If all prices, including the nominal wage rate, double in the long run, then aggregate output supplied will:
D) remain unchanged.
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.