FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Modelling Real Gdp and the Price Level in the Short Run

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Figure 8-1 -According to Figure 8-1,a decrease in aggregate demand between real GDP levels Q₁ and Q₀

A) would most likely result in some inflation.
B) would not increase output since the economy is already working at full capacity.
C) would have no effect on the price level.
D) would cause price levels to fall.

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

In the short run,an increase in the price level induces firms to expand production because

A) prices of inputs are held constant so the higher prices for their product implies that it is profitable to expand production.
B) each firm must keep its production level up to the level of its rivals,and some firms will expand production as the price level increases.
C) the higher prices allow the firm to hire more inputs by offering higher prices to the inputs,which increases productivity and profits.
D) they can increase profits by increasing maintenance costs.

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

The effect of an adverse demand shock is to

OPEC's oil embargo of Canada in the 1970s was an example of

Figure 8-3 -In Figure 8-3,the three curves are:

In the short run,if the price level rises then the overall economy can temporarily produce beyond its nominal capacity.One reason for this is that

Short run changes in the price level can affect real output because

Over the last twenty years,real GDP in the Canadian economy has increased and there has been inflation.This indicates that aggregate demand has ________ more than aggregate supply.

Figure 8-3 -Which point or points on Figure 8-3 illustrate an eventual long-run equilibrium?

Short run changes in the ________ can affect real output because some production costs are relatively fixed.

Figure 8-3 -According to Figure 8-3,what will the price level be in the new long-run equilibrium?

The difference between the equilibrium level of real GDP and how much the economy could be producing if it were operating at full employment on its long-run aggregate supply curve is known as the

As the price level ,the short-run aggregate supply curve becomes increasingly steep.

If the Canadian dollar becomes stronger in international markets,consequences include

An increase in long- run aggregate supply could be caused by

________ takes place when aggregate supply increases.

In the ________,an increase in the price level induces firms to expand production because prices of inputs are held constant so the higher prices for their product implies that it is profitable to expand production.

A long run equilibrium occurs at the intersection of the short-run aggregate supply curve and the

If the Canadian dollar becomes weaker in international markets,the net effects will include

Figure 8-5 -If the aggregate demand curve in Figure 8-5 is D₂,the economy will be experiencing