Aggregate Economy

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 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

Which of the following is NOT a component of aggregate demand?

• investment

• costs

• consumption

• government spending

Which way does the aggregate demand curve shift when the level of real disposable income goes down?

• To the right [upwards]

• To the left [downwards]

The total quantity of goods and services produced in any economy at different prices levels is shown by the

• aggregate demand curve

• aggregate expenditures curve

• aggregate supply curve

• production possibilities curve

The short-run aggregate supply curve shows that

• as the price level falls, firms produce more output

• as the price level increases, firms produce less output

• as the price level increases, firms produce more output

• output produced by firms is independent of the price level

When short-run aggregate supply increases, the SRAS curve

• shifts upward

• shifts to the left

• shifts to the right

• remains constant

The long-run aggregate supply curve

• is not affected by changes in aggregate demand

• is vertical at the level of potential or full employment output

• reflect the idea that, in the long run, output is independent of the price level

• all of the above

When equilibrium real GDP is less than the full employment level of real GDP, the economy is probably experiencing

• a inflationary gap

• inflation

• a recessionary gap

• a fall in unemployment

        In the AD-AS model, a decrease in SRAS can be expected to lead to:

• an increase in the price level and an increase in real GDP

• a fall in the price level and a fall in real GDP

• an increase in the price level and a fall in real GDP

• a fall in the price level and an increase in real GDP