Chapter 8 AD & AS

The AD curve shows the various amounts of real output that people are willing and able to

• buy at different income levels.

• buy at different price levels

• sell at different profit levels

• sell at different price levels

• None of the answers are correct

A decrease in the price level

• shifts the AD curve to the right.

• shifts the AD curve to the left.

• causes an upward movement along the existing AD curve

• causes a downward movement along the existing AD curve

• none of the answers are correct

An increase in labor's productivity will cause the SRAS curve to shift __________ and the price level to __________.

• leftward; increase

• rightward; decrease

• rightward; increase

• leftward; decrease

A decrease in the price of a nonlabor input such as electricity will cause

• a movement down the SRAS curve

• a movement up the SRAS curve

• a leftward shift in the SRAS curve

• a rightward shift in the SRAS curve

• no change regarding the SRAS curve

Short-run equilibrium exists

• where the AD curve intersects the short-run aggregate supply (SRAS) curve.

• where the AD curve intersects the long-run aggregate supply (LRAS) curve.

• on the AD curve only.

• on the SRAS curve only.

If consumption increases,

• the SRAS curve will shift rightward, which will push the price level up

• the SRAS curve will shift leftward, which will push the price level up

• the AD curve will shift leftward, which will push the price level down

• the AD curve will shift rightward, which will push the price level up

If aggregate quantity supplied is greater than aggregate quantity demanded at a particular price level, then a

• shortage exists and consumers will bid the price level up

• surplus exists and consumers will bid the price level up

• surplus exists and the price level will decline

• shortage exists and the price level will decline

• surplus exists and the price level will decline & shortage exists and the price level will decline

 Which of the following is an example of an adverse supply shock?

• a nationwide drought lasting for many months

• an outbreak of war among several of the Middle Eastern oil-producing countries

• an influenza virus that affects 50 percent of the labor force over a two-month period

• a nationwide drought lasting for many months & an outbreak of war among several of the Middle Eastern oil-producing countries & an influenza virus that affects 50 percent of the labor force over a two month period

• a nationwide drought lasting for many months & an influenza virus that affects 50 percent of the labor force over a two-month period

An increase in the price of nonlabor inputs

• shifts the AD curve leftward

• shifts the SRAS curve leftward

• is the same thing as a beneficial supply shock

• shifts the AD curve rightward

• shifts the SRAS curve rightward

A rise in wage rates

• causes the AD curve to shift leftward

• causes the short-run aggregate supply (SRAS) curve to shift rightward.

• does not affect the present position of the SRAS curve

• causes the AD curve to shift rightward

• causes the SRAS curve to shift leftward