The long-run supply curve illustrates how the aggregate output supplied is _____ the aggregate price level.
A) positively related to
B) negatively related to
C) unrelated to
D) a one-to-one correspondence with
The level of output that the economy would produce if all prices, including nominal wages, were fully flexible is called:
A) real GDP.
B) Keynesian GDP.
C) structural GDP.
D) potential GDP.
The point at which the long-run aggregate supply curve touches the x-axis is known as:
A) potential output.
B) the accelerator point.
C) the multiplier point.
D) the self-correcting economy point.
An aggregate output level lower than potential output means there will be:
A) high interest rates.
B) high inflation.
C) low unemployment.
D) high unemployment.
Producing an aggregate output level that is higher than potential output is possible only if nominal wages:
A) fully adjust downward..
B) fully adjust upward.
C) haven’t yet fully adjusted upward.
D) haven’t yet fully adjusted downward.
Which statement is TRUE with respect to short-run and long-run aggregate supply?
A) The economy can be on both curves simultaneously.
B) If the economy is on the short-run aggregate supply curve, it cannot also be on the long-run aggregate supply curve.
C) If the economy is on the long-run aggregate supply curve, it cannot also be on the short-run aggregate supply curve.
D) The economy can never rest on both curves simultaneously.
Suppose that the aggregate output level is lower than potential output. Which statement is FALSE?
A) Workers are abundant.
B) Jobs are scarce.
C) Nominal wages will fall over time.
D) The short-run aggregate supply curve will gradually shift to the left.