ECON-1012-B-Introduction to Macroeconomics

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Figure 10.3.1

Refer to Figure 10.3.1, which shows the AS-AD model. When this economy is in short-run macroeconomic equilibrium, which of the following situations occurs?

Potential GDP exceeds equilibrium real GDP by $40 billion.

0%

Equilibrium real GDP equals potential GDP.

0%

Potential GDP exceeds equilibrium real GDP by $20 billion.

0%

Equilibrium real GDP exceeds potential GDP by $20 billion.

0%

Equilibrium real GDP exceeds potential GDP by $40 billion.

❌

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Table 10.3.1

Refer to Table 10.3.1, which shows the aggregate demand and aggregate supply schedules. Potential GDP is $600 billion. In long-run equilibrium, what is the economy's price level and real GDP?

The price level is ________ and real GDP is ________ billion.

130; $600

❌

120; $500

0%

120; $600

0%✨

130; $500

0%

125; $550

0%

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Figure 10.3.2

Refer to Figure 10.3.2, which shows the AS-AD model. When an economy is in short-run macroeconomic equilibrium, what is the price level?

75

❌

95

❌

70

❌

80

✅

65

❌

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Figure 10.2.1

Refer to Figure 10.2.1, which shows possible changes in aggregate supply and aggregate demand. Which graph illustrates the effect of an increase in the quantity of money?

only graph (a)

❌

only graph (b)

❌✨

only graph (c)

✅

only graph (d)

❌

both graphs (b) and (c)

❌

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Figure 10.3.1

Refer to Figure 10.3.1, which shows the AS-AD model in which an economy is in short-run macroeconomic equilibrium. Which of the following statements (1) and (2) is correct and which is incorrect?

(1)	The economy is at a below full-employment equilibrium.

(2)	The actual unemployment rate equals the natural unemployment rate.

(1) is correct; (2) is incorrect.

✅✨

(2) is correct; (1) is incorrect.

❌

(1) and (2) are incorrect.

❌

(1) and (2) are correct.

❌

(1) is correct; (2) is correct if the natural unemployment rate is too high.

❌

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Figure 10.3.2

Refer to Figure 10.3.2, which shows the AS-AD model, in which an economy is in short-run macroeconomic equilibrium. If the economy automatically adjusts to long-run equilibrium, which of the following situations occur?

The actual unemployment rate exceeds the natural unemployment rate.

0%

The SAS curve shifts rightward.

❌✨

Real GDP is $600 billion.

0%

Potential GDP decreases.

0%

The price level rises to 90.

0%

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Figure 10.3.2

Refer to Figure 10.3.2, which shows the AS-AD model, in which an economy is in short-run macroeconomic equilibrium. Which of the following statements is correct?

The actual unemployment rate is less than the natural unemployment rate.

0%

The economy is at a below full-employment equilibrium.

100%✨

A recessionary gap exists.

0%

Potential GDP is greater than equilibrium GDP.

0%

The actual unemployment rate is equal to the natural unemployment rate.

0%

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Figure 10.3.2

Refer to Figure 10.3.2, which shows the AS-AD model. When an economy is in short-run macroeconomic equilibrium, what is real GDP?

$600 billion

100%

$550 billion

0%

$650 billion

0%

$475 billion

0%

$500 billion

0%

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Table 10.3.2

Refer to Table 10.3.2, which shows the aggregate demand and aggregate supply schedules. Potential GDP is $7 trillion. With no change in monetary policy and fiscal policy, which of the following events will occur in the long run?

Short-run aggregate supply curve will shift rightward.

✅

Long-run aggregate supply curve will shift leftward.

❌

Long-run aggregate supply curve will shift rightward.

❌

Short-run aggregate supply curve will shift leftward.

❌✨

Both A and C will occur.

❌

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Table 10.3.1

Refer to Table 10.3.1, which shows the aggregate demand and aggregate supply schedules. As this economy adjusts to long-run equilibrium, which of the following events will occur?

The AD curve shifts rightward.

0%

The SAS curve shifts rightward.

0%✨

The LAS curve shifts leftward.

0%

The SAS curve shifts leftward.

❌

The AD curve shifts leftward.

0%

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