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...
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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