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ECN CH12 EXAM QUESTIONS WITH ALL CORRECT ANSWERS

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ECN CH12 EXAM QUESTIONS WITH ALL CORRECT ANSWERS A change in what that effects our wealth is a movement along AD? - Answer- price level A change in anything (except price level) that effects our wealth is a _______ AD - Answer- shift in Aggregate supply curve - Answer- shows the relationshi...

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  • November 15, 2024
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  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • ecn ch12 exam questions with all correct answers

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ECN CH12 EXAM QUESTIONS WITH
ALL CORRECT ANSWERS

A change in what that effects our wealth is a movement along AD? - Answer- price level

A change in anything (except price level) that effects our wealth is a _______ AD -
Answer- shift in

Aggregate supply curve - Answer- shows the relationship between the aggregate price
level and the quantity of aggregate output in the economy.

Why does the SRAS (short run agg supply) curve slope upward? - Answer- Because
nominal wages are sticky in the short run

Nominal wage: - Answer- the dollar amount of the wage paid.

Sticky wages - Answer- nominal wages that are slow to fall even in the face of high
unemployment and slow to rise even in the face of labor shortages.

A higher aggregate price level leads to ________ profits and ________ aggregate
output in the short run.

- lower; increased
- higher; increased
- higher; decreased
- lower; decreased - Answer- higher; increased

The SRAS curve shifts because of changes in: - Answer- Commodity prices.
Nominal wages.
Productivity.

Leftward Shift in SRAS: ________ in short- run agg supply - Answer- Decrease in short-
run aggregate supply

Rightward Shift in SRAS: _______ in short run agg supply - Answer- increase

3 reason why the SRAS curve would shift right- what does it do to producers' profits? -
Answer- decrease in commodity prices.
decrease in nominal wages.
increase in productivity

, increases profits

3 reasons why the SRAS curve would shift left- what does it do to producers' profits? -
Answer- increase in commodity prices.
increase in nominal wages.
decline in productivity.

reduces profits

long-run aggregate supply curve - Answer- shows the relationship between the
aggregate price level and the quantity of aggregate output supplied that would exist if all
prices, including nominal wages, were fully flexible.

The long run - Answer- the time it takes for all prices (including nominal wages) to
adjust.

there is no change to profits SIMPLY BECAUSE PRICES HAVE CHANGED

T or F? - Answer- T

Potential output - Answer- the level of real GDP the economy would produce if all
prices, including nominal wages, were fully flexible.

The level of real GDP is almost always either above potential output because of short-
run fluctuations.

T or F - Answer- above OR BELOW

low unemployment will cause nominal wages to ______, and SRAS will shift _____

- rise; left
- fall; left
- fall; right
- rise; right - Answer- rise; left

high unemployment will cause nominal wages to ________, and SRAS will shift
_______.

- rise; left
- fall; left
- fall; right
- rise; right - Answer- fall; right

Theory of sticky wages - Answer- wages fail to fall even during periods of high
unemployment

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