ECON-1012-B-Introduction to Macroeconomics Course Materials & Test Answers | moodle.uleth.ca

Short Description: A graph of price level versus real G D P. Long Description: The vertical axis is labelled, price level (G D P deflator, 20 12 = 100) and ranges from 60 to 110 in increments of 10 with a kink near the origin. The horizontal axis is labelled, real G D P (billions of 20 12 dollars) and ranges from 320 to 520 in increments of 40 with a kink near the origin. The line for S A S slopes upward from the lower left corner to the upper right corner passing through the points (340, 70) and (400, 85). The line for A D slopes downward from the upper left corner to the lower right corner, passing through the points (360, 100), (400, 85), and (440, 70). The line for L A S is a vertical line from the point (440, 0) on the horizontal axis passing through the point (440, 70).

Figure 10.3.1

Refer to Figure 10.3.1, which shows the AS-AD model in which an economy is in short-run macroeconomic equilibrium. Which of the following statements (1) and (2) is correct and which is incorrect?

(1)	The actual unemployment rate exceeds the natural unemployment rate.

(2)	The SAS curve will automatically shift leftward as the economy adjusts to long-run equilibrium.

(1) is correct; (2) is incorrect.

(1) is correct; (2) is correct if the money wage rate falls.

(1) and (2) are correct.

(2) is correct; (1) is incorrect.

(1) and (2) are incorrect.

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ECON-1012-B-Introduction to Macroeconomics

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