1) The supply of real GDP is a function of
A) the total expenditures of consumers, investors and government.
B) the sum of wages, salaries, corporate
... [Show More] profits, rents and interest.
C) only the state of technology.
D) the quantities of labor, capital and the state of technology.
Answer: D
Topic: Aggregate Supply Fundamentals
Skill: Conceptual
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
2) The quantity of real GDP supplied depends on the
A) level of aggregate demand.
B) quantity of capital, bonds, and stocks.
C) quantity of labor, the quantity of capital, and the state of technology.
D) price level, the unemployment rate, and the quantity of government expenditures on
goods and services.
Answer: C
Topic: Aggregate Supply Fundamentals
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
3) An aggregate supply curve depicts the relationship between
A) the price level and nominal GDP.
B) household expenditures and household income.
C) the price level and the aggregate quantity supplied.
D) the price level and the aggregate quantity demanded.
Answer: C
Topic: Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
4) In the macroeconomic short run,
A) actual real GDP may be less than or more than potential GDP.
B) the unemployment rate is zero.
C) by definition, the economy is always moving away from full employment.
D) actual real GDP always equals potential GDP.
Answer: A
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Modified 10th edition
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
2 Parkin · Macroeconomics, Tenth Edition
5) When talking about aggregate supply, it is necessary to
A) focus on the short run.
B) focus on the long run.
C) distinguish between long-run aggregate supply and short-run aggregate supply.
D) distinguish between long-run full employment and short-run full-employment.
Answer: C
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
6) We distinguish between the long-run aggregate supply curve and the short-run aggregate
supply curve. In the long run
A) technology is fixed but not in the short run.
B) the price level is constant but in the short run it fluctuates.
C) the aggregate supply curve is horizontal while in the short run it is upward sloping.
D) real GDP equals potential GDP.
Answer: D
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
7) In the macroeconomic long run,
A) GDP always is below potential GDP.
B) there is full employment with no unemployment.
C) output always is above potential GDP.
D) there is full employment and real GDP is equal to potential GDP.
Answer: D
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
8) In the macroeconomic long run,
A) real GDP equals potential GDP.
B) the economy is at full employment.
C) regardless of the price level, the economy is producing at potential GDP.
D) All of the above are correct.
Answer: D
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
Chapter 10 Aggregate Supply and Aggregate Demand 3
9) In the long-run
A) the aggregate supply curve is upward sloping.
B) real GDP is equal to potential GDP.
C) aggregate supply depends on the price level.
D) All of the above answers are correct.
Answer: B
Topic: Macroeconomic Long Run and Short Run
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
10) The long-run aggregate supply (LAS) curve
A) has a positive slope.
B) has a negative slope.
C) is vertical.
D) is horizontal.
Answer: C
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
11) When the labor market is int full employment,
A) real GDP equals potential GDP.
B) the price level is stable.
C) the price level equals potential prices.
D) the SAS curve is horizontal.
Answer: A
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Modified 10th edition
AACSB: Reflective Thinking
12) The long-run aggregate supply curve is vertical because
A) at full employment prices are stable.
B) there is no cyclical inflation.
C) potential GDP is independent of the price level.
D) the money wage rate increases faster than the price level.
Answer: C
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
Copyright © 2012 Pearson Education, Inc.
4 Parkin · Macroeconomics, Tenth Edition
13) The long-run aggregate supply curve is
A) horizontal at the full employment price level.
B) vertical at the full employment level of real GDP.
C) upward sloping because of the effects of price level changes on real GDP.
D) the same as the short-run aggregate supply curve.
Answer: B
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
14) Which of the following statements is TRUE?
A) The long-run aggregate supply curve is upward sloping.
B) The long-run aggregate demand curve is upward sloping.
C) The short-run aggregate supply curve is vertical.
D) The long-run aggregate supply curve is vertical.
Answer: D
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
15) The long-run aggregate supply curve is ________ because along it, as prices rise, the money
wage rate ________.
A) vertical; falls
B) vertical; rises
C) upward sloping; falls
D) upward sloping; stays constant
Answer: B
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Previous edition, Chapter 10
AACSB: Reflective Thinking
16) The long-run aggregate supply curve illustrates the
A) relationship of the price level and real GDP when the economy is at full employment.
B) relationship of aggregate supply and aggregate demand.
C) amount of products producers offer at various prices when money wages and other
resource prices do not change.
D) surpluses, shortages and equilibrium level of GDP.
Answer: A
Topic: Long-Run Aggregate Supply
Skill: Recognition
Question history: Modified 10th edition
AACSB: Reflective Thinking
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