ECONOMICS E2101 chapter 16 questions with verified answers
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Course
E2101
Institution
University Of Winnipeg (U Of W
)
1. In terms of aggregate supply, the short run is a period in which:
the price level is constant.
employment is constant.
real GDP is constant.
→ nominal wages and other input prices are constant.
Multiple Choice Question
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objec...
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Topic: 16-06 Demand-Pull In
Multiple Choice Questions - (104)
Model - (13)
Topic: 16-07 Cost-Push Infla
True/False Questions - (24)
Model - (17)
Odd Numbered - (64) Topic: 16-08 Recession and t
Even Numbered - (64) Topic: 16-09 Economic Grow
Accessibility: Keyboard Navigation - (82) Topic: 16-10 The Inflation-U
Difficulty: Easy - (61) Topic: 16-11 Short-Run Trad
Difficulty: Hard - (5) Topic: 16-12 Aggregate Supp
Difficulty: Medium - (62) Topic: 16-13 The Long-Run
Learning Objective: 16-01 Explain how the economy arrives at its long-run equilibrium. - (17) Topic: 16-14 The Short-Run
Learning Objective: 16-02 Explain how to apply the long-run AD-AS model to explain inflation; recessions; and Topic: 16-15 Expectation and
growth. - (44) Curve - (5)
Learning Objective: 16-03 Explain the short-run tradeoff between inflation and unemployment (the Phillips
Topic: 16-17 Taxation and A
Curve). - (27)
Learning Objective: 16-04 Discuss why there is no long-run tradeoff between inflation and unemployment. - (22) Topic: 16-20 The Laffer Curv
Learning Objective: 16-05 Explain the relationship between tax rates; tax revenues; and aggregate supply. - (18) Topic: 16-21 Criticisms of th
Topic: 16-01 From the Short Run to the Long Run - (3) Type: Application - (67)
Topic: 16-02 Short-Run Aggregate Supply - (8) Type: Definition - (16)
Topic: 16-03 Long-Run Aggregate Supply - (5) Type: Graphic - (45)
Topic: 16-04 Long-Run Equilibrium in the AD-AS Model - (1)
1. In terms of aggregate supply, the short run is a period in which:
the price level is constant.
employment is constant.
real GDP is constant.
→ nominal wages and other input prices are constant.
Accessib
Learning Objective: 16-01 Explain how the economy arrives
Topic: 16-02 S
Multiple Choice Question
2. The short-run aggregate supply curve is upward-sloping because:
higher prices discourage the producers to expand output.
→ higher price levels create incentives to expand output when resource prices remain
lower prices encourage the producers to expand output.
higher price levels create an expectation among producers of still higher price level
Accessib
Learning Objective: 16-01 Explain how the economy arrives
Topic: 16-02 S
Multiple Choice Question
3. Other things equal, a decrease in the price level will:
shift the short run aggregate supply curve to the left.
shift the aggregate demand curve to the left.
cause a movement up a short-run aggregate supply curve.
→ cause a movement down a short run aggregate supply curve.
,Reference: 16-05
5. Refer to the above diagram. Assume that nominal wages initially are set on the basis of the pric
economy initially is operating at its full-employment level of output Q f. In the short run, an inc
from P2 to P3 will:
change aggregate supply from AS2 to AS3.
increase real output from Q1 to Q2.
change aggregate supply from AS2 to AS1.
→ increase real output from Qf to Q2.
Learning Objective: 16-01 Explain how the economy arrives
Multiple Choice Question Topic: 16-02 S
Reference: 16-05
6. The short run in macroeconomics is a period in which nominal wages:
remain fixed as the price level stays constant.
change as the price level stays constant.
→ remain fixed as the price level changes.
change as the price level changes.
Accessib
Learning Objective: 16-01 Explain how the economy arrives
Topic: 16-02 S
Multiple Choice Question
7. The economy enters the long run once:
nominal wages become real wages.
real wages become nominal wages.
→ input prices start to change from being inflexible to fully flexible.
sufficient time has elapsed for real GDP to increase and unemployment to decrease
Accessib
Learning Objective: 16-01 Explain how the economy arrives
Topic: 16-03 L
, Topic: 16-03 L
Reference: 16-10
10. Refer to the above diagram. Assume that nominal wages initially are set on the basis of the pric
economy initially is operating at its full-employment level of output Qf. In terms of this diagram
supply curve:
is AS2.
→ is a vertical line extending from Qf upward through e, b, and d.
may be either AS1, AS2, or AS3 depending on whether the price level is P1, P2, or P
is a horizontal line extending from P2 rightward through f, b, and g.
Learning Objective: 16-01 Explain how the economy arrives
Multiple Choice Question Topic: 16-02 S
Reference: 16-10
11. The long-run aggregate supply curve:
is downward sloping.
→ is vertical.
is horizontal.
is upward sloping.
Accessib
Learning Objective: 16-01 Explain how the economy arrives
Topic: 16-03 L
Multiple Choice Question
12. If there is sufficient time for wage contracts to expire and nominal wage adjustments to occur, t
economy is operating in the short run.
→ economy has entered the long run.
unemployment rate will increase.
inflation rate will decrease.
Accessib
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