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Intermediate Macroeconomics (Final)
Questions and Correct Answers/ Latest
Update / Already Graded
According to the equation for the short-run aggregate supply, output
will be at the natural level if:
Ans: The price level equals the expected price level.
According to the sticky-price model, the short-run aggregate supply
curve will be steeper:
Ans: The greater the proportion of firms that can adjust their
prices immediately.
According to the imperfect-information model, the short-run
aggregate supply curve will be steeper:
Ans: The faster firms incorporate information about the
economy into their pricing decisions.
Both models of aggregate supply discussed in Chapter 14 imply that if
the price level is lower than expected, what happens to output?
Ans: It falls below the natural rate of output.
All rights reserved © 2025/ 2026 |
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Each of the two models of short-run aggregate supply is based on
some market imperfection. In the sticky-price model, the imperfection
is that:
Ans: Some firms do not adjust their prices instantly to changes
in demand.
Some firms do not instantly adjust the prices they charge in response
to changes in demand because:
Ans: A. It is costly to alter prices.
B. They do not want to annoy their frequent customers.
C. Some prices are set by long-term contracts between firms
and customers.
According to the Phillips curve, other things being equal, inflation
depends positively on:
Ans: Expected inflation.
Analysis of the short-run Phillips curve suggests that policymakers who
want to reduce unemployment in the short run should *blank*
aggregate demand at a cost of generating *blank* inflation.
Ans: Increase; higher
All rights reserved © 2025/ 2026 |
Intermediate Macroeconomics (Final)
Questions and Correct Answers/ Latest
Update / Already Graded
According to the equation for the short-run aggregate supply, output
will be at the natural level if:
Ans: The price level equals the expected price level.
According to the sticky-price model, the short-run aggregate supply
curve will be steeper:
Ans: The greater the proportion of firms that can adjust their
prices immediately.
According to the imperfect-information model, the short-run
aggregate supply curve will be steeper:
Ans: The faster firms incorporate information about the
economy into their pricing decisions.
Both models of aggregate supply discussed in Chapter 14 imply that if
the price level is lower than expected, what happens to output?
Ans: It falls below the natural rate of output.
All rights reserved © 2025/ 2026 |
, Page |2
Each of the two models of short-run aggregate supply is based on
some market imperfection. In the sticky-price model, the imperfection
is that:
Ans: Some firms do not adjust their prices instantly to changes
in demand.
Some firms do not instantly adjust the prices they charge in response
to changes in demand because:
Ans: A. It is costly to alter prices.
B. They do not want to annoy their frequent customers.
C. Some prices are set by long-term contracts between firms
and customers.
According to the Phillips curve, other things being equal, inflation
depends positively on:
Ans: Expected inflation.
Analysis of the short-run Phillips curve suggests that policymakers who
want to reduce unemployment in the short run should *blank*
aggregate demand at a cost of generating *blank* inflation.
Ans: Increase; higher
All rights reserved © 2025/ 2026 |
