Chapter 13 questions 41-80

74.Which of the following causes an increase in short-run aggregate supply?

Firms and workers expect the price level to fall.

46.Which of the following is true?

Long-run aggregate supply is independent of the price level.

45.Which of the following is true about the price level and aggregate supply?

The price level influences aggregate supply in the short run but not in the long run.

56.Which of the following would cause an increase in long-run aggregate supply?

The stock of capital increases.

78.An increase in expected future prices causes:

a decrease in short-run aggregate supply.

76._________ would decrease short-run aggregate supply.

a negative supply shock

59.When an economy has a more stable and well-developed financial system, it is reasonable to expect:

a rightward shift of the long-run aggregate supply curve.

65.A supply shock is defined as:

a surprise event that changes the firm's production costs.

53.A rightward shift of the long-run aggregate supply curve means there has been:

economic growth.

55.New computer technologies can be expected to:

increase long-run aggregate supply.

60.Increases in productivity will:

increase long-run aggregate supply.

52.In the long run, a technological advance that improves communication can be expected to _________ labor productivity and _________ unemployment.

increase; have no effect on

47.In the long run, the output of an economy:

is equal to full employment output.

71.When the general price level rises and firms decide not to change their prices in the short run, this can be attributed to:

menu costs.

72.If the price level falls but workers are reluctant to accept a pay cut, this is an example of:

money illusion.

73.If workers actively demand pay increases when the price level is rising and are willing to accept pay cuts when the price level is falling, then the short-run aggregate supply curve would be:

nearly vertical.

41.Aggregate supply describes a relationship between:

output and prices.

57.If the price level rises by 10%, then all else being equal, the long-run quantity of aggregate supply will:

remain unchanged.

58.If the price level falls by 5%, then all else being equal, the long-run aggregate supply curve will:

remain unchanged.

51.The long-run output of an economy depends on:

resources, technology, and institutions.

64.A supply shock causes a shift in:

short-run aggregate supply.

69.The slope of the short-run aggregate supply curve can be explained by:

sticky input prices and flexible output prices.

63.Input prices are _________ in the short run and _________ in the long run.

sticky; flexible

67.When inflation pushes up prices in the economy, input prices are _________ and revenues _________ in the short run.

sticky; increase

66.Shifts in the short-run aggregate supply curve are caused by:

supply shocks.

42.When decision makers have time to fully adjust to changes in the overall price level, we refer to this as:

the long run.

54.When an economy experiences economic growth:

the long-run aggregate supply curve shifts to the right.

68.The relationship between sticky input prices and flexible output prices explains:

the positive slope of the short-run aggregate supply curve.

70.Menu costs help to explain:

the positive slope of the short-run aggregate supply curve.

61.All else being equal, an increase in _________ would shift the long-run aggregate supply curve to the left.

the rate at which capital depreciates

62.An economy has experienced a rightward shift of its long-run aggregate supply curve and is now producing on that new long-run aggregate supply curve. It is reasonable to expect that:

the unemployment rate has been unaffected.

50.The long-run aggregate supply curve is:

vertical at the level of full employment output.

49.The long-run aggregate supply curve is:

vertical because full employment output is independent of the price level.

44.When prices in the economy have not fully adjusted, we say that:

we are in the short run.

80.The economy is in long-run equilibrium when:

aggregate demand intersects both long-run and short-run aggregate supply.

79.The economy is in short-run equilibrium when:

aggregate demand intersects short-run aggregate supply.

43.The long run is best defined as a period of time such that:

all prices have adjusted.

77.A technological advance leads to a shift in:

an upward movement along the aggregate supply curve.

75.An increase in the general price level will lead to:

an upward movement along the short-run aggregate supply curve as firms increase output.

48.Shifts in the long-run aggregate supply curve are caused by:

changes in labor productivity.