Econ 102 chapter 10

the table above gives the aggregate demand and aggregate supply schedules in Lotus Land. The short-run macroeconomic equilibrium is a price level of ______ and real GDP of ______

110; 500

In the above figure, when the economy is in a long-run equilibrium, the price level will be

120

In the figure the economy is currently at point A. suppose that the money wage rate and the price level both fall by 10 percent. Firms will be willing to supply output equal to

16 trillion

in the above figure, the aggregate demand curve is AD2, so the short-run equilibrium level of real GDP is

16.5 trillion

If higher inflation is expected in the future, then the

AD shifts rightward

________ economist believe that the economy is self regualting and always at full employment

Classical

In 2009, just after taking office, President Obama approved an $800 billion stimulus package of tax cuts and increased government spending to combat the recession brought on by the financial crisis of 2007. Which group of economists most approved of president Obama's actions?

Keyensian economists

if the money wage rate rises, then the

SAS curve shifts leftward

If the full-employment quantity of labor increases, then the

SAS curve shifts rightward and the LAS curve shifts rightward

and increase in the quantity of capital increases _______ and increase in the full-employment quantity of labor increase _______.

The SAS and the LAS; the SAS and the LAS

which of the following occurs while moving along a short-run aggregated supply curve?

The price level changes and the money wage rate is constant

All of the following shift the short-run aggregate supply curve EXPECT

a change in the price level

Which of the following does NOT shift the short-run aggregate supply curve

a change in the price level

Which of the following statements is incorrect

a classical macroeconomist believes that the money wage rate adjusts slowly

Which of the following events shifts the aggregate demand curve leftward

a decrease in government expenditures on goods and services

In the above figure, the economy is initiallly at point B. If taxes increase , there is

a shift in AD2

In the figure above, the short-run aggregate supply curve is SAS1. if the money wage rate increase there is

a shift to SAS0

Which of the following changes does NOT shirt the short run aggregate supply curve

an increase in the price level

Which of the following increases aggregate demand

an increase in the quantity of money

The AD curve shows the sum of

consumption expenditure, investment, government expenditures on goods and services and net exprots

according to the intertemporal subtitution effect, a higher price level

decreases the quantity of real GDP demanded

the AD curve slopes

downward due to the wealth and substitution effects

the US fiscal policy implemented in 2008 was an attempt to

give billions of dollars to businesses and low and middle income Americans in order to stimulate business investments and consumption expenditure, and thereby increasing AD

what could keynes have meant by his now famous statement, "in the long run we are all dead?"

govenment intervention in the economy is necessary in times of recession becaause an economy rarely restores itself to full employment

The data in the above table show that when the price level is 120, the economy

has a recessionary gap

the aggregate demand curve shows that, if other factors are held constant, a

higher price level results in a decrease in the quantity of real GDP demanded

an increase in government expenditure on goods and services

increases aggregate demand

suppose the economy was initially in a long run equilibrium. Then the world economy expands so that foreign incomes rise US aggregate demand ______ and eventually the money wage rate ______

increases; rises

The SAS curve and the LAS curve

intersect at potential GDP

the intertemporal substitution effect of the price level on aggregate demand

is one reason that the aggregate demand curve has a negative slope

suppose the economy is at point b. if firms expect profits will be higher in the future, to what point might the economy's move in the short run?

it shifts to a point such as C

_____ economists believe that active help from fiscal and monetary policy is needed to insure that the economy is operating at full employment

keyenesian

The quantity of real GDP demanded equals 16.2 trillion when the price level is 90. if the price level rises to 95, the quantity of the real GDP demanded equals

less than 16.2 trillion

which school of thoughts believes that recessions are the result of inappropriate monetary policy

monetarist

If you have 1000 of money in the bank and the price level rises by 5 percent, your

money is less in terms of what it can purchase

in the short run, real GDP can be greater than or less than potential GDP because in the short run the

money wage rate is fixed

in the above figure, the economy initially is at point B. Then price level rises by 10. the wealth effect will help

move economy to point C

Which school of thought believes that real GDP always equals potential GDP

only classical

The SAS curve shifts if there is a change in Potential GDP

potential GDP

aggregate demand is the relationship between the quantity of real GDP demanded and the

price level

in the short-run macroeconomics equilibrium

real GDP and the price level are determined by short run aggregate supply and aggregate demand

The short-run aggregate supply curve

shows the relationship between aggregate production and the price level holding constant potential GDP and all resource prices

If the money prices of resources changes

the SAS curve shifts

in the above figure as the economy adjusts towards equilibrium

the SAS curve will shift left

A Keynesian econmist believes that

the economy is self regulated and always at full employment

a classical economist believes that

the economy is self-regulating and always at full employment

a monetarist economist believes that

the economy is self-regulating and will normally, though not always, operate at full employment in monetary policy is not erratic

An aggregate supply curve depicts the relationship between

the price level and the level and the quantity of real GDP supplied

The supply of real GDP is a function of

the quantities of labor, capital and the state of technology

In the figure above, if the economy is at point A, which of the following is true

there is an inflationary gap