Consider Yp in panel (b). What is it? Panel (a) Panel (b) Price level Price level Py ::3 P, . P, P Y: Y Yo Y, Real GDP Real GDP Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a indicates a decrease in aggregate demand. b itis potential output. indicates a recessionary gap. d isassociated with considerable unemployment. The level of income associated with Y1 in panel (b): Panel (a) Panel (b) Price level Price level AS AS P1 AD X AD Y1 YP YP Y1 Real GDP Real GDP Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a is equal to potential output. b reveals an inflationary gap compared with Yp. C is a long-run equilibrium. d is caused by flexible wages and prices.If the consumer price index is 180 in year 1 and 190 in year 2, the inflation rate between year 1 and year 2 is about (in percentage form - that is a whole number like "18" and not a decimal like "0.18"): Typed numeric answer will be automatically saved. Use the table to answer the question. Noting that 2010 is the base year, real GDP increased by what percentage? Use the midpoint formula for calculating percentages, and be sure to answer in percentage form, meaning if you calculate a decimal value like .05, multiply this by 100 to get "5" meaning "5 percent." Table: Peanut Butter and Jelly Economy Product 2010 Output 2010 Prices Product 2011 Output 2011 Prices (base year) Peanut Butter 200 units $1 per unit Peanut Butter 250 $1.10 per unit Jelly 100 units 2 per unit Jelly 100 2.50 per unit Typed numeric answer will be automatically saved. N Look at the figure. Suppose that this economy is in equilibrium at E2. If there is a tax increase, then in the short run, will shift to the ,causing a(n) in the price level and a(n). in real GDP. Aggregate | price level AS P2 . . ... P1 . . . . . E1 AD2 AD1 Y1 Real GDP Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a AD2; left; increase; decrease b AD2; left; decrease; decrease C AD1; right; increase; increase d AD1; right; decrease; increaseSuppose that the economy is in an expansionary period or inflationary gap. Of the following, the appropriate FISCAL policy is: Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a an increase in government transfer payments. b an increase in government purchases of goods and services. C an increase in tax rates. d a decrease in interest rates.The aggregate supply curve is slopes upwards because: Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a Wages and other costs of production respond immediately to changes in prices. b profitis lower when prices increase, so output decreases. workers are willing to work for lower wages rather than be laid off. d higher prices for output lead to higher profits and higher output. Which of the following is the most widely accepted way to show that economic growth has occurred over time? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a inflation b increases in real per capita GDP C decline in real interest rates d increases in the available labor supplyMonetary policy affects aggregate demand primarily through changes in: Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a government expenditures. b taxes and transfer payments collected by the government. investment spending. d exportdemand. If the cost of a market basket is $150 in year 1 and $200 in year 2, the price index for year 2 using year 1 as the base is: Typed numeric answer will be automatically saved. I The consumer price index in the United States in 1971 was 40.5, while in 1992 it was 140.3. What amount in 1992 would be equivalent to a dollarin 1971? Round your answer to two digits. Typed numeric answer will be automatically saved. S Consider an economy that produces two goods: clothing and housing. Last year, 10 units of clothing were sold at $20 each and 5 units of housing were sold at $100 each, while this year 15 units of clothing were sold at $10 each and 10 units of housing were sold at $50 each. Real GDP this year using last year as the base year is: Typed numeric answer will be automatically saved. | Producing a short-run level of aggregate output that exceeds the economy's potential output results in a(n) in adjustment Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a downward; wages b upward; profits per unit of output downward; production costs d upward; wages Times in which output is falling and unemployment is increasing are: Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a recessions. b booms. C expansions. d deflations. Consider the diagram and suppose that the economy were in a temporary equilibrium at point 4, where aggregate supply is AS1 and aggregate demand is AD1. An appropriate fiscal policy to pursue if the economy were at this point is: GDP deflator . ASs Y AS, AS 1 4 ap, ADs AD, Real GDP 3 5 6 8 9 AD, AD 3 AD Real GDP Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a A tax cut or an increase in spending b Easy money policy that results in a lower interest rate and increased investment spending. C An increase in taxes. d Monetary policy that increases the interest rate, decreasing investment spending.Suppose the economy is producing at a point above potential GDP. In the long-run, as the economy automatically adjusts, the price level will and output will Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a rise; increase b rise; decrease C rise; remain stable d fall; remain stable Of the alternatives listed below, the best way we have available to measure the standard of living in a country is: Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a nominal GDP b market GDP. C real GDP per capita. d nominal GDP per capita.Which of the following events in the 1970s caused economists to question some of the basic assumptions of macroeconomic theory as it existed at the time? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a The extreme volatility of investment spending throughout the decade. b The simultaneous occurrence of deflation and unemployment. C The simultaneous occurrence of inflation and unemployment. d The prolonged impact on the economy of the Vietnam War.In a small town, 100 people are working, 25 people are not working but are looking for work, and 45 people are neither working nor looking for work. The unemployment rate in this town is (answer in percentages like 15.1, not decimals like 0.151): Typed numeric answer will be automatically saved. 0] The Efficient Markets Hypothesis: Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a Implies that future changes in stock prices can't be predicted using present data. b Implies that future changes in stock prices are completely predictable using present data. Implies that someone who uses data efficiently can make more money in the stock market. d Implies thatinsiders such as money managers have natural informational advantages. The rule of 70 indicates that a 6% annual increase in the level of real GDP would lead to the output doubling in approximately how many years? Typed numeric answer will be automatically saved. I A firm's research reveals that the return on investment (ROI) per year for three potential projects is given as follows: Project ROI A 6% B 5% 4% 3% If the going interest rate is 3.5%, which of the projects will the firm undertake? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a A and B only. b Conly. c All of the projects. d All of the projects except D.Use the table to answer the question. In 2011, for the two-good economy below, real GDP in 2011 using 2010 as the base year was: Table: Peanut Butter and Jelly Economy Product 2010 Output 2010 Prices Product 2011 Output 2011 Prices {base year) Peanut Butter 200 units $1 per unit Peanut Butter 250 $1.10 per unit Jelly 100 units 2 per unit Jelly 100 2.50 per unit Typed numeric answer will be automatically saved. Consider the figures. The position of AS with AD in (a) shows an economy: Panel (a) Panel (b) Price level Price level AS AS P3 P2 P1 Y1 YP YP Y1 Real GDP Real GDP Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a in a recessionary gap. b in an inflationary gap. C in long-run equilibrium. d with an unusually low unemployment rate.Which of the following correctly describes how interest rate policy influences investment spending? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a Higherinterest rates encourage more investment, because investors make higher returns Higher interest rates encourage more investment, because businesses are more willing to extend credit to b . . . . consumers, inducing businesses to invest more. c Higher interest rates reduce investment, because higher interest rates increase the costs of borrowing and investment opportunity costs for businesses. d Higher interest rates reduce investment, because consumers need to hold fewer investments to achieve the same rates of return as previously