1. Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price...
Question:
1. Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if consumer confidence decreases.
Question: Starting from long-run equilibrium means that the economy is starting at full-employment?
- True
- False
2.Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if consumer confidence decreases.
Question: The graphical illustration of long-run equilibrium includes AD, SRAS, and LRAS?
- True
- False
3. Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if consumer confidence decreases.
Question: Starting from long-run equilibrium means that actual RGDP is the same as full-employment RGDP.
- True
- False
4. Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if consumer confidence decreases.
Question: Which one of the following best depicts the effect of a decrease in consumer confidence on consumer spending and aggregate demand.
- ---> increase in savings --> decrease consumer spending ---> decrease aggregate demand
- ---> decrease in savings -- decrease consumer spending ---> decrease aggregate demand
- ---> decrease in consumer income --> decrease consumer spending ---> decrease aggregate demand
- ---> increase in savings --> decrease consumer wealth --> decrease consumer spending --> decrease aggregate demand
- None of the responses are correct
5. Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if consumer confidence decreases.
Question: A decrease in consumer confidence results in rising costs of production, which will tend to reduce profits and thereby aggregate supply.
- True
- False
6.Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if consumer confidence decreases.
Question: Which one of the following best illustrates the effect of a decrease in consumer confidence.
None of the responses are correct. | |
AD and SRAS shift left, price level falls and RGDP falls | |
AD shifts left, price level rises and RGDP falls | |
AD and SRAS shift left, price level remains relatively constant and RGDP falls | |
SRAS shifts left, price level rises and RGDP falls |
7.Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if consumer confidence decreases.
Question: A decrease in consumer confidence will tend to reduce RGDP and unemployment.
- True
- False
8. Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if the cost of labor declines and business expectations decline.
Question: A decrease in business expectations results in a decrease in both AD and SRAS.
- True
- False
9. Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if the cost of labor declines and business expectations decline.
Question: Which one of the following best illustrates the effect of a decline in the cost of labor and a decrease in business expectations on AD, SRAS, and LRAS.
- AD shifts left and SRAS shifts right.
- Both AD and SRAS shift left.
- AD shifts left and SRAS remains constant.
- AD shifts left and both SRAS and LRAS shift right.
- None of the responses are correct.
10. Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if the cost of labor declines and business expectations decline.
Question: Which one of the following best illustrates the effect of a decline in the cost of labor and a decrease in business expectations on the average price level, RGDP, and unemployment.
- Price level falls, RGDP remains relatively constant (ambiguous), and unemployment remains relatively constant (ambiguous)
- RGDP falls, price remains relatively constant (ambiguous), and unemployment rises.
- Price level falls, RGDP falls, and unemployment rises
- Price level falls, unemployment rises, and RGDP remains relatively constant (ambiguous)
- None of the responses are correct
11. Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if the cost of labor declines and business expectations decline.
Follow-up: Based on the outcomes (conclusions) from the above scenario, the economy is at the natural rate of unemployment.
- True
- False
12.Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if the cost of labor declines and business expectations decline.
Follow-up: Based on the outcomes (conclusions) from the above scenario, which one of the following best describes the state of the economy:
- The economy is in long-run equilibrium
- The economy is in short-run equilibrium but experiencing a recessionary gap
- The economy is experiencing an inflationary gap and producing above the full-employment level of RGDP
- The economy is producing below the full-employment level of RGDP.
- None of the responses are correct.
13.Scenario: Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if the cost of labor declines and business expectations decline.
Follow-up: Based on the outcomes (conclusions) from the above scenario, what types of unemployment exist.
Choose the best response:
- The economy is experiencing only frictional and structural unemployment.
- The economy is experiencing frictional, structural, and cyclical unemployment.
- The economy is experiencing only cyclical unemployment.
- The economy is at the natural rate of unemployment and only experiencing frictional unemployment.
- None of the responses are correct.