Deck 20: Demand Side and Supply Side Policies

Question 1

The total level of planned spending on final goods and services in an economy at any price is shown by:

A) Aggregate demand curve
B) Aggregate supply curve
C) Aggregate income curve
D) The production possibility frontier

Answer 1

A

Question 2

The total amount of final goods and services that can be produced at each and every price, other things unchanged, is shown by:

A) Aggregate demand curve
B) Aggregate supply curve
C) An inflationary gap
D) GDP

Answer 2

B

Question 3

An increase in aggregate demand will generally:

A) Increase price, decrease output
B) Decrease price, decrease output
C) Increase price, increase output
D) Decrease price, increase output

Answer 3

C

Question 4

Supply side policies do not include:

A) Training more people
B) Subsidizing investment in research and development
C) Reducing the benefits available for the unemployed
D) Increasing spending on products

Question 5

In a slump aggregate supply is likely to be relatively:

A) Price inelastic
B) Demand inelastic
C) Output sensitive
D) Price elastic

Question 6

An increase in aggregate demand if aggregate supply is totally price elastic will:

A) Increase price but not output
B) Increase output but not price
C) Increase output and price
D) Decrease output and price

Question 7

An increase in aggregate supply should lead to:

A) An increase in price and output
B) A decrease in price and output
C) An increase in price and decrease in output
D) A decrease in price and increase in output

Question 8

If aggregate supply is totally price inelastic an increase in aggregate demand will affect output and not price.

Question 9

If aggregate supply is totally price elastic firms can easily increase output.

Question 10

The maximum output the economy can produce with all its resource employed is called _______ employment.

Question 11

Which of the following will influence the level of aggregate demand in an economy?

A) Household income
B) The amount of government spending
C) The level of net exports
D) All of the above

Question 12

Which of the following would increase the level of aggregate demand within an economy?

A) An increase in taxation
B) Positive expectations about future income prospects
C) An increase in imports
D) Contractionary government policy

Question 13

Which of the following would lead to a fall in aggregate demand?

A) A decrease in net exports
B) A decrease in tax rates
C) An increase in consumption
D) A fall in imports

Question 14

Which of the following does not influence the level of aggregate supply within an economy?

A) The price level
B) Consumer income
C) The state of technology
D) The level of immigration