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Aggregate Supply and Demand
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Questions in this quiz (20)
1Which of the following is consistent with an increase in the price level?
- ADollars become less valuable, and interest rates fall.
- BDollars become more valuable, and interest rates rise.
- CDollars become more valuable, and interest rates fall.
- DDollars become less valuable, and interest rates rise.
2Which of the following best describes the effects of a fall in the price level?
- AThe real exchange rate and interest rates rise.
- BThe real exchange rate rises, and interest rates fall.
- CThe real exchange rate and interest rates fall.
- DThe real exchange rate falls, and interest rates rise.
3What are the effects of an increase in the price level?
- AThe interest rate decreases, the dollar depreciates, and net exports increase.
- BThe interest rate increases, the dollar appreciates, and net exports decrease.
- CThe interest rate decreases, the dollar appreciates, and net exports decrease.
- DThe interest rate increases, the dollar depreciates, and net exports increase.
4What happens when the dollar depreciates?
- ACanadian exports and imports increase
- BCanadian exports increase, while imports decrease.
- CCanadian exports decrease, while imports increase.
- DCanadian exports and imports decrease.
5What are the implications of a appreciation of the dollar?
- AThe dollar buys more foreign currency, so it buys more foreign goods
- BThe dollar buys less foreign currency, so it buys more foreign goods.
- CThe dollar buys less foreign currency, so it buys fewer foreign goods.
- DThe dollar buys more foreign currency, so it buys fewer foreign goods.
6Why does an increase in the price level cause a decrease in the aggregate quantity of goods and services demanded?
- Abecause wealth falls, interest rates rise, and the dollar appreciates
- Bbecause wealth falls, interest rates fall, and the dollar depreciates.
- Cbecause wealth rises, interest rates fall, and the dollar depreciates.
- Dbecause wealth rises, interest rates rise, and the dollar appreciates.
7When taxes decrease, consumption increases. How is this situation represented in the aggregate demand and aggregate supply model?
- Aby a movement to the left along a given aggregate-demand curve.
- Bby shifting aggregate demand to the right
- Cby shifting aggregate supply to the right.
- Dby a movement to the right along a given aggregate-demand curve.
8Which of the following shifts aggregate demand to the left?
- Aan investment tax credit.
- Ban increase in net exports.
- Can increase in the price level.
- Da decrease in the money supply.
9Which of the following would happen to Canadian net exports and aggregate demand if countries that imported from Canada went into recession?
- ANet exports would fall, and aggregate demand would shift left.
- BNet exports would fall, and aggregate demand would shift right.
- CNet exports would rise, and aggregate demand would shift right.
- DNet exports would rise, and aggregate demand would shift left.
10Why is the long-run aggregate-supply curve vertical?
- Abecause prices are stable.
- Bbecause the government controls inflation.
- Cbecause population grows slowly.
- Dbecause money is neutral.
11In which of the following situations would the long-run aggregate-supply curve shift right?
- Aif technology improves.
- Bif the price level decreases.
- Cif the price of oil increases.
- Dif the money supply increases.
12What happens to prices and output when the long-run aggregate-supply curve shifts left?
- APrices and output both increase.
- BPrices increase and output decreases
- CPrices decrease and output increases.
- DPrices and output both decrease.
13According to the aggregate demand and aggregate supply model, in the long run what is the impact of an increase in the money supply?
- AIt increases both the price level and real GDP.
- BIt increases the price level, but it does not change real GDP.
- CIt increases GDP, but it does not change the price level.
- DIt lowers both the price level and real GDP.
14How do prices change due to an economic contraction that is caused by a shift in aggregate demand?
- AThey fall in the short run and rise back to their original level in the long run.
- BThey fall in the short run and fall even more in the long run.
- CThey rise in the short run and fall back to their original level in the long run.
- DThey rise in the short run and rise even more in the long run.
15Suppose there was an economic contraction caused by a shift in aggregate supply; suppose the central bank changes the money supply to offset the effects of that contraction. How would the effects of the change in money supply be reflected in the aggregate demand and aggregate supply model?
- AAggregate supply would shift to the left.
- BAggregate demand would shift to the left.
- CAggregate demand would shift to the right.
- DAggregate supply would shift to the right.
16In which of the following situations would stagflation exist?
- Awhen prices and output fall.
- Bwhen prices rise and output falls.
- Cwhen prices and output rise.
- Dwhen prices fall and output rises.
17Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, what would we expect will happen in the short run?
- AThe price level will rise, and real GDP might rise, fall, or stay the same.
- BReal GDP will fall, and the price level might rise, fall, or stay the same.
- CThe price level will fall, and real GDP might rise, fall, or stay the same.
- DReal GDP will rise, and the price level might rise, fall, or stay the same.
18Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, the value of the dollar falls. What would we expect to happen in the short run?
- AThe price level will fall, and real GDP might rise, fall, or stay the same.
- BReal GDP will fall, and the price level might rise, fall, or stay the same.
- CThe price level will rise, and real GDP might rise, fall, or stay the same.
- DReal GDP will rise, and the price level might rise, fall, or stay the same.
19Suppose the economy is in long-run equilibrium. In a short span of time, there is a decline in the money supply, a tax increase, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, what would we expect to happen?
- AThe price level and real GDP will both stay the same.
- BThe price level and real GDP will both fall.
- CThe price level will increase, and the real GDP will fall.
- DThe price level and real GDP will both rise.
20Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, what would we expect to happen?
- AThe price level will rise, and real GDP will fall.
- BThe price level and real GDP will both stay the same.
- CThe price level will fall, and real GDP will rise.
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- 1000 Intro to Economics (Aggregate Supply and Demand ) Quiz on Aggregate Supply and Demand, created by Megan Clermont on 14/04/2016.
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- Megan Clermont
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- English
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