QUESTION FOUR [20 4.1 Examine two (2) reasons for the downward-sloping aggregate demand curve. (1– 4.2 Evaluate the shape of the long-run aggregate supply curve. (6) END OF QUESTION PAPER
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- Question 24 What happens on the aggregate demand curve when there is a rise in the price level which causes a change in the interest rate? There is an upward movement along the aggregate demand curve. There is a downward movement along the aggregate demand curve. There is no movement along the aggregate demand curve. There is a leftward shift of the aggregate demand curve. There is a rightward shift of the aggregate demand curve. Question 25 In the long run, the economy has gone through a full business cycle. at least five years have passed. some prices have adjusted. all prices have adjusted. the majority of firms are making a profit. Question 26 In the long run, the output of an economy does not grow. grows at a positive rate. depends on aggregate…Multiple choice. 3. Which of the following statements is true if there is an increase in aggregate demand while the economy is in equilibrium on a positively sloping short-run aggregate supply curve? a) Prices rise, national income does not change B) Prices decrease, national income does not change C) Prices go up and national income goes down. D) Prices decrease and national income decreases. E) Prices rise, national income risesQuestion 26 The effects of a higher than expected price level are shown by Answer shifting the short-run aggregate supply curve right. shifting the short-run aggregate supply curve left. moving to the right along a given aggregate supply curve. moving to the left along a given aggregate supply curve. Question 27 A decrease in the expected price level shifts Answer only the long-run aggregate supply curve right. only the short-run aggregate supply curve right. both the short-run and the long-run aggregate supply curve right. Neither the short-run nor the long-run aggregate supply curve right. Question 28 Which of the following shifts short-run, but not long-run aggregate supply right? Answer a decrease in the actual price level a decrease in the expected price level a decrease in the capital stock an increase in the money supply Question 29 In 1986, OPEC countries increased their production of oil. This caused Answer the price level to rise. aggregate supply to shift right.…
- The effects of a higher than expected price level are shown by Answer shifting the short-run aggregate supply curve right. shifting the short-run aggregate supply curve left. moving to the right along a given aggregate supply curve. moving to the left along a given aggregate supply curve. Question 27 A decrease in the expected price level shifts Answer only the long-run aggregate supply curve right. only the short-run aggregate supply curve right. both the short-run and the long-run aggregate supply curve right. Neither the short-run nor the long-run aggregate supply curve right.Which of the following would shift the long-run aggregate supply curve to the right?a. a decrease in the rate of inflationb. an increase in the growth rate of spendingc. a severe drought that decreases crop production and as a result raises pricesd. the invention of a new computer chip that makes assembly production twice as fastQuestion 2 The Australian economy is initially in long-run equilibrium. The import price of industrial machinery, which it uses for production, now falls. In the short run: the aggregate demand curves shifts left and the short-run aggregate supply curve shifts right. the aggregate demand curve does not shift and the short-run aggregate supply curve shifts right. the aggregate demand curve shifts left and the short-run aggregate supply curve does not shift. the aggregate demand curve shifts right and the short-run aggregate supply curve does not shift. the aggregate demand curve does not shift and the short-run aggregate supply curve shifts left.
- Mexico is experiencing a collapse in business investment, rising unemployment, and falling consumer spending. Business and consumer confidence are low. Illustrate how business and consumer confidence influence aggregate supply and aggregate demand.Which of the following will not shift the long run aggregate supply curve to the left A. Major natural events resulting in the destruction of economic infrastructure B. Increase in unemployment during recessions C. Decrease in the labor force participation D. ongoing political unrests and political instability.Which of the following would shift the long run aggregate supply curve to the left? Decrease in consumption Decrease in the wage rate Decrease in resources Decrease in profit. All of the following would cause a decrease in the aggregate demand except Increase in interest rates Household wealth falls Dollar depreciates relative to foreign currencies Increase in tax rates.
- Question 48 The following event has occurred: The U.S. government has issued tax rebates to households. This causes Question 48 options: a) aggregate demand to increase b) short-run aggregate supply to increase c) short-run aggregate supply to decrease d) aggregate demand to decreaseChose one from Multiple choice. 3. Which of the following statements is true if there is an increase in aggregate demand while the economy is in equilibrium on a positively sloping short-run aggregate supply curve? a) Prices rise, national income does not change B) Prices decrease, national income does not change C) Prices go up and national income goes down. D) Prices decrease and national income decreases. E) Prices rise, national income risesMCQ 3. Which of the following statements is true if there is an increase in aggregate demand while the economy is in equilibrium on a positively sloping short-run aggregate supply curve? a) Prices rise, national income does not change B) Prices decrease, national income does not change C) Prices go up and national income goes down. D) Prices decrease and national income decreases. E) Prices rise, national income rises
