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Aggregate Supply curve shows the relationship between the price level and the real GDP supplied in an economy.

a. Under what circumstances the AS curve will have a flat segment?

b. When an economy has a vertical AS curve?

c. The AS curve is upward sloping in the intermediate region between the horizontal and the vertical segments. What kind of macroeconomic conditions give rise to the upward sloping range?

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Anne Gillian Duero
Anne Gillian DueroLv10
28 Sep 2019

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Related questions

1. In the long run, when prices are perfectly flexible:

a. aggregate supply is vertical and a market economy is self-correcting.

b. a market economy cannot self-correct.

c. government will be required to set prices to maintain equilibrium.

d. changes in aggregate demand cause equilibrium real GDP to change.

 

2. An increase in household wealth when the SRAS curve is upward sloping:

a. leads to an increase in the price level but has no impact on real GDP

b. has no impact on the price level but leads to an increase in real GDP

c. leads to an increase in both the price level and real GDP

d. has no impact on the price level or real GDP

 

3. In the long run, continued increases in aggregate demand not matched by similar increases in aggregate supply will cause:

a. an increase in the full-employment level of real GDP

b. a recessionary gap

c. a decrease in the price level

d. an increase in the price level

 

4. The vertical long-run aggregate supply curve implies that:

a. changes in aggregate demand will not affect the price level

b. the short-run aggregate supply curve is also vertical

c. natural or full-employment real GDP does not depend on the price level, in the long run

d. natural or full-employment real GDP is the same as the equilibrium real GDP in the short run

 

5. A rightward shift of the long-run aggregate supply curve illustrates:

a. economic growth

b. a recessionary gap

c. an inflationary gap

d. a decrease in natural real GDP

 

6. When the economy is in a recessionary gap

a. there is a surplus of labor

b. there is a shortage of labor

c. it is producing a real GDP level that is greater than natural real GDP

d. the unemployment rate is less than the natural unemployment rate

 

7. If the actual unemployment rate is less than the natural unemployment rate:

a. a recessionary gap exists and wages are likely to rise

b. an inflationary gap exists and wages are likely to rise

c. a recessionary gap exists and wages are likely to fall

d. an inflationary gap exists and wages are likely to fall

 

8. An economy in long-run equilibrium is producing:

a. a level of real GDP that is greater than its natural real GDP

b. where both the price level and real output are maximized

c. a level of real GDP equal to its natural real GDP

d. in the vertical range of aggregate demand.

 

If we observe an increase in real GDP and an increase in the price level after an increase in aggregate demand, we can conclude that

A. the aggregate supply curve is upward sloping.

B. the economy is now at full employment.

C. the aggregate supply curve is vertical.

D. the aggregate supply curve is horizontal.


An inflationary gap occurs when

A. the equilibrium level of real GDP is greater than the long-run aggregate supply curve.

B. short-run aggregate supply falls, but other things remain constant.

C. the equilibrium level of real GDP is less than the long-run aggregate supply curve.

D. aggregate demand falls, but other things remain constant.


Cost-push inflation is

A. inflation caused by decreases in aggregate supply that are not matched by decreases in aggregate demand.

B. inflation caused by decreases in aggregate supply that generate an even larger decrease in aggregate demand.

C. inflation caused by increases in aggregate demand that generate an even larger increase in aggregate supply.

D. inflation caused by increases in aggregate demand that are not matched by increases in aggregate supply.


A stronger dollar in world exchange markets is shown by

A. a dollar buying less units of foreign currency than it could before.

B. a dollar buying more units of foreign currency than it could before.

C. a dollar buying the same amount of foreign currency than it could before, with gold backing up the value of the dollar.

D. foreigners selling the dollars that they have.

10,A change in the price level​ ________ the AE curve and​ ________ the AD curve.
A.
​shifts; shifts
B.
has no effect​ on; results in a movement along
C.
results in a movement​ along; results in a movement along
D.
results in a movement​ along; shifts
E.
​shifts; results in a movement along

17,When the price level​ falls, the aggregate planned expenditure curve shifts​ ________, equilibrium expenditure​ ________ and there is a movement​ ________ along the aggregate demand curve.
A.
​upward; increases; upward
B.
​downward; decreases; downward
C.
​upward; decreases; downward
D.
​upward; increases; downward
E.
​downward; increases; upward

21,Which of the following increases the size of the expenditure​ multiplier?
A.
an increase in autonomous spending
B.
a decrease in the marginal propensity to consume
C.
a decrease in the marginal propensity to import
D.
an increase in the marginal income tax rate
E.
an increase in investment

23,If the quantity of real GDP demanded is greater than the quantity of real GDP​ supplied, then
A.
the price level falls and firms decrease production.
B.
aggregate demand changes to restore equilibrium.
C.
the economy must be producing at potential GDP.
D.
the price level falls to restore the macroeconomic equilibrium
E.
the price level rises and firms increase production.


24, ________ can trigger an expansion.
A.
Equality between aggregate expenditure and real GDP
B.
A decrease in induced expenditure
C.
A downward shift of the AE line
D.
An increase in autonomous expenditure
E.
A decrease in autonomous expenditure


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