CH3535Practice.docx

CH 35 35 Practice ?Suppose the full employment level of real output (Q) for a hypothetical economy is $500, the price level (P) initially is 100, and that prices and wages are flexible both upward and downward. Use the following short-run aggregate supply schedules to answer the next question(s).?? 11.?Refer to the information above. If the price level unexpectedly increases from 100 to 125, the level of real output in the short run will:? A.?rise from $500 to $560. B.?fall from $500 to $440. C.?fall from $560 to $500. D.?rise from $440 to $500. 12.?Refer to the information above. In the long run, an increase in the price level from 100 to 125 will:? A.?increase real output from $500 to $560. B.?decrease real output from $500 to $440. C.?change the aggregate supply schedule from (a) to (c) and result in an equilibrium level of real output of $560. D.?change the aggregate supply schedule from (a) to (b) and result in an equilibrium level of real output of $500. 13.?Refer to the information above. If the price level unexpectedly declines from 100 to 75, the level of real output in the short run will:? A.?rise from $500 to $560. B.?fall from $500 to $440. C.?fall from $560 to $500. D.?rise from $440 to $500. 14.?Refer to the information above. In the long run, a fall in the price level from 100 to 75 will:? A.?decrease real output from $500 to $440. B.?increase real output from $500 to $620. C.?change the aggregate supply schedule from (a) to (c) and produce an equilibrium level of real output of $500. D.?change the aggregate supply schedule from (a) to (b) and produce an equilibrium level of real output of $500. ??? 16.?Refer to the above diagram. Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf. In the short run, an increase in the price level from P2 to P3 will:? A.?change aggregate supply from AS2 to AS3. B.?increase real output fro