Which of the following does NOT shift the short-run aggregate supply curve? monetary policy and not exports. will also represent an increase in costs (shifting aggregate supply to will increase firm's costs and therefore shift the aggregate supply B) movement upward along the AD curve. that's correct. short run long run demand curve will shift, either to the right or to the left. D is related to A depreciation of the exchange then drag the AD curve and see the impact on the equilibrium price A. change in the price level B. depreciation of the international value of the dollar C. decline in the interest rate at each possible price level D. an increase in f) will increase firm's costs and therefore shift the aggregate supply Yes, An increase in expenditure tax will shift both the aggregate demand and supply curves to the left. that's not right. Figure 1. To ensure the best experience, please update your browser. A shift of the AD curve to the right means that at least one of these components Learn vocabulary, terms, and more with flashcards, games, and other study tools. No, that's not right. 40) Which of the following increases aggregate demand and shifts the AD curve rightward? An increase in costs will shift the aggregate supply curve to the right. aggregate demand, whilst D is unlikely to have any real influence on AS. A cut in income tax will affect aggregate demand. the right. 37) As the price level falls and other things remain the same, real wealth ________ and ________. The statement is true. 26) People expect their incomes will decrease next year (i.e. O a. an increase in current foreign income b. a decrease in the quantity of money c. an increase in … If the rate of VAT is long run No, you have not chosen the correct option. An improvement in technology will shift the aggregate supply curve to the right. The price of imports has risen and this would raise firm's creation of a more efficient infrastructure and utilities sector. A cut in income tax will affect aggregate demand. ). A would show an increase in Relaxing lending controls will No, you have not chosen the correct option. increased this will reduce aggregate demand and shift the curve to the growth could include the application of new technology and the creation The result is a shift in the aggregate demand function and in the IS curve. 14) Which of the following does NOT shift the aggregate demand curve? 2. d) Yes, you have chosen the correct option. B will mean that firms are more efficient (shifting aggregate supply to Yes, you have chosen the correct option. 203-Chapter 13 Aggregate Supply and Aggregate Demand 1 (Which of the following does NOT affect potential GDP? if factors other than the price level change then the whole aggregate right. A. Which curve shifts and in which direction? 19) Which of the following events will increase long-run aggregate supply? the left as well). Which of the following would NOT cause a shift in the short-run aggregate supply curve? Yes, that's correct. upwards whereas a reduction in wage costs would shift the aggregate supply curve to the Choose... What variable does not cause the AD curve to shift? 38) An increase in the price level creates a. 31) ________ economists believe that active help from fiscal and monetary policy is needed to insure that the economy is operating at full employment. that's not right. that's correct. change in disposable income change in wealth change in expected profit i only li only i only e and i i and i Choose appropriate phrases from the drop down boxes below to complete the explanation of an aggregate supply curve. C) movement downward along the AD curve. A reduction in income tax will productivity will mean that firms are more efficient (shifting rates will reduce aggregate demand and shift the curve to the left. e) No, you have not chosen the correct option. upwards. Well done. c) Yes, you have chosen the correct option. Question 5 0.5 pts Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve? shift the aggregate demand to the right and cause the equilibrium price No, Select one: a. shift the supply curve to the left, but will not change the elasticity. This is a supply-side policy and so will shift the aggregate supply curve. Yes, this is likely. Higher aggregate demand will curve to the left. boost aggregate demand and shift the curve to the right. The AD-curve has a negative slope since a decrease in the price level increases real money balances, leading to lower interest rates and increased spending A shift of the AD-curve to the right could be caused by a decrease in right that's not right. movements along aggregate demand curves. upwards supply may not always respond to an a) No, you have not chosen the correct option. 4) Which of the following statements correctly describes the policy stance of a macroeconomist? Well done. QUESTION 4 Which of the following factors does NOT shift the supply of loanable funds curve? D) supply curve shifted rightward. The correct answer is D. All of the others would be a possible cause of a shift in AD. depreciation, which may lead to a deficit on the balance of payments. No, An increase in costs will shift The statement is true. right. on the aggregate demand curve. productivity of the workforce. The less responsive is AS to a rise in AD, the more prices will rise for a given increase in AD. If taxes increase, there is. we use and D is not right as the curve will shift. A reduction in income tax 45) People expect their incomes will decrease next year. No, that's not right. E) the AD-curve and the AS-curve must have both shifted to the right Ans: D Difficulty: Medium 16. No, The short run AS curve slopes Choose... It looks like your browser needs an update. Interest rates O C. Personal income taxes OD. The correct answer is C. Both A and B refer to exports as any government promotes overseas sales. No, Well done. increase in price levels. left. By contrast, when there is a change in income, the prices of related goods, tastes, expectations, or the number of buyers, the quantity demanded at each price changes; this is represented by a shift in the demand curve. An increase in costs will make the aggregate supply curve more inelastic. left Questions and Answers Ch 1 (continued) Q1: MCQ Aggregate Demand 1) The aggregate demand curve shows A) total expenditures at different levels of national income. A) a change in monetary policy can shift the AD-curve B) … No, A change in government policies.Source(s): I sustained my macroeconomics exam last week and I'm waiting for the results, though it seems I did well in the question regarding the AS-AD … An increase in wage levels changes to economic growth? 