Question : 31) In the figure above, the economy at an equilibrium : 1238121

31) In the figure above, the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110. At this point there is

A) an inflationary gap.

B) a recessionary gap.

C) price stability.

D) a full-employment equilibrium.

E) an above full-employment equilibrium.

32) In the figure above, the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the ________ curve shifts ________.

A) aggregate supply; leftward

B) aggregate supply; rightward

C) aggregate demand; rightward

D) aggregate demand; leftward

E) potential GDP; leftward

33) In the figure above, the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the ________ curve shifts ________ because ________.

A) aggregate supply; leftward; the money wage rate rises

B) aggregate supply; rightward; the money wage rate falls

C) aggregate demand; rightward; the money wage rate falls

D) aggregate demand; leftward; the money wage rate rises

E) potential GDP; leftward; the money wage rate falls

34) An economy experiences a recessionary gap. As the economy adjusts to full employment, the money wage rate

A) falls, shifting the aggregate supply curve rightward.

B) rises, shifting the aggregate supply curve leftward.

C) rises, shifting the aggregate demand curve rightward.

D) falls, shifting the aggregate demand curve leftward.

E) falls, increasing potential GDP.

35) If the economy is above full employment, there is ________ gap, and as the economy adjusts toward full employment, the price level ________.

A) an inflationary; rises

B) an inflationary; falls

C) a recessionary; rises

D) a recessionary; falls

E) an inflationary; does not change

36) Which of the following can start an inflation?

A) an increase in aggregate demand

B) an increase in aggregate supply

C) a decrease in aggregate supply

D) Both answers A and C are correct.

E) Answers A, B, and C are correct.

37) Inflation can be started by

A) a decrease in aggregate supply or a decrease in aggregate demand.

B) a decrease in aggregate supply or an increase in aggregate demand.

C) an increase in aggregate supply or an increase in aggregate demand.

D) an increase in aggregate supply or a decrease in aggregate demand.

E) an increase in aggregate demand or an increase in potential GDP.

38) Demand-pull inflation starts with

A) an increase in aggregate demand.

B) a decrease in aggregate demand.

C) an increase in potential GDP.

D) an increase in aggregate supply.

E) a decrease in aggregate supply.

39) Demand-pull inflation starts with a shift of the

A) AS curve rightward.

B) AD curve rightward.

C) AS curve leftward.

D) AD curve leftward.

E) potential GDP line leftward.

40) Demand pull inflation can be started by

A) a decrease in the quantity of money.

B) an increase in government expenditure.

C) a decrease in net exports.

D) an increase in the price of oil.

E) a decrease in the money price of resources.