How is it possible for the economy reach Y1 in the short term?

Overtime use of labour and capital

How is a positive wealth effect best described?

Confidence rising as assets appreciate

studbud

AD/SRAS/LRAS

20 termsStudBud Administration2,089 plays

A quiz on Aggregate Demand and Supply aimed at Lower Sixth A-Level students just starting out on their macroeconomics

Flashcards20 cardsFPractice quizPHost liveL

Questions 20

Answers

1
In which phase of the cycle is the Accelerator effect likely to be strongest?
Recession
Boom
Downturn
Recovery
2
What would a rising budget deficit do to AD holding all else equal?
Improve the trade/(X-M) balance
Shift it right
Worsen the trade/(X-M) balance
Shift it left
3
In the Keynesian model of LRAS, if there is a rise in AD, when is inflation most likely?
In a recession
In a boom
In a downturn
In a recovery
4
What does the word aggregate mean?
Total
Median
Subtract
Mean/Average
5
What is likely to be happening in the following diagram?
Consumer confidence is higher
Demand-pull inflation
Raw material prices are rising
Oil prices are falling
6
What is the formula for the multiplier effect?
1/1-mps
1/mpc
100/1-mps
1/1-mpc
7
Which component of AD is biggest in the UK?
X
I
G
C
8
When is the level of investment least likely to rise?
As interest rates fall
In a recovery
As spare capacity increases
As spare capacity decreases
9
Which of the following would cause a rightward shift in SRAS?
Falling exchange rate
Higher oil prices
Rising wages
Lower VAT
10
How is it possible for the economy reach Y1 in the short term?
Full capcity is higher
Overtime use of labour and capital
AD rises
Costs of production have fallen
11
What is the impact on AD if oil prices rise?
Shift right in AD
Shift left in AD
Movement right along AD
Movement left along AD
12
What is the formula which gives us Aggregate Demand?
C-I+G+(X-M)
C+I+G+(X+M)
C+I+G+(X-M)
C+I+G-T+(X-M)
13
Which type of taxation is most likely to shift the AD curve?
Mansion tax
Income tax
VAT
Excise duties
14
What is the key factor in determining the position of the SRAS curve?
Costs of production
Consumer confidence
Full capacity output of the economy
Level of government spending
15
Which of these would cause a leftward shift in SRAS?
Stronger exchange rate
Higher import prices
Falling business taxes
Lower interest rates
16
Which of the following is not a factor which would shift the AD curve?
Changes in real incomes
Changes in nominal wages
Changes in confidence
Changes to the Interest Rate
17
What does the Keynesian LRAS allow for that the Classical LRAS does not?
Inflation as AD rises near full capacity
An economy operating above full capacity
The ability for the full capacity output to shift right
Prolonged recession
18
All of the following would shift the LRAS to the right except for .....
Falling levels of inactivity
Technological progress
Greater provisiona dn quality of education
Higher direct taxes
19
How is a positive wealth effect best described?
House prices falling makes housing afforable
Share dividends rising
Value of an asset rising
Confidence rising as assets appreciate
20
All of the following would shift the LRAS to the right except for .....
A weaker banking system
Improving capital investment conditions
More competitive markets
The development of an entrepreneurial culture

AD/SRAS/LRAS Flashcards | StudBud