Economics Chapter 14 Answers

Question 1
1 out of 1 points

According to the aggregate demand and aggregate supply model, in the long run what is the impact of an increase in the money supply?
Answer

Selected Answer: It leads to increased price level, but there is no change in real GDP.
Correct Answer: It leads to increased price level, but there is no change in real GDP.

Question 2
1 out of 1 points

Which of the following would make the price level decrease and real GDP increase?
Answer

Selected Answer: Long-run aggregate supply shifts right.
Correct Answer: Long-run aggregate supply shifts right.

Question 3
0 out of 1 points

According to the sticky wage theory, which of the following is consistent with an unexpected fall in the price level?
Answer

Selected Answer: The real wage falls and employment falls.
Correct Answer: The real wage rises and employment falls.

Question 4
0 out of 1 points

What happened in the first few years of the Great Depression?
Answer

Selected Answer: Unemployment rose by about 10 percent, and prices rose about 27 percent.
Correct Answer: Unemployment rose by about 25 percent, and prices fell about 19 percent.

Question 5
1 out of 1 points

Most economists believe that classical economic theory is a good description of the world over which of the following time periods?
Answer

Selected Answer: in the long run, but not in the short run
Correct Answer: in the long run, but not in the short run

Question 6
1 out of 1 points

Scenario 14-1. The economy is in long-run equilibrium. Suddenly, due to improved international relations and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.

Refer to Scenario 14-1. In the short run, which of the following describes the changes that take place in the economy?