Practice Quiz 9

Question 1

The basic aggregate supply equation implies that output exceeds natural output when the price level is

Answer 1

greater than the expected price level

Question 2

according to the sticky price model, other things being equal, the greater the proportion, s, of firms that follow the sticky price rule, the ____ the ____ in output in response to an unexpected price increase

Answer 2

greater; increase

Question 3

the imperfect information model bases the difference in the short run and long run aggregate supply curve on

Answer 3

temporary misperceptions about prices

Question 4

according to the imperfect-information model, when the price level rises by the amount the producer expected it to rise, the producer

Answer 4

does not change production

Question 5

according to the imperfect-information model, in countries in which there is a great deal of variability of prices

Answer 5

the response of output to unexpected changes in prices will be relatively small

Question 6

Using the sticky price model, the higher the average rate of inflation, the more frequently firms must adjust their prices, which implies that a high rate of inflation

Answer 6

makes the short run AS curve steeper

Question 7

the short run AS curve is drawn for a given

Answer 7

expected price level

Question 8

along an AS curve, if the level of output is less than the natural level of output, then the price level is

Answer 8

less than the expected price level

Question 9

which of the following will shift the AS curve up to the left

Answer 9

an increase in the expected price level

Question 10

the relationship between short run AS curves and phillips curves is that there

Answer 10

is exactly one phillips curve corresponding to each short run AS curve

Question 11

according to the phillips curve, other things being equal, inflation depends positively on

Answer 11

expected inflation

Question 12

all of the following are ways that the modern phillips curve differs from the relationship observed by A.W. Phillips in 1958 expect that the modern phillips curve

Answer 12

substitutes the output gap for unemployment

Question 13

the NAIRU is the

Answer 13

non accelerating inflation rate of unemployment

Question 14

when adaptive expectations are used to model inflation expectations in the phillips curve, then the natural rate of unemployment is called the ____ rate of unenployment

Answer 14

non accelerating inflation