Question 1

Stagflation results from
A)a shift of the AS curve to the left.
B)a shift of the AS curve to the right.
C)a shift of the AD curve to the left.
D)a shift of the AD curve to the right.

Accepted Answer

Stagflation is characterized by slow economic growth and high unemployment (stagnation) along with rising prices (inflation). This can be represented by a leftward shift of the Aggregate Supply (AS) curve, which indicates a decrease in the overall production capacity of the economy while prices increase.

Question 2

An increase in aggregate demand (given no change in aggregate supply) will cause______________ inflation.
A)constant
B)higher
C)lower
D)none of the above

Accepted Answer

An increase in aggregate demand, when aggregate supply remains unchanged, typically leads to higher inflation. This is because more money is chasing the same amount of goods and services, leading to an increase in prices.

Question 3

Which of the following would NOT cause a SHIFT in AS?
A)Incentives
B)The structure of the economy
C)The level of government spending
D)The costs of the factors of production

Accepted Answer

The level of government spending affects aggregate demand, not aggregate supply. Changes in incentives, the structure of the economy, and the costs of the factors of production directly impact the aggregate supply curve by altering the production capacity and costs.

Question 4

Which of the following events will shift the Aggregate Supply curve to the left?
A)a fall in interest rates.
B)land costs fall.
C)real wages rise.
D)inflation expectations decrease.

Accepted Answer

A rise in real wages increases production costs for businesses, which can lead to a decrease in the quantity of goods and services supplied at any given price level, shifting the Aggregate Supply curve to the left.

Question 5

The short-run Aggregate Supply curve is upward sloping only because we assume that resource costs are held .
A)constant
B)flexible
C)need more information
D)none of the above

Accepted Answer

The short-run Aggregate Supply curve is upward sloping because it is assumed that resource costs, such as wages and prices of raw materials, are held constant. This assumption allows for output to increase with rising prices, as firms are more willing to produce more goods when prices rise, assuming their costs do not change.

Question 6

If Aggregate Demand exceeds Aggregate Supply, unwanted inventories will begin to accumulate, forcing firms to ______________prices to get rid of those inventories.
A)zero
B)none of these
C)increase
D)reduce

Accepted Answer

When aggregate demand exceeds aggregate supply, there is a shortage of goods, not an accumulation of unwanted inventories. Therefore, firms are more likely to increase prices, not reduce them. However, the question seems to be based on a misunderstanding of economic principles.

Quiz 1: Macroeconomic Concepts and Policies

Stagflation results from

An increase in aggregate demand (given no change in aggregate supply) will cause______________ inflation.

Which of the following would NOT cause a SHIFT in AS?

Which of the following events will shift the Aggregate Supply curve to the left?

The short-run Aggregate Supply curve is upward sloping only because we assume that resource costs are held .

If Aggregate Demand exceeds Aggregate Supply, unwanted inventories will begin to accumulate, forcing firms to ______________prices to get rid of those inventories.