Ch 17 EQ

What happens the LRAS and SRAS curves if costs of production decline AND the economy is operating at full employment?

• LRAS shifts out, SRAS is the same

• SRAS is the same, LRAS shifts out

• both shift outward

• both shift inward

What happens the LRAS and SRAS curves if there is a natural disaster AND the economy is operating at full employment?

• LRAS shifts out, SRAS is the same

• SRAS is the same, LRAS shifts out

• both shift outward

• SRAS shifts in, LRAS is the same

If an export-heavy economy is at full employment and there is a supply side shock and cost of production increases, what will happen to the general price level?

• Deflation occurs

• Inflation occurs

• Inflation declines

• GPL is unchanged

According to Neoclassical economics, LR equalibrium national output is always equal to

• AD

• AS

• The Point where the SRAS curve is perfectly inelastic

• the full employment level of output

According to Keynesian economics, equilibrium national output is most influenced by

• AD

• AS

• Price level

• the full employment level of output

What does the intersection of AD and AS represent?

• real GDP and equilibrium price levels

• real GDP and inflation levels

• real national output and employment levels

• the amount of spare productive capacity

What happens if there is an increase in AD at the full level of employment acccording to Monetarists?

• the general price level increases

• the general price level decreases

• the general price level stays the same

• national output increases

When there is a supply side shock, what happens to real national output and the general price level?

• Increases, inflation

• increases deflation

• reduces, delation

• reduces, inflation

Which scenario will shift both the LRAS and SRAS curve outwards?

• tax increase

• when the economy is producing at full employment and a short run AS determinant improves

• when the government passes a tariff

• when the government gives subsidies to producers

When will there be a rise in the general price level AND a contraction?

• If the economy is producing at full employment and an SRAS determinant worsens

• if the minimum wage is lowered

• if direct taxes are introduced

• if labor productivity improves