Macroeconomics ESS AD/SRAS/LRAS

A strong rise in energy cost is likely to lead to

• A rise in real GDP and the price level

• A fall in GDP and the price level

• A fall in real GDP but a rise in the price level

• A rise in real GDP but a fall in the price level

Which of the following equations represents Aggregate Demand

• GDP = X + I + C + (Y - Z)

• GDP = C + I + G + (X - M)

• GDP = C + I + X + (G - T)

• GDP = (1/MPS)*G + I + C

Which of the following events will increase the Aggregate Demand in the economy. Check all that apply.

• The government increasing Income Tax

• The Fed lowering interest rates

• A rise in the cost of raw material

• A supply shock like a new production technology

• An increase in consumer confidence

Consumption in the economy depends on all these factors EXCEPT.

• Corporate Taxes

• Consumer Confidence

• Income Tax

• Interest Rates

____________ refers to the total value of final goods and services which all the sectors of an economy are planning to buy at a given level of income during a period of one accounting year.

• aggregate demand

• aggregate supply

the level of disposable income determines the level of ____________________.

• consumption expenditure

• private expenditure

• government expenditure

• net export

which of the following is not a component of aggregate demand in a two-sector economy?

• consumption

• government expenditure

• investment

_____________ refers to the money value of goods and services that all the producers are willing to supply in an economy in a given time period.

• Aggregate demand

• Aggregate supply

Which of the following events shifts the short-run aggregate supply curve to the right?

• a decrease in the money supply

• a drop in oil prices

• an increase in government spending on military equipmentd

• an increase in price expectations

Suppose the economy is initially in long-run equilibrium. Then suppose there is a drought that destroys much of the wheat crop. According to the model of aggregate demand and aggregate supply, what happens to prices and output in the short run?

• Prices rise; output falls.

• Prices fall; output rises.

• Prices rise; output rises.

• Prices fall; output falls.