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In an inflationary economy which of the following is true?

a. the real value of wages is increasing

b. the cost of inputs and price of products is increasing

c. the value of money increases

d. people would like to hold cash

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Yusra Anees
Yusra AneesLv10
1 Apr 2021
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Related questions

In an inflationary economy, which of the following is true?

A) Costs to produce products are increasing but prices are going down.

B) Gross incomes are declining.

C) Discretionary incomes are declining.

D) Both the costs to produce and buy products are increasing.

E) Incomes and costs are not changing, but prices are decreasing.

Assume that full-employment real GDP is Y=$1,200 billion, the current equilibrium real GDP is Y=$1,600, and the MPC= 0.8. To bring the economy to full employment real GDP,

a. a recessionary gap must be bridged by increasing aggregate expenditures by $80 billion.

b. an inflationary gap must be bridged by cutting aggregate expenditures by $80 billion.

c. nothing is needed to bring the economy into full-employment equilibrium.

d. a recessionary gap must be bridged by increasing aggregate expenditures by $400 billion.

e. an inflationary gap must be bridged by cutting aggregate expenditure by $400 billion.

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.

 

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