revision questions chapter 26 pt2

Question 1

The short-run aggregate supply curve shifts because of changes in all of the following EXCEPT

Answer 1

the price level.

Question 2

The mid-1970s in the United Kingdom were characterized by

Answer 2

increases in aggregate demand that were larger than any increases in short-run aggregate supply.

Question 3

The short-run aggregate supply curve

Answer 3

has a positive slope.

Question 4

The quantity of real GDP supplied at full employment is called

Answer 4

potential GDP

Question 5

An inflationary gap means that short-run macroeconomic equilibrium GDP

Answer 5

exceeds full-employment GDP.

Question 6

Price level Aggregate demand (billions of 2001 pounds) Short-run aggregate supply (billions of 2001 pounds) Long-run aggregate supply (billions of 2001 pounds)
140 900 1,150 1,000
130 950 1,100 1,000
120 1,000 1,050 1,000
110 1,050 1,000 1,000
100 1,100 950 1,000

Answer 6

money wage rate will fall in the future.

Question 7

In the macroeconomic long run,

Answer 7

there is full employment and real GDP is equal to potential GDP.