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