A) Aggregate supply is another name for potential GDP. B) Potential GDP increases as the price level increases. C) At full employment, aggregate supply is equal to potential GDP. D) Potential GDP decreases as the price level increases. E) The potential GDP line has a negative slope. Answer: C 7) If the costs of production increase, there is A) an increase in aggregate supply and the curve shifts rightward. AS B) a decrease in aggregate supply and the curve shifts leftward. AS C) an increase in the quantity of real GDP supplied and a movement up along the curve. AS D) a decrease in the quantity of real GDP supplied and a movement down the curve. AS E) a decrease in aggregate supply and the shifts rightward. AS Answer: B 8) of the following shifts the aggregate supply curve leftward? A) a decrease in potential GDP B) a fall in the money wage rate C) a decrease in the price level D) a fall in the real wage rate E) an increase in potential GDP Answer: A 9) If potential GDP increases, then the A) aggregate supply curve shifts leftward. B) aggregate supply curve shifts rightward. C) real wage rate increases. D) real wage rate falls. E) aggregate demand curve shifts rightward. Answer: B 10) The change reflected in the figure might be a result of A) a decrease in the money wage rate. B) a decrease in the real wage rate. C) an increase in the money wage rate. D) an increase in the real wage rate. E) a rise in the price level. Answer: A 11) A fall in the real wage rate ________ profits and leads to ________ in the quantity supplied. A) raises; an increase B) raises; a decrease C) lowers; an increase D) lowers; a decrease E) does not change; no change
A) Aggregate supply is another name for potential GDP. B) Potential GDP increases as the price level increases. C) At full employment, aggregate supply is equal to potential GDP. D) Potential GDP decreases as the price level increases. E) The potential GDP line has a negative slope. Answer: C 7) If the costs of production increase, there is A) an increase in aggregate supply and the AS curve shifts rightward. B) a decrease in aggregate supply and the AS curve shifts leftward. C) an increase in the quantity of real GDP supplied and a movement up along the AS curve. D) a decrease in the quantity of real GDP supplied and a movement down the AS curve. E) a decrease in aggregate supply and the AS shifts rightward. Answer: B 8) of the following shifts the aggregate supply curve leftward? A) a decrease in potential GDP B) a fall in the money wage rate C) a decrease in the price level D) a fall in the real wage rate E) an increase in potential GDP Answer: A 9) If potential GDP increases, then the A) aggregate supply curve shifts leftward. B) aggregate supply curve shifts rightward. C) real wage rate increases. D) real wage rate falls. E) aggregate demand curve shifts rightward. Answer: B 10) The change reflected in the figure might be a result of A) a decrease in the money wage rate. B) a decrease in the real wage rate. C) an increase in the money wage rate. D) an increase in the real wage rate. E) a rise in the price level. Answer: A 11) A fall in the real wage rate ________ profits and leads to ________ in the quantity supplied. A) raises; an increase B) raises; a decrease C) lowers; an increase D) lowers; a decrease E) does not change; no change