Macro Econ Ch 11 - Assignment Essays

question

Say's law asserts that

answer

supply creates its own demand.

question

Suppose that the value of the US $ yesterday was $1 = 4 euros. Today the exchange rate changed such that $1 = 5 euros. One can say the

answer

US $ appreciated.

question

An appreciation of the US $ should result in

answer

a lower price level but the impact on the level of real GDP depends on the magnitude of the shifts in the aggregate demand and short-run aggregate supply curves.

question

In modern Keynesian analysis, a decrease in aggregate demand will result in

answer

a decrease in both the price level and output.

question

The short-run Keynesian aggregate supply curve is

answer

horizontal

question

Inflation in an economy implies that

answer

the average price level has increased over a stated period of time.

question

Cost-push inflation arises due to

answer

a decrease in the short-run aggregate supply curve.

question

Which of the following would create cost-push inflation?

answer

An increase in wages paid to workers.

question

Which of the following will increase both the short-run and long-run aggregate supply curves?

answer

Younger workers in the labor force receive better and more training than their predecessors.

question

Which of the following is true concerning shifts of the long-run aggregate supply curve?

answer

An increase in the long-run aggregate supply curve is depicted as a rightward shift and an increase in real GDP.

question

Suppose that the value of the US dollar ($) yesterday was $1 = 4 euros. Today the exchange rate changed such that $1 = 3 euros.
Given that the US dollar has depreciated, the aggregate demand in the United States should

answer

shift to the right.

question

Given that the US dollar has depreciated the short-run aggregate supply in the United States should

answer

shift to the left.

question

Suppose that the value of the US dollar ($) yesterday was $1 = 4 euros. Today the exchange rate changed such that $1 = 6 euros.
Given that the US $ has appreciated, the aggregate demand in the United States should

answer

shift to the left.

question

Given that the US $ has appreciated, the short-run aggregate supply in the United States should

answer

shift to the right.

question

Modern Keynesian analysis assumes that the short-run aggregate supply curve is

answer

upward sloping

question

A short-lived change in production input prices will

answer

shift SRAS but not LRAS.

question

Refer to the economy shown in the graph to the right. Suppose that there is an increase in oil prices.
The short-run effect of this change on the economy is

answer

a leftward shift of the SRAS curve, and cost-push inflation.

question

When aggregate demand decreases in the classical model of the short-run aggregate supply curve,

answer

price decreases and real GDP is unchanged.

question

Classical economists thought that

answer

price, wage, and interest rate flexibility can quickly cure any tendencies for a recession.

question

The Modern Keynesian short-run aggregate supply curve is best described by which of the following statements?

answer

It is very flat at low levels of real GDP; increases slightly as real GDP grows; and becomes very steep as real GDP surpasses full employment.

question

A stronger dollar contributes to inflation.

answer

false

question

As the dollar becomes stronger in international foreign exchange markets, the short-run aggregate supply curve will shift to the ________ and the aggregate demand curve will shift to the ________.

answer

right; left

question

Cost-push inflation is caused by persistent

answer

decreases in short-run aggregate supply.

question

In the modern Keynesian Model the short-run aggregate curve slopes upward. How does this model explain the reason behind this upward sloping curve when it only addresses labor input?

answer

The workers are switched from uncounted production to counted production, thus enabling the firm to expand output as the price level expands.

question

Which of the following is the best example of uncounted production?

answer

An employee recalibrating a machine to maintain production within satisfactory tolerance levels for machine parts.

question

According to the classical economists,

answer

the interest rate will ensure that the amount households plan to save will equal the amount businesses desire to invest.

question

Persistent inflation arises due to

answer

the aggregate demand curve increasing by a larger proportion than the long-run aggregate supply curve.

question

Which of the following statements best characterizes demand-pull and cost-push inflation?

answer

Both are short run types of inflation.

question

Suppose that the rental rate of machinery decreased temporarily. The result of this would be best described by

answer

an increase in the short-run aggregate supply curve only.

