Question :
61) Consider the basic AD/AS macro model in long-run equilibrium. : 1384411
61) Consider the basic AD/AS macro model in long-run equilibrium. A permanent expansionary AD shock has ________ price-level effect in the short run and ________ price-level effect in the long run.
A) a positive; no
B) a negative; no
C) a positive; an even larger
D) a positive; a smaller
E) a negative; a positive
62) Suppose Canada’s economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose there is an increase in the Canadian-dollar price of all imported raw materials. In the short run, ________. In the long run, ________.
A) real GDP and the price level both fall; real GDP is below its original level with a lower price level
B) real GDP and the price level both rise; real GDP is above its original level with a higher price level
C) real GDP and the price level both rise; real GDP returns to its original level with a higher price level
D) real GDP rises and the price level falls; real GDP returns to its original level with a lower price level
E) real GDP falls and the price level rises; real GDP and the price level return to their original levels
63) Suppose Canada’s economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose there is a decrease in the Canadian price of all imported raw materials. In the short run, ________. In the long run, ________.
A) real GDP and the price level both fall; real GDP is below its original level with a lower price level
B) real GDP and the price level both rise; real GDP is above its original level with a higher price level
C) real GDP and the price level both rise; real GDP returns to its original level with a higher price level
D) real GDP rises and the price level falls; real GDP and the price level return to their original levels
E) real GDP falls and the price level rises; real GDP is below its original level with a higher price level
64) Refer to Figure 24-3. A negative shock to the economy shifts the AD curve from to . The initial effect is
A) a recessionary output gap of 100.
B) a recessionary output gap of 300.
C) a recessionary output gap of 550.
D) an inflationary output gap of 200.
E) an inflationary output gap of 100.
65) Refer to Figure 24-3. A negative shock to the economy shifts the AD curve from to . At the new short-run equilibrium, the price level is ________ and real GDP is ________.
A) 90; 900
B) 110; 800
C) 60; 1000
D) 60; 700
E) 90; 1250
66) Refer to Figure 24-3. Which of the following events could have shifted the AD curve from to ?
A) an increase in net exports
B) an increase in government purchases
C) an increase in desired investment
D) an increase in autonomous household saving
E) an increase in autonomous consumption
67) Refer to Figure 24-3. After the negative aggregate demand shock shown in the diagram (from to ), which of the following describes the adjustment process that would return the economy to its long-run equilibrium?
A) Wages would eventually fall, causing the AD curve to shift to the right, returning to the original equilibrium at point A.
B) Wages would eventually fall, causing the AS curve to shift slowly to the right, reaching a new equilibrium at point E.
C) Wages would increase, causing the AS curve to shift to the right, reaching a new equilibrium at point E.
D) Wages would increase, causing the AD curve to shift to the right, returning to the original equilibrium at point A.
E) Potential output would decrease from 1000 to 900 and a new long-run equilibrium would be established at point D.
68) Refer to Figure 24-3. Following the negative AD shock shown in the diagram (from to ), the adjustment process will take the economy to a long-run equilibrium where the price level is ________ and real GDP is ________.
A) 110; 1000
B) 60; 1000
C) 90; 900
D) 110; 800
E) 90; 1250
69) Consider the AD/AS model, and suppose that the economy begins at potential output. The effect of a positive AS shock on real GDP will be reversed in the long run with a ________ shift in ________.
A) rightward; AS
B) rightward; AD
C) leftward; AS
D) leftward; AD
E) leftward; Y*
70) Consider the AD/AS model and suppose the economy begins at potential output. The effect of a negative AS shock on real GDP will be reversed in the long run with a ________ shift in ________.
A) rightward; AS
B) rightward; AD
C) leftward; AS
D) leftward; AD
E) leftward; Y*
