Question : 11) During an inflationary gap, A) real GDP less than potential : 1227897

11) During an inflationary gap,

A) real GDP is less than potential GDP.

B) the aggregate demand curve and the aggregate supply curve intersect at potential GDP.

C) the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP that exceeds potential GDP.

D) the aggregate demand curve and the aggregate supply curve do not intersect.

E) the price level will fall to restore the long-run equilibrium.

12) Starting from a situation of full employment, an increase in aggregate demand creates ________ and ________ the price level.

A) an inflationary gap; raises

B) a recessionary gap; lowers

C) a recessionary gap; raises

D) an inflationary gap; lowers

E) a recessionary gap; does not change

13) If real GDP is less than potential GDP, then the money wage rate ________, aggregate supply ________ so that the price level ________.

A) rises; decreases; rises

B) falls; increases; falls

C) rises; increases; falls

D) falls; decreases; rises

E) does not change; increases; falls

14) If real GDP is less than potential GDP, then the ________ and the price level ________.

A) aggregate demand curve shifts leftward; rises

B) aggregate demand curve shifts rightward; falls

C) aggregate supply curve shifts leftward; rises

D) aggregate supply curve shifts rightward; falls

E) amount of potential GDP increases; falls

15) A recessionary gap occurs when ________ so that real GDP is ________ potential GDP.

A) aggregate supply increases; less than

B) aggregate supply decreases; less than

C) aggregate demand increases; greater than

D) aggregate demand decreases; less than

E) potential GDP decreases; greater than

16) If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP less than potential GDP, there is

A) a recessionary gap.

B) an inflationary gap.

C) a rising price level.

D) a falling real GDP.

E) an above full-employment equilibrium.

17) If the equilibrium price level is 135 but the actual price level is 150, then

A) firms increase their production because they are able to sell their output at a higher than expected price.

B) the quantity of real GDP demanded is less than the quantity of real GDP supplied.

C) the quantity of real GDP demanded is greater than the quantity of real GDP supplied.

D) aggregate demand will increase to restore equilibrium.

E) aggregate demand will decrease to restore equilibrium.

18) If the equilibrium price level is 135 but the actual price level is 120, then

A) firms decrease their production because they cannot sell the output they produce.

B) the quantity of real GDP demanded is less than the quantity of real GDP supplied.

C) the quantity of real GDP demanded is greater than the quantity of real GDP supplied.

D) aggregate demand will increase to restore equilibrium.

E) aggregate demand will decrease to restore equilibrium.

19) At a peak in the business cycle, the macroeconomic equilibrium is ________ the level of potential real GDP.

A) greater than

B) equal to

C) less than

D) falling below

E) None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion.

20) At a trough in the business cycle, the macroeconomic equilibrium is ________ the level of potential real GDP.

A) greater than

B) rising above

C) equal to

D) less than

E) None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion.

The table gives the aggregate demand and aggregate supply schedules for a nation.