Aggregate Demand/Supply, Macroeconomic Equilibrium

Name a reason for the increase in quantity of capital in an economy

• Training

• 2. Research & Development 

• Investment

• Discovery of new resources

What shape does the Long-Run Aggregate Supply curve take according to monetarists?

• 1. Sloping Upwards 

• 3. Horizontal 

• 4. Sloping Downwards 

• 2. Vertical 

Select all factors that will increase the production potential of an economy

• 1. Irrigation technology 

• 2. Decrease in the cost of raw materials 

• 3. Re-training 

• 4. Immigration 

• Increase in wage rates

Identify the stages correctly:

• 1. 1.Spare capacity is used up

  2. 2.Full employment of all factors of production

  3. 3.Spare capacity exists 

• 2. 1.Full employment of all factors of production

  3. 2.Spare capacity is growing

  4. 3.Full Unemployment of all factors of production 

• 3. 1.Spare capacity exists

  4. 2.Spare capacity is used up

  5. 3.Full employment of all factors of production 

• 4. 1.Spare capacity exists

  5. 2.Full employment of all factors of production

  6. 3.Spare capacity is used up 

What shape does the Short-run Aggregate Supply curve take?

• Sloping Upwards

• 2. Vertical 

• 3. Horizontal 

• 4. Sloping Downwards 

What is the Formula for AD?

• C + I + G + (X + M)

• C + I + G - (X + M)

• C + I + G + (X - M)

• C + I + G + (M - X)

What could lead to a rightwards shift of the AD curve

• Increase in interest rates

• Increase in corporate taxes

• Reduction of income tax levels

• Decrease in goverment spending

If a country decides to adopt a more trade policy by reducing tariffs on imports, the import expenditure would be expected to rise.

• True

• False

If a countries exchange rate becomes stronger then:

• This makes the countries exports relatively more expensive to foreigners

• Imported goods become less expensive

• This makes the countries exports relatively cheaper to foreigners

• Imported goods become more expsesnive expensive

What can cause a change in a countries level of exports

• A change in foreigners income

• A change in the value of the countries currency

• Changes in countries trade policies

• Explosion of the sun