The AD-AS diagram used in this chapter
A. is unrelated to the demand and supply diagram used in microeconomics
B. uses the average price level of all goods and services we buy as “price”
C. uses an AS-curve that is relatively more price elastic in the medium run than in the long run
D. uses an AS-curve that is vertical in the long run and horizontal in the very short run
E. all of the above
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Which of the following is NOT reflected in a shift of the AD-curve?
A. a change in real money balances due to a change in the price level
B. a change in real money balances due to a change in nominal money supply
C. a change in government transfer payments
D. a change in the confidence of consumers and businesses
E. all of the above will shift the AD-curve
The slope of the AS-curve becomes steeper
A. as nominal wages become more flexible
B. as nominal wages become more rigid
C. as the actual level of output moves further away from potential output
D. as the economy approaches full employment
E. both A) and D)
A decrease in real money supply caused by an increase in the price level is graphically represented by
A. a shift of the AD-curve to the right
B. a shift of the AD-curve to the left
C. movement along the AD-curve to the right
D. movement along the AD-curve to the left
E. a shift of the AS-curve to the right
The natural rate of unemployment is
A. always zero
B. the unemployment rate that exists when inflation is zero
C. the unemployment rate that exists when output is assumed to be at its full-employment level
D. the unemployment rate that exists above frictional unemployment
E. none of the above
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