Which of the following would cause a negative supply shock?

A disruption in world oil supplies

Which of the following will occur if the price of steel decreases?

Short-Run Aggregate Supply will increase.

If actual output is equal to potential output, which of the following is true?

The economy is in long-run equilibrium.

Which of the following will occur in the short run as a result of a decrease in investment spending?

Aggregate Demand will decrease.

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AD/AS Review

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Questions 9

Answers

1
Stagflation results from which of the following?
Negative demand shock
Positive supply shock
Positive demand shock
Negative supply shock
2
Which of the following would cause a negative supply shock?
A decrease in production costs
A housing market crash
An increase in productivity
A disruption in world oil supplies
3
Which of the following is true when the economy is experiencing a recessionary gap?
The economy has self-adjusted.
The price level is rising.
There is high unemployment.
Potential output is below actual output.
4
Which of the following will occur if the price of steel decreases?
Aggregate Demand will decrease.
Short-Run Aggregate Supply will decrease.
Short-Run Aggregate Supply will increase.
Aggregate Demand will increase.
5
Which of the following leads to self correction when the economy is in a recessionary gap?
SRAS shifts right.
SRAS shifts left.
Nominal wages and input prices rise.
Unemployment causes AD to increase.
6
A higher price level leads to greater profit per unit & greater output in the short run because of...
the real wealth effect
the interest rate effect
sticky nominal wages
flexible input prices
7
Which of the following would cause a positive demand shock?
a decrease in the aggregate price level
the discovery of a new oil field
a booming stock market
an increase in nominal wages
8
If actual output is equal to potential output, which of the following is true?
The aggregate price level is falling.
The economy is in long-run equilibrium.
The economy is experiencing high inflation.
The economy is experiencing cyclical unemployment.
9
Which of the following will occur in the short run as a result of a decrease in investment spending?
Aggregate Demand will decrease.
Short-Run Aggregate Supply will decrease.
Short-Run Aggregate Supply will increase.
Aggregate Demand will increase.

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