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Aggregate Supply
Aggregate Supply
20 terms
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StudBud Administration
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A revision quiz on aggregate supply and supple-side policies.
Flashcards
20 cards
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Practice quiz
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Questions
20
Answers
1
Which of the following is likely to shift an economy’s SRAS curve to the right?
A fall in global oil and gas prices
A rise in the size of the trade deficit
A government employment subsidy
A fall in corporation tax
2
The trend rate of GDP growth is best defined as the
Rate of growth that can be sustained in the long run
Fastest GDP growth achieved over a 10-year period
Rate of growth needed to keep unemployment low
Average rate of growth achieved during a boom
3
An increase in which of the following will likely cause a fall in investment spending?
national income
company profits
interest rates on corporate debt
business confidence
4
What is part of Keynesian macroeconomic analysis?
a vertical short-run aggregate supply curve
a liquidity trap when low interest rates are ineffective
an equilibrium price that always clears the market
a non-linear aggregate supply curve
5
If aggregate demand is assumed constant, a leftward (inward) shift in the LRAS curve will
affect only the level of real GDP.
affect only the general level of prices
increase real GDP and also lower the price level.
reduce real GDP and also raise the price level.
6
If the economy achieves cyclical GDP growth but not long-run potential growth, what would the final position be?
C
B
A
D
7
Which of the following is most likely to increase a UK manufacturing firm’s productivity?
An increase in net capital investment
A fall in demand by consumers of the firms' product
A fall in capacity utilisation
A decrease in personal income tax rates
8
How can a change in consumption that increases unemployment be illustrated on an AD-AS diagram?
C
D
A
B
9
Large scale damage such as that caused by a hurricane or earthquake will be demonstrated by
SRAS moving to the left
SRAS moving to the right
LRAS moving to the left.
LRAS moving to the right
10
Which of the following will cause a contraction of SRAS
followed
by an inward shift of SRAS?
Disinflation followed by a currency depreciation
Deflation followed by a currency depreciation
Inflation followed by a rise in the national living wage
Deflation followed by a fall in indirect taxes
11
Which of the following factors could cause an outward shift in LRAS?
Lower average price level
Advances in the state of technology
Increased availability of natural resources
Improved infrastructure
12
What
must
be true if an economy is experiencing inflation?
Interest rates are rising
The real value of money is falling
Aggregate supply is decreasing
Aggregate demand is increasing
13
Which of the following factors would be expected to cause an outward shift of LRAS?
Technological progress in the economy.
A decision to increase spending on welfare benefits
A sustained boom in house prices
A fall in the exchange rate leading to a rise in exports
14
Which of these policies would
free-market economists
favour to increase long run aggregate supply?
Agreements to liberalise trade between countries
An increase in subsidies to the energy industry
A reduction in basic and higher rates of income tax
Privatisation of previously state-owned sectors such as transport
15
How will an increase in government spending on infrastructure affect aggregate demand and aggregate supply?
A
D
B
C
16
The position of the long run aggregate supply curve depends directly upon the
size of the household savings ratio
size of the budget deficit
size and quantity of the labour force and capital stock
size and quantity of stocks of raw materials
17
Which change in circumstances is most likely to lead to a reduction in the rate of domestic inflation
An increase in competition in domestic markets
A rise in labour productivity
higher indirect taxes to finance increased welfare payments
a depreciation in the currency
18
A movement from a point inside the production PPF to a point on the PPF itself represents
Short run economic growth
A fall in inequality
Economic development
Long run economic growth
19
Which of the following is likely to decrease long run aggregate supply?
A reduction in corporation tax and income tax
A short-term rise in the price of raw materials
A period of net outward migration
A rise in economic inactivity
20
Other things remaining the same, a rise in the national minimum wage will result in
LRAS moving to the left
SRAS shifting to the right
SRAS shifting to the left
LRAS moving to the right.
