Figure 10-2
At which point in is the economy experiencing an economic recession?
a.
J
b.
I
c.
F
d.
H
b
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Which of the following is not a reason the aggregate-demand curve slopes downward? As the price level increases,
a. firms may believe the relative price of their output has risen. b. real wealth declines. c. the interest rate increases. d. the exchange rate increases.
Which of the following statements best describes the substitution bias in the construction of the CPI?
A. Not taking into account that consumers alter their buying habits as new products come into being and lifestyles change, for example, the rising popularity of cell phones instead of land-line phones. B. Not accounting for the fact that consumers are effectively getting more product for their money because technological changes have led to improvements in quality and lower production costs over time. C. The failure to recognize that over time consumers alter the goods they buy, switching from relatively high priced goods toward lower-priced alternatives. D. The failure to capture the fact that consumers have made substitutions in their shopping habits: shifting from high-priced department stores to lower-priced discount stores.
Suppose policy makers want to increase NX and keep Y constant. Which of the following policies would most likely achieve this?
A) a reduction in government spending B) a real depreciation C) a reduction in government spending and a reduction in the real exchange rate D) a reduction in the real exchange rate and a tax cut
Consider a nation in which most workers are unionized. If all the nation's unions band together and succeed in boosting wages established by long-term labor contracts, then
A. there is a leftward shift in just LRAS. B. there is a rightward shift in just SRAS. C. there is a rightward movement along the SRAS curve. D. there is a leftward shift in both LRAS and SRAS.