Podcast
Questions and Answers
What is the characteristic of the short run aggregate supply curve when the economy is in long run equilibrium?
What is the characteristic of the short run aggregate supply curve when the economy is in long run equilibrium?
- It is horizontal
- It is upward sloping
- It is vertical (correct)
- It is downward sloping
Which of the following is an example of a positive demand shock?
Which of the following is an example of a positive demand shock?
- The stock market crash of 1929 (correct)
- An increase in nominal wages
- The discovery of a large previously unknown oil field
- Reduction in the aggregate price level
What will a positive supply shock lead to?
What will a positive supply shock lead to?
- An increase in aggregate output along with inflation
- Stagflation (correct)
- A recession
- A rightward shift in the short run aggregate supply curve
Which of the following is true when the economy is experiencing a recessionary gap?
Which of the following is true when the economy is experiencing a recessionary gap?
What does the short run aggregate supply curve represent when it intersects the horizontal axis?
What does the short run aggregate supply curve represent when it intersects the horizontal axis?
Which type of shock resulted in the collapse of wealth and consumer confidence during the Great Depression?
Which type of shock resulted in the collapse of wealth and consumer confidence during the Great Depression?
What leads to an increase in the nominal wages and a reduction in the aggregate price level?
What leads to an increase in the nominal wages and a reduction in the aggregate price level?
Which event is an example of a negative supply shock?
Which event is an example of a negative supply shock?
What characterizes the short run equilibrium aggregate output?
What characterizes the short run equilibrium aggregate output?
What will a positive supply shock lead to?
What will a positive supply shock lead to?
What will occur if the federal government reduces defense spending?
What will occur if the federal government reduces defense spending?
What will occur if an increase in interest rate leads to a decrease in investment spending?
What will occur if an increase in interest rate leads to a decrease in investment spending?
What will occur as a result of an increase in the aggregate price level?
What will occur as a result of an increase in the aggregate price level?
What will occur if the price of steel decreases as a result of the discovery of new deposits of iron used to make steel?
What will occur if the price of steel decreases as a result of the discovery of new deposits of iron used to make steel?
What do sticky nominal wages in the short run cause the short run aggregate supply to do?
What do sticky nominal wages in the short run cause the short run aggregate supply to do?
As a result of the wealth effect, a higher aggregate price level will reduce which of the following?
As a result of the wealth effect, a higher aggregate price level will reduce which of the following?
The interest rate effect of a decrease in the aggregate price level will increase which of the following?
The interest rate effect of a decrease in the aggregate price level will increase which of the following?
Which type of shock leads to policy dilemmas due to the inability to use stabilization policy to address inflation and unemployment at the same time?
Which type of shock leads to policy dilemmas due to the inability to use stabilization policy to address inflation and unemployment at the same time?
A higher aggregate price level leads to higher profit per unit output, an increase output in the short run, because of which of the following?
A higher aggregate price level leads to higher profit per unit output, an increase output in the short run, because of which of the following?
If potential output is equal to actual aggregate output, which of the following is true?
If potential output is equal to actual aggregate output, which of the following is true?
