short run is a period in which nominal wages

remain fixed as the price level increase

economy is at E1 and moves to E2; AD2 intersects SRAS1- then Shifts to SRAS2 because

nominal wages rise in the long run

diagram describes the notion that as tax:

rates inc tax revenue inc to some max level & then dec to 0

economy enters the long-run once:

time elapse for wage contracts to expire, nom. wage changes

a major argument for economic growth is that it:

leads to a higher standard of living

In the short run, nominal wages are assumed to be:

fixed, but in long run assumed to be flexible

in the extended AD-AS model, demand pull inflation occurs because of:

inc in nominal wages, resulting in an inc in the SRAS curve

which is the best explanation for upward sloping SRAS curve?

wages & prices of some goods are sticky in the short run

if tax rates are b/w B & D, supply side says that:

dec in tax rates will inc tax revenues

the traditional Phillips curve is based on constant SRAS, a greater inc in Agg demand is:

greater inc in the rate of inflation

if there is sufficient time for wage contracts to expire and nominal wage to change, then the:

economy has entered the long-run

rightward shift of the PC suggests that:

higher rate of unemployment with each inflation rate

inverse relationship b/w unemployment and inflation

which is a basic proposition of supply-side economics?

tax increase on business reduce productivity and output

traditional Phillips curve is based on the idea that a constant SRAS, greater inc in AD will:

greater inc in the rate of inflation

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Macro:Modern Economics and Phillips Curve

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unit v review

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Questions 33

Answers

1
short run is a period in which nominal wages
change as the price level stays constant
inc as real wages inc
change as the price level increase
remain fixed as the price level increase
2
which event contributed to stagflation in the 1970s?
worldwide agricultural surpluses
rise in the price of oil
improvement in productivity
appreciation in the dollar
3
economy is at E1 and moves to E2; AD2 intersects SRAS1- then Shifts to SRAS2 because
agg real output rises in the long run
nominal wages rise in the long run
real wages rise in the long run
real money supply rise in the long run
4
SRPC intersects LRPC at the
natural rate of unemployment
real interest rate
current rate of inflation
nominal rate of interest
5
which is not a supply factor of economic growth?
natural resources
an efficient allocation of resources
the quantity and quality of labor
change in rGDP per capita
6
If PPC is at AB but the economy is at point 4, why?
demand and efficiency factors
technological progress
labor inputs and labor productivity
supply and environmental factors
7
diagram describes the notion that as tax:
rate dec 100 to 0, tax revenue will dec from 100 to a max
rates inc tax revenue inc to some max level & then dec to 0
as tax revenues inc, tax rates inc to a max level then dec
rate inc 0 to 100, tax revenue will inc from 0 to a max
8
economy is at Equ. A,if there is demand pull inflation, AD1 shifts to AD2, longrun price will:
P2 and rGDP will be Q3
P1 and rGDP will be Q1
P3 and rGDP will be Q1
P2 and rGDP will be Q2
9
The long-run agg supply curve is assumed to be:
upsloping
vertical
downsloping
horizontal
10
SRPC has shifted right, the __ curve has shifted to the ___
SRAS; left
SRAS; right
AD; left
AD; right
11
the economy is at eq. where AD1/AS1 curves intersect, demand pull inflation in SR is a shift:
AS1 to AS2
AD2 to AD1
AD1 to AD2
AS1 to AS3
12
economy is at E1 where AD1 intersects SRAS1 & LRAS; AD1 moves to AD2. Shift due to:
an increase in money supply
a decrease in gov't expenditure
an increase in tax rates
an increase in the aggregate price level
13
NRU ___, nonaccelerating inflation rate of unemployment will _____, LRPC shifts to the left
rises; rises
rises; falls
falls; falls
falls; rises
14
demand-pull inflation in short run inc the price level and
real output
nominal wages
unemployment
real wages
15
demand pull inflation is the short run increases the price level and ____
unemployment
real output
real wages
nominal wages
16
economy enters the long-run once:
time elapse for wage contracts to expire, nom. wage changes
real wages become nominal wages
nominal wages become real wages
time has elapsed for real GDP to inc & unemployment to dec
17
a major argument for economic growth is that it:
leads to a higher standard of living
creates an equal distribution of income
protects common property resources
reduces the amount of taxation
18
the change from Q1 to Q2 represents a shift in the:
level of prices
agg demand curve
long-run agg supply curve
short-run agg supply curve
19
In the short run, nominal wages are assumed to be:
fixed, but in long run assumed to be flexible
fixed and in the long run assumed to be fixed
flexible but in long run assumed to be fixed
flexible and in the long run assumed to be flexible
20
an anti growth view would be that there may be a significant trade-off b/w productivity and ___
economies of scale
employment
the quality of life
education
21
in the extended AD-AS model, demand pull inflation occurs because of:
an inc in nominal wages, resulting in a dec in SRAS curve
dec in nominal wages, resulting in a dec in the SRAS curve
inc in nominal wages, resulting in an inc in the SRAS curve
inc in AD, resulting in a dec in SRAS curve
22
which is the best explanation for upward sloping SRAS curve?
wages & prices of some goods are sticky in the short run
wages & prices of some goods are sticky in the long run
wages are perfectly flexible
prices are perfectly flexible
23
stagflation can be described as a:
shift right in agg supply curve
period of stable prices and high unemployment
period of rising prices and low unemployment
shift left in agg supply curve
24
if tax rates are b/w B & D, supply side says that:
dec in tax rates will inc tax revenues
inc in tax revenue will inc tax rates
in in tax rates will inc tax revenue
dec in tax revenue will dec tax rates
25
a supply shock:
shifts the SRPC curve
shifts AS but not PC
moves us along SRPC
moves our economy along the SRAS curve
26
the traditional Phillips curve is based on constant SRAS, a greater inc in Agg demand is:
smaller inc in price level
smaller inc in nominal wages
greater inc in unemployment
greater inc in the rate of inflation
27
if there is sufficient time for wage contracts to expire and nominal wage to change, then the:
inflation rate will decrease
unemployment rate will increase
economy is operating in the short-run
economy has entered the long-run
28
rightward shift of the PC suggests that:
agg supply curve shifted to the right
lower rate of employment with each inflation rate
higher rate of unemployment with each inflation rate
agg demand curve shifted left
29
SRPC shows
optimal level of employment
inverse relationship b/w unemployment and inflation
direct relation b/w unemployment and inflation
consequences of the misperceptions theory
30
what depicts a trade off b/w unemployment and inflation
Friedman curve
Keynes's Law
Phillips curve
multiplier
31
which factor has accounted for the largest inc in productivity of labor in the US since 1929?
education and training of workers
quantity of capital
technological advances
economies of scale
32
which is a basic proposition of supply-side economics?
tax increase on business reduce productivity and output
low tax rates dec incentives to work, save, investment
transfer payments increase incentives to work
Federal Reserve should target FFR rather than money supply
33
traditional Phillips curve is based on the idea that a constant SRAS, greater inc in AD will:
smaller increase in nominal wage rates
smaller inc in price level
greater inc in the rate of inflation
greater inc in unemployment rate

Macro:Modern Economics and Phillips Curve Flashcards | StudBud