Economic Fluctuations: Aggregate Demand and Supply Dynamics

Which of the following would cause an increase in aggregate demand?

• A decrease in the level of taxation

• An increase in interest rates

• A decrease in consumer confidence

• An increase in imports

Which determinant of aggregate supply can be affected by government policies such as subsidies and taxes?

• Resource prices

• Technology

• Expectations about inflation

• Government actions

What is a likely effect on the short-run aggregate supply curve when there is a decrease in the cost of raw materials?

• It would shift to the left

• It would shift to the right

• It would become flatter

• It would become steeper

How does an increase in consumer wealth generally affect the aggregate demand curve?

• It shifts to the left because consumers save more

• It shifts to the right because consumers spend more

• It remains unchanged but becomes steeper

• It remains unchanged but becomes flatter

If workers and firms expect higher prices in the future, what is the likely impact on the short-run aggregate supply curve?

• It will shift to the right

• It will shift to the left

• It will remain unchanged

• It will become more elastic

What happens to the aggregate demand curve when there is a significant reduction in government spending?

• It shifts to the right

• It shifts to the left

• It remains unchanged

• It becomes more inelastic

How would an improvement in technology most likely affect the aggregate supply curve in the short run?

• It would shift to the left

• It would shift to the right

• It would remain unchanged

• It would become more inelastic