Economics: aggregate supply

Which of the following statements is true?

• The LRAS curve shows the potential output of the economy

• The SRAS curve shows the potential long-term output of the economy

• Any point on the production possibility frontier shows the potential output of the economy

Which model of aggregate supply does not use SRAS curves?

• Classical

• Keynesian

What happens to the SRAS curve when there is a change in real output?

• The curve shifts to the right

• The curve shifts to the left

• There is a movement along the curve

Which of the following is the correct definition of the short-run?

• Period when money wage rates/prices of other factor inputs are fixed

• Period when money wage rates/prices of other factor inputs change

Which of the following changes will shift the SRAS curve to the right?

• Lower wage rates

• Higher prices of raw materials

• Higher indirect taxes

• A fall in productivity

Which way will the SRAS curve shift if the exchange rate falls?

• To the right

• To the left

Which of the following changes will shift the LRAS curve?

• Changes in taxation

• Changes in raw materials prices

• New technology

• Factors of production become more mobile

According to the Keynesian model, why is it sometimes possible for output to increase without any increase in costs or prices?

• Unemployment can last for a long time

• Unemployment disappears when output goes up

Which model believes that mass unemployment is a temporary feature of the economy?

• Keynesian model

• Classical model

Which theory claims that unemployment can persist in the economy because wages do not always fall when unemployment occurs?

• Classical

• Keynesian