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Worksheetspearson ch 12 AD AS
Total questions: 30
Worksheet time: 18mins
Name
Class
Date
1.
What is on the "Y" axis on an AD/AS Model?
a)
Real GDP
b)
ouput
c)
price level
d)
price
2.
What is represented on the "X" axis on the AD/AS Model?
a)
price level
b)
price
c)
Real GDP
d)
Nominial GDP
3.
What is the vertical line called on the AD/AS Model?
a)
short-run aggregate supply
b)
aggregate demand
c)
long run aggregate supply
d)
r GDP
4.
What is a recessionary gap?
a)
when ouput falls below potential
b)
when output exceeds potentional
c)
when output increases
d)
when unemployment decreases
5.
What is an inflationary gap?
a)
when output goes beyond full employment
b)
when output falls below full employment
c)
when unemployment increases
d)
when deflation is present in an economy
6.
What would cause AD to decrease?
a)
an increase in taxes
b)
a decrease taxes
c)
an increase in government spending
d)
keeping government spending constant
7.
Prices and wages tend to be:
a)
flexible both upward and downward.
b)
inflexible both upward and downward.
c)
flexible downward, but inflexible upward.
d)
flexible upward, but inflexible downward.
8.
the AD curve slopes down because
a)
at high prices less is consumed and produced
b)
its the same as demand curve
c)
supply has to cut across
d)
all of these reasons
9.
if there is an increases in wages and firms pay more in producing goods
a)
AD shift right
b)
AD shift left
c)
AS shift right
d)
AS shift left
10.
an increase in AD
a)
means the Ad curve shifts left
b)
Ad curve shifts right
c)
movement along the AD curve up
d)
movement along the AD curve down wards
11.
which of the following factors will not shift the AD curve right
a)
increase in the cost of labour
b)
increase in consumer confidence
c)
increased exports
d)
increased investment
12.
contractionary monetary policy would shift
a)
AS left
b)
AS right
c)
AD left
d)
AD right
13.
what would happen if the volume of imports into australia increased
a)
AD shift left
b)
AD shift right
c)
AS shift left
d)
As shift right
14.
a)
contractionary fiscal policy
b)
supply side policy
c)
expansionary fiscal policy
d)
expansionary monetary policy
15.
caused by
a)
inflation
b)
increased X
c)
increased M
d)
decrease in I
16.
which part of the ADAS model is most likely to be changed when there are more leakages such as imports
a)
AD
b)
SAS
c)
LAS
d)
all of these
17.
ADAS help show
a)
law of diminishing returns
b)
opportunity cost
c)
trade agreements
d)
the impact of government economic policy
18.
a)
boom
b)
upswing
c)
recession
d)
downswing
19.
Which of the following is not a determinant of aggregate demand ?
a)
Change in Consumer Spending
b)
Change in Political Parties
c)
Change in Government Spending
d)
Change in investment Spending
20.
A decline in investment will shift the AD curve to the:
a)
left by a multiple of the change in investment.
b)
left by the same amount as the change in investment.
c)
right by the same amount as the change in investment.
d)
right by a multiple of the change in investment.
21.
The aggregate supply curve (short-run) slopes upward and to the right because:
a)
changes in wages and other resource prices completely offset changes in the price level.
b)
the price level is flexible upward but inflexible downward.
c)
supply creates its own demand.
d)
wages and other resource prices adjust only slowly to changes in the price level.
22.
Refer to the above diagram. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be:
a)
F and C, respectively.
b)
G and B, respectively.
c)
F and A, respectively.
d)
E and B, respectively.
23.
A decline in investment will shift the AD curve to the:
a)
left
b)
downward
c)
right
d)
increase
24.
Supporters of Keynesian economics believe that
a)
government should be used as a tool to increase demand for goods.
b)
demand for goods increases when prices rise.
c)
taxes have a strong negative influence on economic output.
d)
the government should have a limited role in regulating the economy.
25.
AD =
a)
C+I +G +X- M
b)
AS
c)
both C+ I + G X-M and AS
26.
AS in the short run is NOT
a)
is the total of all produced
b)
the most an economy can produce
c)
can vary according to the stage of the business cycle
d)
may not be in equilibrium with LRAS
27.
Which of the following is NOT true about Potential Output?
a)
•Potential Output is the level of output the economy would produce if all prices were fully flexible.
b)
•That is, the level of output the economy will produce given the level of technology if all of its factors of production were fully employed.
c)
•We use as our measure, our estimate of what we think the economy would be able to produce it were operating at the full employment level.
d)
•it is the minimum sustainable amount of output the economy can produce when it is operating at a high rate of resource use.
28.
Which of the following is NOT true about the AD-AS Model?
a)
The economy is in equilibrium in the short run at the point where AD and SRAS curves intersect.
b)
•If the aggregate price level is above the equilibrium price, the quantity of aggregate output exceeds the quantity of aggregate output demanded. Thus the aggregate price level will fall as firms will lower prices to sell off the excess supply.
c)
•If the aggregate price level is below the equilibrium price, the quantity of aggregate output does not exceed the quantity of aggregate output demanded. Thus the aggregate price level will rise.
d)
To understand the behavior of the economy, you must look at the AD and AS curves separately, and not how they affect each other.
29.
Which of the following is NOT a result of a recessionary gap?
a)
increase unemployment
b)
workers accept lower wages which will lower cost of production
c)
the SRAS curve will move to the right until long run equilibrium is restored
d)
there will be a low unemployment rate
30.
which is not a cause of a decrease in the SRAS
a)
increase income tax
b)
increase wages
c)
increase costs of production
d)
depreciation of currency
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