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Question : 15.3   Macroeconomic Equilibrium in the Long Run and the Short : 1244782

Economics

 

15.3   Macroeconomic Equilibrium in the Long Run and the Short Run

 

1) Long-run macroeconomic equilibrium occurs when

A) aggregate demand equals short-run aggregate supply.

B) aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve.

C) structural and frictional unemployment equals zero.

D) output is above potential GDP.

 

2) An increase in aggregate demand results in a(n) ________ in the ________.

A) recession; long run

B) expansion; long run

C) expansion; short run

D) recession; short run

 

3) Suppose there has been an increase in investment. As a result, real GDP will ________ in the short run, and ________ in the long run.

A) increase; increases further

B) increase; decrease to its initial value

C) decrease; decrease further

D) decrease; increase to its initial level

 

4) A decrease in investment causes the price level to ________ in the short run and ________ in the long run.

A) increase; increase further

B) increase; decrease

C) decrease; decrease further

D) decrease; increase

 

5) An increase in aggregate demand causes an increase in ________ only in the short run, but causes an increase in ________ in both the short run and the long run.

A) the price level; real GDP

B) real GDP; real GDP

C) the price level; the price level

D) real GDP; the price level

 

6) Most recessions in the United States since World War II have begun with

A) a decline in residential construction.

B) a rapid increase in the price level.

C) a substantial number of bank failures.

D) a stock market crash.

 

7) When the aggregate demand curve and the short-run aggregate supply curve intersect

A) the long-run aggregate supply curve must also intersect at the same point.

B) inflation must be increasing.

C) structural and frictional unemployment equal zero.

D) the economy is in short-run macroeconomic equilibrium.

 

8) Interest rates in the economy have fallen. How will this affect aggregate demand and equilibrium in the short run?

A) Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise.

B) Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise.

C) Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall.

D) Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall.

 

9) A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

A) The price level will fall, and the level of GDP will be unaffected.

B) The price level will fall, and the level of GDP will fall.

C) The price level will rise, and the level of GDP will fall.

D) The price level will rise, and the level of GDP will be unaffected.

 

10) If the short-run aggregate supply increases by less than the long-run aggregate supply, then, at the short-run equilibrium

A) GDP will be below potential GDP.

B) aggregate demand will increase.

C) GDP will be above potential GDP.

D) GDP will be equal to potential GDP.

 

 

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