Suppose the actual and expected price levels in an economy are initially equal. However, the actual ...

Suppose the actual and expected price levels in an economy are initially equal. However, the actual price level becomes higher due to some change in economic conditions. Which of the following will occur eventually?
 a. The economy will move rightward along the short-run aggregate supply curve.
  b. The economy will move leftward along the short-run aggregate supply curve.
  c. The short-run aggregate supply curve will shift to the right.
 d. The short-run aggregate supply curve will shift to the left.
 e. The short-run aggregate supply curve will become flatter.

QUESTION 2

Which of the following policies can be adopted by the Fed in order to stimulate an economy in the short run?
 a. Increase the market interest rate
 b. Purchase U.S. government securities
  c. Increase the discount rate
 d. Increase the price of consumer goods
  e. Increase the required reserve ratio

QUESTION 3

In the aggregate demandaggregate supply model, which of these changes is most likely when the cost of production increases in the long run?
 a. A leftward shift of the short-run aggregate supply curve
  b. A leftward shift of the short-run aggregate demand curve
  c. A rightward shift of the short-run aggregate supply curve
  d. An increase in the potential output level increases.
 e. A decrease in the actual price level decreases.

QUESTION 4

In the aggregate demand-aggregate supply model in the short run, a decrease in the money supply is likely to cause a(n):
 a. increase in both the price level and real GDP.
 b. decrease in both the price level and real GDP.
 c. increase in real GDP and a decrease in the price level.
  d. decrease in real GDP and an increase in the price level.
  e. increase in the price level only.

QUESTION 5

The long run is the period of time during which:
 a. real wage is exactly equal to nominal wage.
  b. inflation is zero.
 c. excess aggregate demand leads to a shortage.
  d. real wages are constant.
 e. all resource prices can be varied.

QUESTION 6

In the aggregate demand-aggregate supply model in the short run, an increase in the money supply will lead to a(n):
 a. increase in both the price level and real GDP.
 b. decrease in both the price level and real GDP.
 c. increase in real GDP and a decrease in the price level.
  d. decrease in real GDP and an increase in the price level.
  e. increase in the price level only.

QUESTION 7

In the short run, there is a positive relationship between:
 a. inflation and unemployment.
 b. inflation and real GDP.
 c. the actual price level and the aggregate quantity supplied.
  d. the actual price level and unemployment.
 e. the actual price level and consumption spending.

QUESTION 8

In the short run, a decrease in the money supply will lead to a(n):
 a. decrease in Gross Domestic Product.
  b. increase in the price level.
 c. increase in aggregate demand.
 d. increase in the demand for money.
  e. decrease in the market interest rate.