Question 1 (2 points) The negative slope of the aggregate demand curve is due to the substitution effect. True False

Question 2 (2 points) The aggregate supply curve shows the relationship between the aggregate quantity of output supplied by _____ and ____. all the firms in an economy; the overall inflation rate the government; aggregate demand domestically owned firms in the economy; the interest rate the world; the money supply

Question 3 (2 points) If all wages and input costs are completely flexible in the long-run, the long-run aggregate supply curve is vertical horizontal positively sloped negatively sloped

Question 4 (2 points) When input prices do not adjust as quickly as output prices, the aggregate supply curve is _____ showing any increase in the inflation rate will cause an increase in aggregate output supplied. horizontal vertical upward sloping downward sloping

Question 5 (2 points) Which of the following would cause the long-run aggregate supply curve to shift to the left? A decrease in energy prices A decrease in the capital stock A decrease in government expenditures A decrease in exports

Question 6 (2 points) Which of the following shifts the long-run aggregate supply curve to the right? An increase in the inflation rate An increase in the target on the inflation rate An increase in the price of oil An increase in retired workers reentering the labor force

Question 7 (2 points) If the economy is operating on the relatively flat segment of the short-run aggregate supply curve, an increase in aggregate demand causes a big change in the ____ and a small change in ____. aggregate demand; aggregate supply aggregate supply; aggregate demand output; inflation rate inflation rate; output

Question 8 (2 points) If input prices are more flexible (but not completely flexible), an increase in aggregate demand causes a big change in the ____ and a small change in ____. aggregate demand; aggregate supply aggregate supply; aggregate demand output; inflation rate inflation rate; output

Question 9 (2 points) Draw an AD-SRAS where the economy is initially at equilibrium. Furthermore, when drawing the diagram, note that input prices are perfectly flexible. For this particular economy, if imports decreased, what would happen to output and inflation after the fall in imports? Output would decrease and inflation would decrease Output would remain the same and inflation would fall Output would increase and inflation would increase Output would remain the same and inflation would rise

Question 10 (2 points) If input prices are completely flexible, expansionary or contractionary fiscal policy will be able to impact output in both the short and long run. True False