Chapter 14 Aggregate Demand and Aggregate Supply

| November 9, 2018

21)
Suppose consumer tastes and preferences shift from pizza to tacos. In the short
run case, these changing tastes will result in pizza restaurants ________ pizza
prices and taco restaurants ________ taco prices.
A)
increasing; decreasing
B)
decreasing; increasing
C)
decreasing; decreasing
D)
increasing; increasing

22)
Suppose consumer tastes and preferences shift from tacos to pizzas. In the
short run, these changing tastes will result in pizza restaurants ________
pizza prices and taco restaurants ________ taco prices.
A)
increasing; decreasing
B)
decreasing; increasing
C)
decreasing; decreasing
D)
increasing; increasing

23)
The short run in macroeconomics is the period in which
A)
prices change significantly.
B)
no contracts or agreements exist to fix prices.
C)
demand determines output.
D)
the demand curve is vertical.

Recall
the Application about the behavior of prices in retail catalogs to answer the
following question(s). Economist Anil Kashyap of the University of Chicago
examined the prices of 12 selected goods from L.L. Bean, REI, and The Orvis
Company, Inc. Kashyap tracked the prices from the companies’ catalogs which
were reissued every six months.

24)
Recall the application. This Application examines the concept of
A)
the wealth effect.
B)
sticky prices.
C)
consumer spending habits.
D)
stagflation.

25)
Recall the application. Even though the catalogs listed in the Application were
reissued every six months, the prices which were tracked in these retail
catalogs
A)
were typically fixed for a year or more.
B)
changed every month.
C)
tended to fall during periods of high inflation.
D)
were not listed due to low rates of inflation.

26)
Recall the application. The prices which were tracked in the retail catalogs
exemplified the macroeconomic concept of the short run, a period of time in
which
A)
price changes are significant because the aggregate supply curve is vertical.
B)
prices never change because the aggregate demand curve is vertical.
C)
prices change frequently because of changes in aggregate supply.
D)
prices don’t change very much, implying that the aggregate supply curve is
relatively flat.

27)
The price system always works instantaneously.

28)
Prices of industrial products and wages tend to be the most
“flexible.”

29)
For most firms, the biggest cost of doing business is wages.

30)
The price system works in an economy on a day-to-day basis to match the desires
of consumers with the output from producers.

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