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AS/AD Flashcards | StudBud

AS/AD

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Aggregate Supply and Aggregate Demand

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Questions 10

Answers

1
At point A, what type of gap exists?
Inflationary gap
Expansionary gap
Sadness gap
Recessionary gap
2
How would the current gap be best described?
Inflationary
Demand
Awesome
Recessionary
3
Refer to the graph. The shift from AD₁ to AD₂may have been caused by:
a reduction in aggregate supply.
a reduction in the price level.
a decrease in government spending.
a decline in personal taxes.
4
Higher prices of imported resources will:
move the economy downward & to the right along the AD curve
shift the AS supply curve to the left.
shift the AD curve to the left.
make the AD curve steeper.
5
An increase in the incomes of U.S. trading partners would shift the U.S.:
aggregate demand curve to the right.
aggregate supply curve to the right.
aggregate supply curve to the left.
aggregate demand curve to the left.
6
The self-correcting mechanism of the economy explains why
Wages+prices adjust 2 return the economy to full employment.
Fiscal policy cannot increase aggregate demand in the SR.
The economy will not sustain inflation.
The natural rate of output changes to eliminate unemployment
7
An increase in the price level will:
reduce the value of household debt & increase investment.
increase production costs & reduce short-run AS.
drop purchasing power of personal wealth & drop consumption.
increase net exports.
8
Which of the following will not shift AS left?
An increase in the wage rate.
A new cost-reducing production technology.
A sudden increase in energy prices.
An increase in the expected price level.
9
An increase in production costs will:
shift AS left.
shift AD left.
shift AD right.
shift AS right.
10
The long-run supply curve is:
upward-sloping.
vertical
downward-sloping
horizontal.