1. A change in _____ does not shift the demand curve.
Answer
Correct Answer:
Opportunity costs
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2. The real wage rate definitely falls if the money wage rate ________ and the price level ________.
Answer
Correct Answer:
Remains constant; rises
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3. Consumers are ____________ to changes in the price of used clothing.
Answer
Correct Answer:
Very elastic.
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4. An increase in aggregate demand results in a(n) ________ in the ________.
Answer
Correct Answer:
Expansion; short run
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5. In the Keynesian model the short-run aggregate supply curve is horizontal over the range of output where ______.
Answer
Correct Answer:
Actual real GDP is below potential GDP and firms are operating with excess capacity
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6. When graphically representing aggregate supply (AS), the classical model relies solely on the ______ AS curve.
Answer
Correct Answer:
Vertical long-run
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7. The long-run aggregate supply curve for the United States ______ over time.
Answer
Correct Answer:
Shifts rightward
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8. Only a short-run equilibrium that is ______ is also a long-run equilibrium.
Answer
Correct Answer:
At potential output
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9. What are the effects on the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve when costs of production fall and potential real output expands?
Answer
Correct Answer:
Both curves shift rightward.
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10. The long-run aggregate supply curve can be shifted to the left by ______.
Answer
Correct Answer:
Overregulation
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11. Both the long-run aggregate supply curve and the short-run aggregate supply curve can shift rightward due to ______.
Answer
Correct Answer:
Increases in factors of production
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12. How does an increase in the price level affect the short-run aggregate supply curve?
Answer
Correct Answer:
There is a rightward movement along the curve.
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13. The total quantity of final goods and services suppliers are willing and able to supply at a given price level is shown on a(n) ______ curve.
Answer
Correct Answer:
Aggregate supply
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14. An increase in population will ______.
Answer
Correct Answer:
Increase aggregate demand
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15. Anything that changes the amount of total spending in the economy (holding ______ constant) will shift the ______ curve.
Answer
Correct Answer:
Price levels; aggregate demand
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16. When the price level in the United States falls relative to the price level in other countries, ceteris paribus, what does the foreign demand effect say will happen?
Answer
Correct Answer:
U.S. exports will increase and U.S. imports will decrease.
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17. The total amount of real goods and services produced in the United States that foreigners and American households, firms, and government entities want to purchase is shown in a(n) ______ curve.
Answer
Correct Answer:
Aggregate demand
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18. Household spending contributes to which components of aggregate demand?
Answer
Correct Answer:
Consumption and imports
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19. Models that include international trade effects are called ______ models.
Answer
Correct Answer:
Open economy
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20. Wage and price inflexibility is the tendency for prices and wages to only adjust ____downward to changes in the economy
Answer
Correct Answer:
Slowly
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21. Unexpected temporary events that can either increase or decrease aggregate supply is called
Answer
Correct Answer:
Supply shocks
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22. A situation in which lower growth and higher prices occur together is called
Answer
Correct Answer:
Stagflation
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23. Short run aggregate supply curve is the graphical relationship between RGDP and the price level when output prices can change but input prices are unable to adjust
Answer
Correct Answer:
True
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24. The output gap that occurs when the actual output is ___ than the potential output is recessionary gap
Answer
Correct Answer:
Less
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25. A type of model that includes international trade effects is ___ economy
Answer
Correct Answer:
Open
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26. The difference between the value of exports and the value of imports is called
Answer
Correct Answer:
Net exports
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27. Long run aggregate supply curve is the graphical relationship between RGDP and the price level when output prices and input prices can fully adjust to economic changes
Answer
Correct Answer:
True
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28. The ____ gap that occurs when the actual output is greater than the potential output is called inflationary gap
Answer
Correct Answer:
Output
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29. Demand pull inflation is price-level increase due to an ___ in aggregate demand
Answer
Correct Answer:
Increase
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30. Cost push inflation is price-level ____ due to a negative supply shock
Answer
Correct Answer:
Negative
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31. The total quantity of final goods and services suppliers are willing and able to supply at a given price level is called
Answer
Correct Answer:
Aggregate supply curve
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32. Aggregate demand graph that shows the ____ relationship between the price level and RGDP demanded
Answer
Correct Answer:
Inverse
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33. The total demand for all the final goods and services in the economy is called
Answer
Correct Answer:
Aggregate demand
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