question

According to the classical model, if an excess quantity of labor is supplied at a particular wage level, full employment will be maintained because

answer

wages will fall rapidly to permit businesses to continue hiring everyone who wants to work.

question

Which of the following will occur when aggregate supply remains stable but aggregate demand increases in the short run?

answer

An inflationary gap is created.

question

Suppose that an economy is currently in a long run equilibrium where SRAS = LRAS = AD.
If there is a decrease in the money supply, which of the following is the best description of the outcome in the economy?

answer

Aggregate demand decreases.

question

Suppose that an economy is currently in a long run equilibrium where SRAS = LRAS = AD. Given that there is a decrease in the money supply, the new short run position of the economy finds itself in is termed

answer

a recessionary gap.

question

According to Keynes, when there is excess capacity in an economy, the equilibrium level of real GDP per year is determined by

answer

aggregate demand.

question

According to the classical model, if the economy starts at full employment an increase in aggregate demand will cause all of the following to occur except

answer

a decrease in wage rates.

question

The level of employment in an economy determines its real GDP.

answer

true

question

If an excess quantity of labor is supplied at a particular wage level, the wage level

answer

must be above equilibrium.

question

The model of long-run equilibrium

answer

is the same as the Classical Model.

question

Changes in factors of production that influence economic growth will

answer

shift SRAS and LRAS.

question

An economy is currently in a long run equilibrium where SRAS = LRAS = AD. Suppose that there is an increase in the money supply, which of the following is the best explanation of the outcome?

answer

Aggregate demand increases.

question

Given that the economy is currently in a long run equilibrium where SRAS = LRAS = AD there is an increase in the money supply the economy would then experience

answer

an inflationary gap.

question

According to classical economists, aggregate demand primarily determines

answer

the price level.

question

Which of the following is a possible explanation for sticky prices?

answer

Labor contracts cause wages to be fixed over the contract period.

question

One of the main conclusions of Say's Law was that

answer

if people supply goods in order to then demand goods, there can be no overproduction in a market economy and full employment will be the normal state of affairs.

question

Which of the following best exemplifies Say's Law?

answer

The production of a $4000 plasma TV set creates demand for other goods and services valued at $4000.

question

Say's Law fits best in the ________since this philosophy placed great importance on _____________to determine the ___________

answer

Classical Theory; aggregate supply; level of output

question

In the Classical Model, an increase in aggregate demand will result in

answer

an increase in the price level and no change in output.

1 of 47

question

Say's law asserts that

answer

supply creates its own demand.

question

Suppose that the value of the US $ yesterday was $1 = 4 euros. Today the exchange rate changed such that $1 = 5 euros. One can say the

answer

US $ appreciated.

question

An appreciation of the US $ should result in

answer

a lower price level but the impact on the level of real GDP depends on the magnitude of the shifts in the aggregate demand and short-run aggregate supply curves.

question

In modern Keynesian analysis, a decrease in aggregate demand will result in

answer

a decrease in both the price level and output.

question

The short-run Keynesian aggregate supply curve is

answer

horizontal

question

Inflation in an economy implies that

answer

the average price level has increased over a stated period of time.

question

Cost-push inflation arises due to

answer

a decrease in the short-run aggregate supply curve.

question

Which of the following would create cost-push inflation?

answer

An increase in wages paid to workers.

question

Which of the following will increase both the short-run and long-run aggregate supply curves?

answer

Younger workers in the labor force receive better and more training than their predecessors.

question

Which of the following is true concerning shifts of the long-run aggregate supply curve?

answer

An increase in the long-run aggregate supply curve is depicted as a rightward shift and an increase in real GDP.

question

answer

shift to the right.

question

Given that the US dollar has depreciated the short-run aggregate supply in the United States should

answer

shift to the left.

question

answer

shift to the left.

question

Given that the US $ has appreciated, the short-run aggregate supply in the United States should

answer

shift to the right.

question

Modern Keynesian analysis assumes that the short-run aggregate supply curve is

answer

upward sloping

question

A short-lived change in production input prices will

answer

shift SRAS but not LRAS.

