would happen to the price level and the real GDP?

Both price level and the real GDP would fall.

Suppose the economy was in a long-run equilibrium. Then the government implemented a tax cut policy, and the Federal Reserve Bank increased the money supply by purchasing Treasury securities. In the short run, what would happen to the price level and the real GDP?

Both price level and the real GDP would rise

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the stock market, a tax cut, an increase in the money supply and a decline in the value of the dollar (depreciates). In the short run, the price level and the real GDP will both definitely fall.

F

The short-run aggregate supply curve is upward sloping because in the short run the money wage rate changes but the price level does not.

F

Based on the figure, starting at point A, if there is an increase in the price of oil, then in the short run we move to point ________ and in the long run to point ________.

F; A

Suppose the economy was in a long-run equilibrium. Then there was a decline in the value of the US dollar (dollar depreciates). In the short run, what would happen to the price level and the real GDP?

Price level would fall and the real GDP would rise.

Based on the figure, which of the following would cause the long-run equilibrium point to change from point B to point D?

The country's overall productivity increased.