Chapter 11

Question 0

Changes that cause a decrease in aggregate supply:

Answer 0

Depletion of raw materials
Decreased competition
Increase in international trade a barriers
More regulatory impediments to business
Decrease in labor supply
Decreased training and education
Increase in marginal taxes
Increase in input prices

Question 1

Changes that cause an increase in aggregate supply

Answer 1

Discoveries of née raw materials
Increased competition
Reduction trade barriers
Fewer regulatory impediments to business
Increase in supply of labor
Increased training and education
Decrease marginal tax rates
Reduction input prices

Question 2

If we assume that the economy is operating on a horizontal short-run aggregate supply curve, the equilibrium level of real GDP per year is completely ——- determined.

Answer 2

Demand

Question 3

The horizontal short-run aggregate supply curve has been called the Keynesian shirt-run supply curve because Keyes believed that many prices, especially wages, would not be ——– even when aggregate demand xdecreased.

Answer 3

Reduced

Question 4

In modern Keynesian theory, the short run aggregate supply curve, SRAS shows the relationship between the price level and real GDP without full adjustment or full information . It is upward sloping because it allows for only ——— price adjustment in the short run.

Answer 4

Partial

Question 5

Real GDP can be expanded in the short run because firms can use existing workers and capital equipment more ——–. Also, in the short run when input prices are fixed, a higher price level means —— profits, which induce firms to hire more workers.

Answer 5

Intensively, higher

Question 6

Any change in factors influencing long run output, such as labor, capital, or technology, will shift both SRAS and LRAS. A temporary change in input prices, however will shift only——–.

Answer 6

SRAS