Question 1
What is meant by inflationary gap?
A.
AD = SRAS determines PL and real output. B.
AD rise mainly raises prices near capacity. C.
Sticky wages — may stay below Yfe. D.
Equilibrium above LRAS / positive output gap.
Question 2
A recessionary gap means:
A.
Exports exceed imports B.
Actual output below potential C.
Inflation is hyper D.
Budget is in surplus
Question 3
What is meant by squeezing inflation?
A.
Policy takes months/years to affect equilibrium. B.
Contractionary policy to reduce AD inflation. C.
Firms can expand output without much price rise. D.
Equilibrium above LRAS / positive output gap.
Question 4
Keynesian theory suggests in deep recession:
A.
Wages may be sticky downward B.
No role for government C.
LRAS is always vertical D.
Markets always clear instantly
Question 5
Short-run macro equilibrium occurs where:
A.
MPC equals zero B.
Exports equal GDP C.
S equals T only D.
AD equals SRAS
Question 6
What is meant by keynesian persistence?
A.
Contractionary policy to reduce AD inflation. B.
Sticky wages — may stay below Yfe. C.
AD = SRAS determines PL and real output. D.
AD rise mainly raises prices near capacity.
Question 7
What is meant by sr equilibrium?
A.
AD = SRAS determines PL and real output. B.
Policy takes months/years to affect equilibrium. C.
Sticky wages — may stay below Yfe. D.
Equilibrium above LRAS / positive output gap.
Question 8
Near full capacity, higher AD mainly causes:
A.
Deflation B.
Higher real output only C.
Lower imports only D.
Higher inflation
Question 9
What is meant by time lags?
A.
Policy takes months/years to affect equilibrium. B.
AD rise mainly raises prices near capacity. C.
Where planned injections equal withdrawals (or AD = AS). D.
AD = SRAS determines PL and real output.
Question 10
What is meant by spare capacity?
A.
Policy takes months/years to affect equilibrium. B.
Firms can expand output without much price rise. C.
AD = SRAS determines PL and real output. D.
Equilibrium below LRAS / negative output gap.
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