Question 1

The last few years of the 1990s in the United States were characterized by:

Accepted Answer

A)   low inflation and high unemployment.
B)   stagflation.
C)   low inflation and low unemployment.
D)   a high misery index.E) B) and C)
F) A) and D)

Question 2

Inflation in the U.S.economy tends to be:

Accepted Answer

A)   a finite,one-time event resulting from a shock.
B)   ongoing,as increases in aggregate demand generally exceed the increases in aggregate supply.
C)   a finite,one-time event as the Fed actively works to eliminate all inflation.
D)   ongoing,as aggregate supply is continually shifting to the left.E) A) and B)
F) A) and C)

Question 3

In the last half of the 1990s,the usual short-run trade-off between inflation and unemployment did not arise because:

Accepted Answer

A)   the Fed held interest rates constant.
B)   the federal government balanced its budget.
C)   the U.S.personal savings rate rose.
D)   productivity (and thus aggregate supply) grew faster than previously.E) B) and D)
F) A) and D)

Question 4

(Consider This) Economist Arthur Laffer equated Robin Hood to:

Accepted Answer

A)   government and equated the people passing through Sherwood Forest to taxpayers.
B)   charitable organizations and equated the people passing through Sherwood Forest to poor people.
C)   businesses and equated the people passing through Sherwood Forest to consumers.
D)   government and equated the people passing through Sherwood Forest to importers of goods and services.E) A) and B)
F) A) and C)

Question 5

According to the research of Christina Romer and David Romer:

Accepted Answer

A)   a tax reduction of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent.
B)   a tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent.
C)   a tax reduction of 2 to 3 percent raises real GDP by roughly 1 percent.
D)   a tax increase of 2 to 3 percent lowers real GDP by roughly 1 percent.E) B) and C)
F) A) and B)

Question 6

Suppose the full employment level of real output (Q) for a hypothetical economy is $500,the price level (P) initially is 100,and prices and wages are flexible both upward and downward.Use the following short-run aggregate supply schedules to answer the question.  Refer to the information given.In the long run,a fall in the price level from 100 to 75 will:

Accepted Answer

A)   decrease real output from $500 to $440.
B)   increase real output from $500 to $620.
C)   change the aggregate supply schedule from (a) to (c) and produce an equilibrium level of real output of $500.
D)   change the aggregate supply schedule from (a) to (b) and produce an equilibrium level of real output of $500.E) A) and D)
F) None of the above

Question 7

If government uses its stabilization policies to maintain full employment under conditions of cost-push inflation:

Accepted Answer

A)   a deflationary spiral is likely to occur.
B)   an inflationary spiral is likely to occur.
C)   stagflation is likely to occur.
D)   the Phillips Curve is likely to shift inward.E) A) and B)
F) None of the above

Question 8

Answer the question on the basis of the following economic data for a hypothetical economy: $\begin{array}{c}
\begin{array}{c}
\
\
\
\text { Year } \
\hline 1997 \
1998 \
1999 \
2000
\end{array}
\begin{array}{c}
\text {Average}\
\text {Hourly}\
\text {Wage}\
\underline{\text {Rates}}\
\$ 6.40 \
6.72\
7.24\
8.02
\end{array}
\begin{array}{c}
\
\text {Index of}\
\text { Industrial}\
\underline{\text {Production}}\
197\
199\
196\
192
\end{array}

\begin{array}{c}
\
\
\text {Unemployment}\
\underline{\text {Rate}}\
 5.5 \% \
5.8\
7.2\
8.3
\end{array}

\begin{array}{c}
\
\text {Price}\
\text {Level}\
\underline{\text {Index}}\
130\
133\
139\
147
\end{array}

\begin{array}{c}
\
\text {Rate of}\
\text { Increase in}\
\underline{\text {Productivity}}\
3.0 \% \
2.9\
3.1\
2.8
\end{array}

\end{array}$
 Refer to the given data.This economy has encountered stagflation.

Accepted Answer

A) True 
 B)False

Question 9

The short-run aggregate supply curve is upsloping because higher price levels:

Accepted Answer

A)   lower interest rates and encourage firms to invest and produce more.
B)   create incentives to expand output when resource prices are unresponsive to price-level changes.
C)   encourage importation of foreign goods.
D)   create an expectation among producers of still higher price levels.E) C) and D)
F) A) and B)

Question 10

The Laffer Curve is a central concept in:

Accepted Answer

A)   monetarism.
B)   Keynesianism.
C)   welfare economics.
D)   supply-side economics.E) A) and D)
F) All of the above

Question 11

In the long run:

Accepted Answer

A)   attempts to "fine-tune" the economy cause the rate of unemployment to accelerate.
B)   there is no inflation-unemployment trade-off.
C)   there is an inflation-unemployment trade-off and the terms of that trade-off have worsened in recent years.
D)   there is an inflation-unemployment trade-off,but the terms of that trade-off have improved in recent years.E) A) and B)
F) A) and C)

Exam 37: Extending the Analysis of Aggregate Supply

Correct Answer
verified

(Consider This) Economist Arthur Laffer equated Robin Hood to:

Correct Answer
verified

Correct Answer
verified

If government uses its stabilization policies to maintain full employment under conditions of cost-push inflation:

Correct Answer
verified

Inflation in the U.S.economy tends to be:

Correct Answer
verified

In the last half of the 1990s,the usual short-run trade-off between inflation and unemployment did not arise because:

Correct Answer
verified

The short-run aggregate supply curve is upsloping because higher price levels:

Correct Answer
verified

According to the research of Christina Romer and David Romer:

Correct Answer
verified

The last few years of the 1990s in the United States were characterized by:

Correct Answer
verified

In the long run:

Correct Answer
verified

The Laffer Curve is a central concept in:

Correct Answer
verified

Exam 37: Extending the Analysis of Aggregate Supply

Correct AnswerverifiedShow Answer

(Consider This) Economist Arthur Laffer equated Robin Hood to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If government uses its stabilization policies to maintain full employment under conditions of cost-push inflation:

Correct AnswerverifiedShow Answer

Inflation in the U.S.economy tends to be:

Correct AnswerverifiedShow Answer

In the last half of the 1990s,the usual short-run trade-off between inflation and unemployment did not arise because:

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve is upsloping because higher price levels:

Correct AnswerverifiedShow Answer

According to the research of Christina Romer and David Romer:

Correct AnswerverifiedShow Answer

The last few years of the 1990s in the United States were characterized by:

Correct AnswerverifiedShow Answer

In the long run:

Correct AnswerverifiedShow Answer

The Laffer Curve is a central concept in:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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