1. Stagflation is a combination of: (Points : 1) increasing unemployment and inc
ID: 1177150 • Letter: 1
Question
1. Stagflation is a combination of: (Points : 1)
increasing unemployment and increasing inflation.
decreasing unemployment and decreasing inflation.
increasing unemployment and decreasing inflation.
decreasing unemployment and increasing inflation.
2. If nominal wages fall, then short-run aggregate: (Points : 1)
supply shifts to the right.
supply shifts to the left.
demand shifts to the right.
demand shifts to the left.
3. According to the long-run aggregate supply curve, when _________, the quantity of aggregate output supplied _________. (Points : 1)
nominal wages rise; falls
the aggregate price level rises; does not change
the aggregate price level; rises
the price of commodities falls; rises
4. The short-run aggregate supply curve is positively sloped because: (Points : 1)
wages and other costs of production respond immediately to changes in prices.
profit is lower when prices increase, so output decreases.
workers are willing to work for lower wages rather than be laid off.
higher prices lead to higher profit and higher output.
5. The aggregate demand curve would shift to the left for all the following reasons EXCEPT: (Points : 1)
a fall in consumers' wealth.
a decrease in the amount of money in circulation.
more pessimistic consumer expectations.
lower labor productivity.
6. The aggregate demand curve is negatively sloped due to: (Points : 1)
the substitution effect of an aggregate price level change.
the wealth effect of an aggregate price level change.
the elasticity effect of an aggregate price level change.
all of the above.
7. Suppose that the stock market crashes. Which of the following is most likely to occur? (Points : 1)
the aggregate demand curve shifts to the right
the aggregate demand curve shifts to the left
a movement up the aggregate demand curve
a movement down the aggregate demand curve
8. The marginal propensity to consume is equal to: (Points : 1)
the proportion of consumer spending as a function of aggregate disposable income.
the change in saving divided by the change in aggregate disposable income.
the change in consumer spending divided by the change in aggregate disposable income.
the change in saving divided by the change in consumer spending.
9. An inflationary gap created by a demand shock can be addressed by _________ to _________. (Points : 1)
raising government spending; lower the unemployment rate
raising taxes; lower the unemployment rate
lowering government spending; lower the aggregate price level
lowering taxes; lower the aggregate price level
10. In response to a negative supply shock, the government decreases taxes. The most likely result of the government's tax decrease is: (Points : 1)
a decrease in unemployment and an increase in the aggregate price level.
a decrease in unemployment and a decrease in the aggregate price level.
an increase in unemployment and an increase in the aggregate price level.
an increase in unemployment and a decrease in the aggregate price level.
Explanation / Answer
1) increasing unemployment and increasing inflation.
2) supply shifts to the left.
3) the aggregate price level rises; does not change
4) higher prices lead to higher profit and higher output.
5) lower labor productivity.
6) the wealth effect of an aggregate price level change.
7) the aggregate demand curve shifts to the left
8) the change in consumer spending divided by the change in aggregate disposable income.
9) raising taxes; lower the unemployment rate
10) a decrease in unemployment and a decrease in the aggregate price level.
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