1,In the short run, an unexpected increase in prices will

Group of answer choices

reduce resource prices and increase the quantity of goods supplied.

decrease the productive capacity of firms and decrease the quantity of goods supplied.

increase the profits of firms, thereby leading them to expand output.

increase the profits of firms, thereby leading them to reduce output.

2.A vertical long-run aggregate supply curve indicates that

Group of answer choices

an increase in the price level will not expand an economy's output capacity in the long run.

outputs greater than the long-run supply constraint cannot be achieved.

an increase in the price level will permit the economy to achieve a higher level of output.

an increase in the price level will promote technological change and more rapid economic growth.

3.A disaster that destroys a large part of current agricultural output will not change the long-run aggregate supply (LRAS),while a disaster that destroys the capital stock in a major city will reduceLRAS.

Group of answer choices

True

False

4.Along the long-run aggregate supply curve, the price level ____ with increases in aggregate demand.

Group of answer choices

does not change

increases

decreases slightly

decreases dramatically

Within the framework of the AD/AS model, if consumers and investors become more pessimistic about the future direction of the economy, this will lead to

Group of answer choices

an increase in aggregate demand.

a decrease in aggregate demand.

an increase in long-run aggregate supply (LRAS shifts to the right).

a reduction in the natural rate of unemployment.

6.What would happen to aggregate demand if the federal government increased military purchases and state and local governments decreased their road building budgets at the same time?

Group of answer choices

aggregate demandwould increase, because only federal government purchases affectaggregate demand.

aggregate demandwould decrease, because only state and local government purchases affectaggregate demand.

aggregate demandwould increase if the change in federal purchases were smaller than the change in state and local purchases.

aggregate demandwould decrease if the change in federal purchases was smaller than the change in state and local purchases.

5.