1/ The sticky-price theory of the short-run aggregate supply curve says that whe
ID: 1153347 • Letter: 1
Question
1/ The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have
higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied
higher than desired prices, which leads to a decrease in the aggregate quantity of goods and service supplied.
lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
2/ “Money is a veil” best describes the
economy in the short run but not the long run.
Keynesian view.
new-Keynesian view.
classical view.
3/ Which of the following rises during recessions?
consumer spending but not layoffs
layoffs but not consumer spending
neither layoffs nor consumer spending
layoffs and consumer spending
4/As the price level rises
people will want to buy fewer bonds, so the interest rate rises.
people will want to buy fewer bonds, so the interest rate falls.
people will want to buy more bonds, so the interest rate falls.
people will want to buy more bonds, so the interest rate rises.
5/ Keynes believed that economies experiencing high unemployment should adopt policies to
increase aggregate demand.
reduce government expenditures.
reduce the money supply.
increase aggregate supply.
6/ Which of the following shifts short-run aggregate supply right?
an increase in the minimum wage
an increase in immigration from abroad
an increase in the price of oil
an increase in the actual price level
7/ Which of the following shifts short-run aggregate supply left?
an increase in the actual price level
an increase in the capital stock
None of the above is correct.
an increase in the expected price level
8/ During recessions declines in investment account for about
1/3 of the decline in real GDP.
2/3 of the decline in real GDP.
1/7 of the decline in real GDP.
1/6 of the decline in real GDP.
9/ Other things the same, an increase in the price level causes the interest rate to
a. increase, the dollar to depreciate, and net exports to increase.
b. increase, the dollar to appreciate, and net exports to decrease.
c. decrease, the dollar to depreciate, and net exports to increase.
d. decrease, the dollar to appreciate, and net exports to decrease
higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied
Explanation / Answer
1. lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
In order to adjust there is a slow response to changing economic conditions by the prices of some goods and services
Some firms are left with higher-than-desired prices due to an unanticipated fall in the price level, which depresses sales and thus firms reduce the quantity of goods and services they produce. But when the price level is higher than expected, some firms will have lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
2. classical view
According to classical view money simply acts as a veil which hides real things—goods and services
3. layoffs but not consumer spending
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