Question

1. Short-term macroeconomic equilibrium occurs when the amount of demand for real PIb ____: a. equals...

1. Short-term macroeconomic equilibrium occurs when the amount of demand for real PIb ____:
a. equals full employment GDP
b. equals potential GDP
c. equals the quantity supplied of real GDP
d. not equal to the GDP of full employment


2. When a change occurs in the price level, the short-term aggregate supply curve ___:
a. does not scroll
b. moves to the left
c. scrolls to the right
d. it has a negative slope


3. Discouraged workers often ____:
a. leave the workforce during a recession
b. abandon the workforce during an expansion
c. enter the workforce during a recession
d. they retire early


4. An economy is in full employment Which of the following events can create an inflationary gap?
a. an increase in the capital stock
b. an increase in potential GDP
c. an increase in wages
d. an increase in income abroad

Homework Answers

Answer #1

1) option C is correct. in the short run it is not necessary that quantity demanded of goods and services = potential GDP. It can be equal to quantity supplied at that price level which may not be equal to full employment GDP

2) option A is correct. There is no shift left or right to the short run aggregate supply curve because it is positively related with price level. There is a movement up and down along the curve for price change

3) option A is correct because they are not able to find a job for a longer period of time during recession

4) an increase in the income abroad.

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