Week 3 Reading Quiz Chs. 9 & 11

A  The aggregate supply curve represents the relationship between the price level and the total output or real GDP in the macroeconomy.

B  The aggregate supply curve represents the relationship between the inflation rate and the total output or real GDP in the macroeconomy.

C  The aggregate supply curve represents the relationship between the inflation rate and the total demand or real GDP in the macroeconomy.

D  The aggregate supply curve represents the relationship between the price level and the potential output or GDP in the macroeconomy.

A  Vertical at the potential GDP level

B  Above the short run aggregate supply curve

C  Downward sloping like the aggregate demand curve

D  Upward sloping at the potential GDP level

A  The total supply of products determines the level of gross domestic product and the level of demand in the economy in the long run.

B  The total demand for products determine the level of gross domestic product and may not equal the supply capacity of the economy in the short run.

C  The total demand tends to rise above the total supply capacity in the short run which leads to recessions

D  The total demand always equals the total supply capacity in the short run.

A  Consumers are more confident and spending more than before.

B  The government has reduced its spending by more than 10% over the last 2 years

C  Throughout the economy, workers are using better equipment and output per hour is rising.

D  Energy prices such as gas and electricity have increased rapidly throughout the country.

A  A decline in investors confidence causes investment to fall.

B  The congress passes a new income tax cut.

C  A rise in imports from Europe

D  Technology improvements lead to productivity gains

A  Identifies the equilibrium GDP and price level as well as the gap between the equilibrium GDP and the potential GDP

B  Identifies the equilibrium quantity and price for consumer goods

C  Identifies the equilibrium GDP the economy will reach in the long run

D  Identifies the potential GDP and price level as well as the gap between the price level and the inflation

A  A general decrease in labor cost for businesses.

B  A federal government increase in spending.

C  An increase in productivity.

D  A general increase in energy and labor cost for businesses.

A  In the short run, the production and sales of a $10 product generates $10 income for someone and $10 of demand.

B  In the long run, the demand for a $10 product generates the supply of a $10 product.

C  In the long run, the production and sales of a $10 product generates $10 of income for someone and $10 of demand.

D  In the short run, the demand for a $10 product generates the supply of a $10 product.

A  The total spending in the economy will fall.

B  The aggregate demand will fall and shift to the left.

C  The aggregate supply will fall and shift to the left.

D  The total spending in the economy will rise.

A  The Consumer Price Index

B  The International Pricing Index

C  The GDP price index

D  The Producer Price Index

A  It helped debtors

B  None because everybody is hurt by inflation

C  It helped creditors

D  Helped those people on fixed incomes

A  Less money would be needed to buy the same amount of goods, implying that the value of money increases

B  More money would be needed to buy the same amount of goods, implying that the value of money drops

C  More money would be needed to buy the same amount of goods, implying that the value of money increases

D  Less money would be needed to buy the same amount of goods, implying that the value of money drops

A  6.1%

B  6.5%

C  10%

D  -6.5%

A  Measures the change in all prices of final products in the macroeconomy

B  Measures the change in all inputs of production in the macroeconomy

C  Measures the change in the cost of living for a typical US household

D  Measures the change in energy and food prices in the macroeconomy