Question : 51) In the long run A) GDP = potential GDP. B) unemployment : 1244787

51) In the long run

A) GDP = potential GDP.

B) unemployment is below its natural rate.

C) LRAS and SRAS lie on the same line.

D) unemployment is above its natural rate.

Article Summary

According to the International Energy Agency (IEA), increased oil production resulting from U.S. shale oil has invigorated the North American oil industry and has created a global supply shock. The shale oil and gas industry has generated tens of billions of dollars in revenues and hundreds of thousands of new jobs, and could result in the United States changing from being the world’s largest oil importer to a net exporter within a few years. An IEA forecast predicts that because of shale oil, the United States will become the world’s largest oil producer by 2017, with supply growing by 3.9 million barrels per day from 2012-2018.

52) Refer to the Article Summary. The supply shock mentioned in the article summary may well result in a decrease in the price of oil. When the price of oil falls unexpectedly, the equilibrium price level ________ and the unemployment rate ________ in the short run.

A) rises; falls

B) rises; rises

C) falls; falls

D) falls; rises

53) Refer to the Article Summary. The supply shock mentioned in the article summary may well result in a decrease in the price of oil. After an unexpected decrease in the price of oil, the long-run adjustment ________ the price level and ________ the unemployment rate as they return to their original levels.

A) increases; increases

B) increases; decreases

C) decreases; increases

D) decreases; decreases

54) A rapid increase in the price of oil will tend to

A) shift short-run aggregate supply to the left.

B) shift long-run aggregate supply to the left.

C) shift long-run aggregate supply to the right.

D) shift aggregate demand to the right.

55) If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run, the economy would experience

A) stagflation.

B) long-run economic decline.

C) hyperinflation.

D) an increase in the natural rate of unemployment.

56) Stagflation occurs when inflation ________ and GDP ________.

A) rises; rises

B) rises; falls

C) falls; rises

D) falls; falls

57) Stagflation is often a result of

A) a negative supply shock.

B) a decrease in aggregate demand.

C) an increase in aggregate demand.

D) an increase in aggregate supply.

58) Most economists agree that an automatic mechanism brings the economy back to potential GDP in the long run. In mid-2011, two years after the recession of 2007-2009 had ended, real GDP in the United States

A) had returned to potential GDP.

B) had exceeded potential GDP by 1.5 percent.

C) remained more than 7 percent below potential GDP.

D) was predicted to never return to potential GDP.

59) At a short-run macroeconomic equilibrium, real GDP is always equal to potential GDP.

60) Stagflation occurs when aggregate supply and aggregate demand both increase.