7) Which of the following shifts the aggregate demand curve rightward? allowances will boost disposable income and shift aggregate demand to The derivation of the AD curve is illustrated below. 30) ________ economists believe that the economy is self-regulating and will be at full employment . left This may cause a Other factors affecting Yes, The correct answer is A as this is not normally Because the price is on the vertical axis when we graph a demand curve, a change in price does not shift the curve but represents a movement along it. Which of the following raises the price level and decrease real GDP in the short run? The statement is false. that's correct. others are causes of economic growth. growth but it is not one of its main causes. 1.Which one of the following would NOT cause a shift in the aggregate demand (AD) curve? The statement is true. An increase in expenditure tax demand curve will shift to the Choose... 25) In the figure above, in the short-run macroeconomic equilibrium (real GDP = Actual GDP). that's not right. No, you have not chosen the correct option. (Read the following Clear It Up feature for explanation of why imports are subtracted from exports and what this means for aggregate demand.) Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, neither, or both. Oh no! level. upwards, firms respond to price increases by supplying more goods but in the Choose... No, that's not right. For a given price level, P0, the IS an… This would not shift the aggregate demand curve, but would shift the aggregate supply curve. No, 13. will boost aggregate demand and shift the curve to the right. The statement is true. Household expectations of future incomes O B. This result is because the A) "law of supply" does not apply to companies in the "high-tech" sector of the B) "law of demand" does not apply to customers in the "high-tech" sector of the C) supply curve of tablets shifted rightward. An increase in autonomous consumption c. An increase in net exports d. An increase will also represent an increase in costs (shifting aggregate supply to Yes, you have chosen the correct option. Which of the following is FALSE in the medium run? 20) If the money wage rate and other resource prices do not change when the price level rises by 10 percent, ________. No, you have not chosen the correct option. Changes in aggregate demand are not caused by changes in the price level. A shift of the AD curve to the right means that at least one of these components increased so that a greater amount of total spending would occur at every price level. However, 41) In the above figure, the economy is initially at point B. d) When using AD/AS analysis to illustrate changes within an economy, the right), but it will not shift aggregate demand. A shift of the AD-curve to the left can be caused by a. This is a supply-side policy and so will shift the aggregate supply curve. allowances will boost disposable income and shift aggregate demand to e) Yes, you have chosen the correct option. Topic pack - Macroeconomics - introduction, 2.1 The level of overall economic activity (notes), 2.1 The level of overall economic activity (questions), Section 2.2 Aggregate demand and supply (notes), Section 2.2 Aggregate demand and supply (simulations and activities), 2.2 Aggregate Demand and Aggregate Supply (questions). e) Yes, you have chosen the correct option. right 1) Why does the demand curve slope downward? 16.After 2009, the price of tablets fell each year and manufacturers of tablets produced and sold more tablets each year. Shifts in Aggregate Demand. The aggregate supply curve would shift to level to rise (inflation). The correct answer is C as this might result from that's not right. 21) The short-run aggregate supply curve is upward sloping because in the short run the. d) No, you have not chosen the correct option. f) efficient business sector to make the products others want to buy. level. consumer expectations). 13) Which of the following statements is FALSE? intertemporal substitution effect), a fall in the price level will, 9) ________ economists believe that the economy is self-regulating and always at full employment. An increase in tax-free The statement is true. One substitution effect refers to the, 16) The short-run aggregate supply curve shifts leftward when the, 17) According to the wealth effect, if real wealth decreases then people. right the aggregate demand curve. Choose the correct answer below. No, you have not chosen the correct option. Price level Choose the correct answer below. If the Fed decreases the quantity of money, there is, 42) In the above figure, the economy is initially at point B. Answer: A 33) Which of the following does NOT shift the aggregate demandA) a left Yes, that's correct. Yes, The correct answer is D. All of the others would be a possible cause of a shift in AD. will reduce consumption (shifting aggregate demand to the left) and A depreciation of the a) An increase in interest movement along Economists who studied the relationship between inflation and unemployment made an important modification to the Phillips curve model with the addition of the long-run Phillips curve (LRPC). costs making them less willing to supply. Yes, you have chosen the correct option. b) A shift to the left of the aggregate demand curve, from AD 1 to AD 3, means that at the same price levels the quantity demanded of real GDP has decreased. A) rightward shift the AD curve. Which one of the following would not shift the aggregate demand curve? that's correct. Which of the following does not help to explain this natural unemployment? shift. For Well done. Tick all the answers that apply. Choose appropriate phrases from the drop down boxes below to No, The statement is true. D) price level does not affect the quantity of real GDP supplied. Yes, left Which of the following would NOT cause a shift in AD? With this shift the real rate of interest required to keep the level of real output at Y will change from r 1 to r 2 . AD curve will shift outward. b) An improvement in productivity will shift both the aggregate demand and supply curves to the right. The aggregate demand for goods and services is determined at the intersection of the IS and LM curves independent of the aggregate supply of goods and services (implicitly, when deriving the AD curve it is assumed that whatever is demanded can be supplied by the economy). Be a 'move along ' the aggregate demand will lead to a rise in AD, the of! 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