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WorksheetsChanges in the Ad–As Model in the Short Run
Total questions: 10
Worksheet time: 13mins
When an economy is in equilibrium at potential gross domestic product, the actual unemployment rate is
equal to the cyclical rate
greater than the natural rate
less than the natural rate
equal to the natural rate
equal to zero
The intersection of the aggregate supply curve and the aggregate demand curve occurs at the economy's equilibrium level of
real investment and the interest rate
real disposable income and unemployment
real national output and the price level
government expenditures and taxes
imports and exports
In the AD−AS model, which of the following is true?
The economy is in an inflationary gap when the short-run equilibrium real output is below the long-run equilibrium real output.
The economy is in an inflationary gap when the short-run equilibrium real output is at the long-run equilibrium real output.
The economy is in a recessionary gap when the short-run equilibrium real output is at the long-run equilibrium real output.
The economy is in a recessionary gap when the short-run equilibrium real output is below the long-run equilibrium real output.
The economy is in a recessionary gap when the short-run equilibrium real output is above the long-run equilibrium real output.
The diagram above shows a nation’s short-run aggregate supply curve (SRAS), long-run aggregate supply curve (LRAS), and aggregate demand curve (AD).
Based on the diagram above, which of the following describes the short-run equilibrium?
The economy is operating at full employment.
The economy is operating below full employment.
The economy is operating above full employment.
There will be downward pressure on the price level.
There is a recessionary gap.
Given the graph of the short-run aggregate supply (SRAS) and long-run aggregate supply (LRAS) curves above, which of the following is true?
At point Z, the economy has cyclical unemployment.
At point Z, the economy is in long-run equilibrium but not in short-run equilibrium.
At point Y, the natural rate of unemployment is zero.
At point X, the economy is experiencing a recessionary gap.
At point X, there is no frictional unemployment.
With an upward-sloping short-run aggregate supply curve, an increase in government expenditure will most likely
reduce the price level
reduce the level of nominal gross domestic product
increase real gross domestic product
shift the short-run aggregate supply curve to the right
shift both the aggregate demand curve and the long-run aggregate supply curve to the left
With an increase in the real interest rate, consumption and real gross domestic product will most likely change in which of the following ways?
Consumption - Increase
Real Gross Domestic Product - Increase
Consumption - Increase
Real Gross Domestic Product - Decrease
Consumption - Decrease
Real Gross Domestic Product - Increase
Consumption - Decrease
Real Gross Domestic Product - Decrease
Consumption - No change
Real Gross Domestic Product - Increase
Which of the following would generate cost-push inflation?
An increase in the price of labor
A decrease in the price of energy
An increase in household consumption
A decrease in government spending
An increase in the money supply
Which of the following would be the initial impact on an economy if wages were to increase more than worker productivity?
There would be no initial impact, since neither the aggregate supply curve nor the aggregate demand curve would shift.
Employment would increase, causing a rightward shift in the aggregate demand curve.
The price level would increase, resulting in excess aggregate supply.
The short-run aggregate supply curve would shift to the left, increasing the price level.
The aggregate demand curve would shift to the left, increasing the price level.
Which of the following will most likely occur as a result of an increase in labor productivity in an economy?
An increase in output and a decrease in inflation
An increase in interest rates and a decrease in investment
A decrease in both money demand and money supply
A decrease in exports and an increase in unemployment
A leftward shift in the short-run aggregate supply curve and a decrease in output
