10/14/23, 10:35 AM Self-Quiz Unit 6 - Chapter 22: Attempt review

Started on Saturday, 14 October 2023, 3:13 AM

State Finished
Completed on Saturday, 14 October 2023, 3:22 AM
Time taken 8 mins 45 secs
Grade 10.00 out of 10.00 (100%)

Question 1
Correct
Mark 1.00 out of 1.00

Potential output is:

Select one:
a. the level of real GDP that exists when the economy is experiencing only cyclical and structural unemployment.
b. the level of real GDP that exists when the quantity of labor supplied is equal to the quantity of labor demanded. 
c. the level of real GDP that exists when the actual rate of unemployment is zero.
d. the level of real GDP that exists when the economy is experiencing only frictional and cyclical unemployment.

The correct answer is: the level of real GDP that exists when the quantity of labor supplied is equal to the quantity of labor demanded.

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10/14/23, 10:35 AM Self-Quiz Unit 6 - Chapter 22: Attempt review

Question 2
Correct
Mark 1.00 out of 1.00

In this exhibit (Figure 7-2), changes in aggregate demand from AD1 to either AD2 or AD3:

Select one:
a. will change nominal GDP but will not change real GDP in the long run. 
b. will change real GDP but will not change nominal GDP in the long run.
c. will change the potential level of real GDP.
d. will change the price level and real GDP.

The correct answer is: will change nominal GDP but will not change real GDP in the long run.

Question 3
Correct
Mark 1.00 out of 1.00

Which of the following is a source of wage stickiness?

I. fixed wage contracts
II. minimum wage laws
III. workers and firms want to avoid complexity of negotiating contracts frequently

Select one:
a. I only
b. I and II only
c. I and III only
d. I, II, and III 

The correct answer is: I, II, and III

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10/14/23, 10:35 AM Self-Quiz Unit 6 - Chapter 22: Attempt review

Question 4
Correct
Mark 1.00 out of 1.00

All the following explain price stickiness except:

Select one:
a. firms choose not to adjust prices until they can assess if changes in sales are temporary or permanent.
b. the more firms produce, the lower the average cost of production. Therefore, firms are willing not raise prices as long as 
they can sell more.
c. firms may be concerned that consumers may be angered by price increases.
d. firms may be concerned that their rivals may not match their price increases.

The correct answer is: the more firms produce, the lower the average cost of production. Therefore, firms are willing not raise prices as
long as they can sell more.

Question 5
Correct
Mark 1.00 out of 1.00

Which of the following is an explanation for price stickiness?

I. There are adjustment costs associated with changing prices such as the cost of printing new price lists.
II. Worker unions may forbid firms from raising prices for fear that workers may be laid off if demand for output falls.
III. Firms may have explicit long-term contracts to sell their products to other firms at specified prices.

Select one:
a. I only
b. I and II only
c. I and III only
d. I, II, and III 

The correct answer is: I, II, and III

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10/14/23, 10:35 AM Self-Quiz Unit 6 - Chapter 22: Attempt review

Question 6
Correct
Mark 1.00 out of 1.00

Using the aggregate demand-aggregate supply model, predict what happens in the short run when the federal government enacts a cut
in the personal income tax rates.

Select one:
a. The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases.
b. The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases.
c. The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. 
d. The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease.

The correct answer is: The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP
increase.

Question 7
Correct
Mark 1.00 out of 1.00

In the short-run, an output gap occurs because:

Select one:
a. there is insufficient demand for goods and services.
b. there is insufficient supply of goods and services.
c. wages and prices are fully flexible.
d. wages and some prices have not adjusted sufficiently to maintain output at its potential level. 

The correct answer is: wages and some prices have not adjusted sufficiently to maintain output at its potential level.

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10/14/23, 10:35 AM Self-Quiz Unit 6 - Chapter 22: Attempt review

Question 8
Correct
Mark 1.00 out of 1.00

In this exhibit (Figure 7-7), at output level YK:

Select one:
a. potential output is less than actual output.
b. there is a surplus of real GDP.
c. the unemployment rate exceeds the natural rate of unemployment. 
d. over time aggregate demand will rise to restore long-run equilibrium.

The correct answer is: the unemployment rate exceeds the natural rate of unemployment.

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10/14/23, 10:35 AM Self-Quiz Unit 6 - Chapter 22: Attempt review

Question 9
Correct
Mark 1.00 out of 1.00

In this exhibit (Figure 7-3), suppose that the economy is in long-run equilibrium at point A. Now suppose the stock market crashes,
significantly reducing household wealth. In the short-run:

Select one:
a. the nominal wage rate falls.
b. unemployment is above its natural level. 
c. there will be pressure on prices to rise.
d. the short-run aggregate supply curve shifts to the left as firms cut production.

The correct answer is: unemployment is above its natural level.

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10/14/23, 10:35 AM Self-Quiz Unit 6 - Chapter 22: Attempt review

Question 10
Correct
Mark 1.00 out of 1.00

In this exhibit (Figure 7-7), suppose the economy is initially at K. Which of the following statements best explains how the economy
responds to restore long-run macroeconomic equilibrium?

Select one:
a. Over time, the aggregate demand curve will shift to the right until long-run equilibrium is restored at J and the gap is closed.
b. Rising unemployment puts pressure on nominal wages to fall. The SRAS curve shifts right to SRAS1 closing the gap at H. 
c. In response to rising prices, firms will increase production moving along SRAS2 until long-run equilibrium is restored at J and the
gap is closed.
d. Rising unemployment puts pressure on nominal wages to fall. Firms employ more workers moving along SRAS2 until long-run
equilibrium is restored at J and the gap is closed.

The correct answer is: Rising unemployment puts pressure on nominal wages to fall. The SRAS curve shifts right to SRAS1 closing the gap
at H.

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