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Aggregate Supply and Aggregate Demand Flashcards | StudBud

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Aggregate Supply and Aggregate Demand

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Questions 11

Answers

1
What is the Tax Multiplier (Kt) Equation?
(-MPC)/MPS
1/(1-MPC)
(MPC-1)/(1-MPS)
(-MPC)/(1-MPS)
2
Which is NOT a reason for an upward sloping Short Run AS curve?
Misperceptions
Inflation
Sticky Prices
Sticky Wages
3
What is shown below?
Crowding out
Inflationary Gap
Stagflation
Contractionary Gap
4
"I" is the ______ volatile component of GDP, and changes in "I" are associated with ...
Most; Circular Flow Model
Least; AS/AD Curve
Most; Business Cycle
Least: Business Cycle
5
Define Stagflation
An increase of Prices & GDP caused by a right shift of AD
decrease of GDP and increase in PL b/c of right shift of AS
increase of PL and decrease of GDP because left shift of AS
inflation higher than the desired amount of 2-3%
6
What is the result of the graph below?
Stagflation
Recessionary Gap
Inflationary Gap
Crowding out
7
Ceteris paribus, an improvement in productivity will:
Shift AD to the right
Shift AS to the left
Shift AD to the left
Shift AS to the right
8
If Marginal Propensity to Consume is greater than 1, what must be true?
The multiplier would be decreased
The Marginal Propensity to Save is also greater than 1
It's not possible for MPC to be greater than 1
There is dissavings
9
What is the result of the image below?
Recessionary Gap
Inflationary Gap
Stagflation
The Crowding Out Effect
10
The formula for the Spending Multiplier (Ks) is:
MPC/(1-MPS)
1/MPC
(1-MPC)/MPS
1/(1-MPC)
11
LRAS is most like which other graph?
Production Possibilities Frontier
Aggregate Demand
Circular Flow Model
Investment Demand