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Chapter 9 AD/AS Flashcards | StudBud
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Chapter 9 AD/AS
Chapter 9 AD/AS
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1
In the AD-AS model, a decrease in SRAS can be expected to lead to
anincrease in the price level and a fall in real GDP
afall in the price level and an increase in real GDP
an increasein the price level and an increase in real GDP
afall in the price level and a fall in real GDP
2
The total quantity of goods and services produced in any economy at different prices levels is shown by the
aggregateexpenditures curve
aggregatedemand curve
productionpossibilities curve
aggregatesupply curve
3
An inflationary gap is said to occur whenever
theeconomy experiences inflation
equilibriumreal GDP is less than potential output
thereis an increase in unemployment
equilibriumreal GDP is greater than full employment real GDP
4
Aggregate demand consists of
thequantity of real output produced in an economy at different price levels
Q of real output all buyers in an economy want to buy at different PL's
Q of real output that consumers and producers want to buy at different PL's
thequantity of real output that consumers want to buy at different prices
5
In the monetarist/new classical model, long run equilibrium occurs
atpotential output
atfull employment real GDP
wherethe AD and SRAS curves intersect on the LRAScurve
allof the above
6
When short-run aggregate supply increases, the
SRAS
curve
shiftsto the left
shiftsupward
remainsconstant
shiftsto the right
7
The horizontal part of the Keynesian AS curve is based on the assumption that
wagesand prices are fully flexible
theprice level can fall though wages do not fall easily
wagescan fall though the price level does not fall easily
wagesand prices do not fall easily
8
Which of the following can cause a rightward shift of the
SRAS
curve?
anincrease in costs of production
anegative supply shock
arise in input prices
afall in input prices
9
When equilibrium real GDP is less than the full employment level of real GDP, the economy is probably experiencing
inflation
aninflationary gap
adeflationary gap
afall in unemployment
10
In the monetarist/new classical AD-AS model, an increase in aggregate demand can be expected to lead to
anincrease in the price level and a fall in real GDP
anincrease in the price level and an increase in real GDP
a fall inthe price level and a fall in real GDP
a fall inthe price level and an increase in real GDP
11
A rightward shift in the aggregate demand curve may occur as a result of
agovernment decision to reduce spending on education
animprovement in technology that increases investment spending
increasesin interest rates that raise the cost of borrowing
increasesin income and business taxes that reduce incomes and profits
12
Which of the following is
not
a component of aggregate demand?
consumptionand investment spending
netexport spending
importminus export spending
governmentspending
13
The short-run aggregate supply curve shows that
asthe price level falls, firms produce more output
asthe price level increases, firms produce more output
asthe price level increases, firms produce less output
outputproduced by firms is independent of the price level
14
The long-run aggregate supply curve
isnot affected by changes in aggregate demand
allof the above
reflects the idea that in the LR, output is independent of the price level
isvertical at the level of potential or full employment output
15
A leftward shift in the aggregate demand curve may occur as a result of
decreases in income taxes that increase after tax incomes and profit
worseningconsumer and business confidence
fallingconsumer and corporate indebtedness
fallinginterest rates that lower the cost of borrowing