question

Refer to the economy shown in the graph to the right. Suppose that there is an increase in oil prices.
The short-run effect of this change on the economy is

answer

a leftward shift of the SRAS curve, and cost-push inflation.

question

When aggregate demand decreases in the classical model of the short-run aggregate supply curve,

answer

price decreases and real GDP is unchanged.

question

Classical economists thought that

answer

price, wage, and interest rate flexibility can quickly cure any tendencies for a recession.

question

The Modern Keynesian short-run aggregate supply curve is best described by which of the following statements?

answer

It is very flat at low levels of real GDP; increases slightly as real GDP grows; and becomes very steep as real GDP surpasses full employment.

question

A stronger dollar contributes to inflation.

answer

false

question

As the dollar becomes stronger in international foreign exchange markets, the short-run aggregate supply curve will shift to the ________ and the aggregate demand curve will shift to the ________.

answer

right; left

question

Cost-push inflation is caused by persistent

answer

decreases in short-run aggregate supply.

question

In the modern Keynesian Model the short-run aggregate curve slopes upward. How does this model explain the reason behind this upward sloping curve when it only addresses labor input?

answer

The workers are switched from uncounted production to counted production, thus enabling the firm to expand output as the price level expands.

question

Which of the following is the best example of uncounted production?

answer

An employee recalibrating a machine to maintain production within satisfactory tolerance levels for machine parts.

question

According to the classical economists,

answer

the interest rate will ensure that the amount households plan to save will equal the amount businesses desire to invest.

question

Persistent inflation arises due to

answer

the aggregate demand curve increasing by a larger proportion than the long-run aggregate supply curve.

question

Which of the following statements best characterizes demand-pull and cost-push inflation?

answer

Both are short run types of inflation.

question

Suppose that the rental rate of machinery decreased temporarily. The result of this would be best described by

answer

an increase in the short-run aggregate supply curve only.

question

According to the classical model, if an excess quantity of labor is supplied at a particular wage level, full employment will be maintained because

answer

wages will fall rapidly to permit businesses to continue hiring everyone who wants to work.

question

Which of the following will occur when aggregate supply remains stable but aggregate demand increases in the short run?

answer

An inflationary gap is created.

question

answer

Aggregate demand decreases.

question

answer

a recessionary gap.

question

According to Keynes, when there is excess capacity in an economy, the equilibrium level of real GDP per year is determined by

answer

aggregate demand.

question

According to the classical model, if the economy starts at full employment an increase in aggregate demand will cause all of the following to occur except

answer

a decrease in wage rates.

question

The level of employment in an economy determines its real GDP.

answer

true

question

If an excess quantity of labor is supplied at a particular wage level, the wage level

answer

must be above equilibrium.

question

The model of long-run equilibrium

answer

is the same as the Classical Model.

question

Changes in factors of production that influence economic growth will

answer

shift SRAS and LRAS.

question

An economy is currently in a long run equilibrium where SRAS = LRAS = AD. Suppose that there is an increase in the money supply, which of the following is the best explanation of the outcome?

answer

Aggregate demand increases.

question

Given that the economy is currently in a long run equilibrium where SRAS = LRAS = AD there is an increase in the money supply the economy would then experience

answer

an inflationary gap.

question

According to classical economists, aggregate demand primarily determines

answer

the price level.

question

Which of the following is a possible explanation for sticky prices?

answer

Labor contracts cause wages to be fixed over the contract period.

question

One of the main conclusions of Say's Law was that

answer

if people supply goods in order to then demand goods, there can be no overproduction in a market economy and full employment will be the normal state of affairs.

question

Which of the following best exemplifies Say's Law?

answer

The production of a $4000 plasma TV set creates demand for other goods and services valued at $4000.

question

Say's Law fits best in the ________since this philosophy placed great importance on _____________to determine the ___________

answer

Classical Theory; aggregate supply; level of output

question

In the Classical Model, an increase in aggregate demand will result in

answer

an increase in the price level and no change in output.

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