Week7 Class Flashcard: Change In AD-AS model in short run

Front

What does the Aggregate Demand (AD) curve represent?

Back

Total quantity of goods and services demanded at different price levels

Front

What does the Short-Run Aggregate Supply (SRAS) curve represent?

Back

Total output supplied at varying price levels in the short run.

Front

What happens to the SRAS curve when production costs increase?

Back

It shifts to the left.

Front

Which of the following can cause an increase in Aggregate Demand (AD)?

• A. A decrease in consumer spending
• B. A rise in government spending
• C. An increase in production costs
• D. A reduction in exports

Back

A rise in government spending

Front

What is the likely short-run impact of an increase in AD on the price level?

Back

Price levels increase

Front

If there is a negative supply shock, what happens to the SRAS curve?

Back

It shifts to the left.

Front

What happens in the short run if both AD and SRAS increase simultaneously?

Back

Output increases, but the effect on price level is uncertain.

Front

How does a decrease in taxes typically affect the AD curve in the short run?

Back

It shifts AD to the right

Front

What is the short-run effect of an increase in nominal wages on the SRAS curve?

Back

SRAS shifts to the left.

Front

What happens to equilibrium output in the short run if AD decreases and SRAS remains unchanged?

Back

Output fluctuates randomly.