Week 3 Reading Quiz Chs. 9 & 11

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

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

A  Upward sloping at the potential GDP level

B  Above the short run aggregate supply curve

C  Downward sloping like the aggregate demand curve

D  Vertical at the potential GDP level

A  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.

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

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

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

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

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

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

D  Consumers are more confident and spending more than before.

A  A decline in investors confidence causes investment to fall.

B  A rise in imports from Europe

C  The congress passes a new income tax cut.

D  Technology improvements lead to productivity gains

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

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

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

D  Identifies the equilibrium quantity and price for consumer goods

A  A general decrease in labor cost for businesses.

B  An increase in productivity.

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

D  A federal government increase in spending.

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

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

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

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

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

B  The total spending in the economy will fall.

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

D  The total spending in the economy will rise.

A  The GDP price index

B  The Producer Price Index

C  The International Pricing Index

D  The Consumer Price Index

A  It helped creditors

B  It helped debtors

C  None because everybody is hurt by inflation

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

A  -6.5%

B  6.5%

C  6.1%

D  10%

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

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

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

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