Question 1

Which of the following does NOT shift the aggregate demand curve?

Accepted Answer

A change in the money wage affects the short-run aggregate supply curve, not the aggregate demand curve.

Question 2

If potential GDP increases,

Accepted Answer

An increase in potential GDP indicates that the economy's capacity to produce goods and services has increased, which leads to an increase in aggregate supply.

Question 3

An increase in the money wage rate leads to

Accepted Answer

An increase in the money wage rate increases production costs, which decreases aggregate supply, causing a leftward shift of the aggregate supply curve.

Question 4

Over a business cycle, the quantities of capital, human capital, and entrepreneurial talent

Accepted Answer

The quantities of capital, human capital, and entrepreneurial talent change gradually over time and do not fluctuate as much as real GDP, which is more sensitive to short-term economic changes.

Question 5

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Based on the figure above, the aggregate demand curve will shift from AD0 to AD1 when

Accepted Answer

Lowering the interest rate by the Federal Reserve makes borrowing cheaper, encouraging spending and investment, which increases aggregate demand and shifts the curve from AD0 to AD1.

Question 6

An increase in technology_{--------------------}potential GDP and_{--------------------} aggregate supply.

Accepted Answer

An increase in technology typically enhances productivity, leading to an increase in potential GDP and aggregate supply.

Question 7

If the money wage rate does not change, a decrease in the price level will_{--------------------} the real wage rate and_{--------------------} firms' profit.

Accepted Answer

A decrease in the price level with a constant money wage rate raises the real wage rate, as real wage is the money wage adjusted for the price level. This increase in real wage rate can decrease firms' profit because labor costs become relatively more expensive.

Question 8

- If the money wage rate and the price level both rise by the same proportion, then in the figure above the potential GDP line _{--------------------} , and the aggregate supply curve _{--------------------} .

Accepted Answer

The answer of 
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If the money wage rate and the...

Question 9

Cost-push inflation can be started by

Accepted Answer

Cost-push inflation occurs when the overall price levels rise due to increases in the cost of wages and raw materials. An increase in the money prices of raw materials can lead to higher production costs, which can then be passed on to consumers in the form of higher prices, thus causing cost-push inflation.

Question 10

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP less than potential GDP, there is

Accepted Answer

A recessionary gap occurs when the equilibrium level of real GDP is less than the potential GDP, indicating that the economy is operating below its full capacity.

Question 11

Which of the following statements is correct?

Accepted Answer

A tax increase reduces consumers' disposable income, leading to a decrease in consumption and shifting the aggregate demand curve leftward.

Question 12

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In the figure above, the shift in the aggregate demand curve from AD1 to AD3 could be the result of

Accepted Answer

The answer of 
-

In the figure above, the shift in...

Question 13

Which of the following shifts the aggregate supply curve leftward?

Accepted Answer

An increase in the money wage rate raises production costs, leading to a decrease in aggregate supply, which shifts the aggregate supply curve leftward.

Question 14

A tax cut _{--------------------}aggregate demand and _{--------------------}

Accepted Answer

A tax cut increases disposable income, leading to higher consumer spending, which increases aggregate demand and shifts the AD curve rightward.

Question 15

During a demand-pull inflation, if the Fed tries to maintain a level of real GDP above potential GDP, the AD curve will _{--------------------} and the AS curve will _{--------------------}.

Accepted Answer

If the Fed tries to maintain real GDP above potential GDP, the AD curve will shift rightward continuously due to increased demand, while the AS curve will shift leftward continuously as resources become more scarce and costs rise, leading to inflation.

Question 16

If there is an increase in expected future income, then

Accepted Answer

An increase in expected future income typically leads to higher current consumption, which increases aggregate demand, causing the aggregate demand curve to shift rightward.

Question 17

When the price level increases there is_{--------------------} movement along the aggregate demand curve because the buying power of money _{--------------------}.

Accepted Answer

When the price level increases, the buying power of money decreases, leading to a movement upward along the aggregate demand curve as the quantity of goods and services demanded decreases.

Question 18

In a demand-pull inflation, if the Fed stops expanding the quantity of money,

Accepted Answer

If the Fed stops expanding the quantity of money, the demand-pull inflation will end.

Question 19

A fall in the price level brings a _{--------------------} in the real wage rate that _{--------------------} profits and can lead to _{--------------------} .

Accepted Answer

The answer of A fall in the price level brings...

Question 20

In the figure above, the economy is at an equilibrium with real GDP of $13 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the _{--------------------} curve shifts_{--------------------} .

Accepted Answer

The answer of 
In the figure above, the economy is...

Quiz 13: Aggregate Supply Ad Aggregate Demand

Which of the following does NOT shift the aggregate demand curve?

If potential GDP increases,

An increase in the money wage rate leads to

Over a business cycle, the quantities of capital, human capital, and entrepreneurial talent

- Based on the figure above, the aggregate demand curve will shift from AD0 to AD1 when

An increase in technology--------------------potential GDP and-------------------- aggregate supply.

If the money wage rate does not change, a decrease in the price level will-------------------- the real wage rate and-------------------- firms' profit.

- If the money wage rate and the price level both rise by the same proportion, then in the figure above the potential GDP line -------------------- , and the aggregate supply curve -------------------- .