1. The imperfect-information model assumes that producers find it difficult to distinguish

between changes in:

A) real wages and nominal wages.

B) the overall level of prices and relative prices.

C) the overall level of prices and the expected level of prices.

D) cost-push inflation and demand-pull inflation.

2. The short-run aggregate supply curve is drawn for a given:

A) output level.

B) price level.

C) expected price level.

D) level of aggregate demand.

3. The model of aggregate demand and aggregate supply is consistent with short-run

monetary ______ and long-run monetary ______.

A) neutrality; neutrality

B) nonneutrality; nonneutrality

C) neutrality; nonneutrality

D) nonneutrality; neutrality

4. Which of the following will shift the aggregate supply curve up to the left?

A) an increase in the price level

B) a decrease in the level of output

C) an increase in the expected price level

D) a decrease in the price level

5. The Phillips curve shows a ______ relationship between inflation and unemployment,

and the short-run aggregate supply curve shows a ______ relationship between the

price level and output.

A) positive; positive

B) positive; negative

C) negative; negative

D) negative; positive