Question : 1) Which of the following the defining assumptions of the : 1384405

1) Which of the following are the defining assumptions of the short run in macroeconomics?

A) Factor prices are exogenous, and technology and factor supplies are changing.

B) Factor prices adjust to output gaps, and technology and factor supplies are constant.

C) Factor prices are exogenous, and technology and factor supplies are constant.

D) Factor prices adjust to output gaps, and technology and factor prices are changing.

E) Factor prices are exogenous, technology and factor prices are endogenous.

2) Which of the following are the defining assumptions of the long run in macroeconomics?

A) Factor prices are exogenous, and technology and factor supplies are changing.

B) Factor prices adjust to output gaps, and technology and factor supplies are constant.

C) Factor prices are exogenous, and technology and factor supplies are constant.

D) Factor prices adjust to output gaps, and technology and factor supplies are changing.

E) Factor prices are exogenous, technology and factor prices are exogenous.

3) In macroeconomic analysis, the assumption that potential output (Y*) is changing is a characteristic of

A) the short run.

B) the adjustment process.

C) the national accounts model.

D) the long run.

E) the business cycle model.

4) Which of the following is a defining assumption of the AD/AS macro model in the short run?

A) factor supplies are assumed to be flexible

B) technology used in production is endogenous and variable

C) the level of potential output fluctuates with the price level

D) factor prices are assumed to be exogenous

E) firms cannot operate near their normal capacity

5) In the basic AD/AS model, which of the following is a defining assumption of the adjustment process that takes the economy from the short run to the long run?

A) factor supplies are assumed to be varying

B) technology used in production is endogenous

C) the level of potential output fluctuates with the price level

D) factor prices are assumed to respond to output gaps

E) firms cannot operate near their normal capacity

6) Which of the following is a defining assumption of the AD/AS macro model in the long run?

A) factor supplies are assumed to be fixed

B) technology used in production is constant

C) the level of potential output is constant

D) factor prices are assumed to be fixed

E) changes in real GDP are determined by the changes in potential output

7) The economy’s output gap is defined as the

A) difference between actual GDP and potential GDP.

B) level of total output that would be produced if capacity utilization is at its normal rate.

C) difference between actual national income and desired aggregate expenditure.

D) result of economic growth.

E) difference between nominal GDP and real GDP.

8) Which of the following best describes the concept of potential output?

A) The total output that can be produced when all factors of production (land, labour, and capital) are fully employed.

B) The total output that can be produced when the economy is in short-run economic equilibrium.

C) The total output that can be produced when all productive resources (land, labour, and capital) are used at their maximum capacity.

D) The total output that could be produced in the future when technological advances allow for a higher level of output.

E) The total output that could be produced if no productive resource (land, labour, and capital) was ever left idle.

9) An inflationary output gap occurs when

A) actual GDP exceeds potential GDP.

B) nominal GDP exceeds real GDP.

C) demand for labour services is very low.

D) equilibrium national income is below potential national income.

E) potential GDP exceeds actual GDP.

10) An inflationary output gap implies that

A) the demand for all factor services will be relatively low.

B) the intersection of AD and AS occurs at real GDP below potential output.

C) the economy’s resources are being used beyond their normal capacity.

D) there is a pressure for wages to decrease.

E) there is excess supply of most factors of production.