When inflation occurs, the long-run aggregate supply curve _______________.

slopes upward
does not shift
shifts leftward
shifts rightward

If the money wage and other resource prices do not change when the price level rises by 10 percent, _________________.

the long-run aggregate supply curve shifts leftward
there is movement along the short-run aggregate supply curve
the short-run aggregate supply curve shifts leftward
massive labour lay-offs occur

The land of Ur embarks upon a program where all citizens are required to attend 6 years of post-secondary education. As a result, the long-run aggregate supply curve shifts _______ and so does the _______ curve.

leftward; aggregate demand
rightward; short-run aggregate supply
leftward; short-run aggregate supply
rightward; aggregate demand

When the price level increases, _________________________.

real GDP remains constant
the quantity of real GDP demanded decreases
aggregate demand decreases
aggregate demand increases

As the price level rises and other things remain the same, real wealth ___________ and ______________.

increases; aggregate demand increases
decreases; the quantity of real GDP demanded decreases
decreases; aggregate demand decreases
increases; the quantity of real GDP demanded increases

People in the country of Ru expect their incomes to increase next year. As a result, the ______________ will shift _______________.

long-run aggregate supply curve; rightward
aggregate demand curve; rightward
short-run aggregate supply curve; rightward
aggregate demand curve; leftward

Aggregate demand will increase if the quantity of money _________________________.

is decreased and tax rates are increased
remains constant and tax rates are increased
and transfer payments are decreased
is increased and tax rates are decreased

The business cycle is actually a continuous series of different ____________________.

short-run macroeconomic equilibriums
nominal GDP values
full-employment equilibriums
potential GDP values

Starting at full employment, a business cycle can be described by the following sequence: ________equilibrium, ________ equilibrium, _______equilibrium.

full-employment; below full-employment; above full-employment
below full-employment; full-employment; below full-employment
below full-employment; full-employment; above full-employment
above full-employment; below full-employment; full-employment

An economy is at full employment. Which of the following events can create an inflationary gap?

An increase in the capital stock
An increase in potential GDP
An increase in wages
An increase in foreign income

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