Chapter 8: Fixed Blur

Question 1 (1 point) Consider the AD/AS model. Suppose there is a decrease in aggregate demand and, simultaneously, an increase in aggregate supply. The result will be a O Al rise in real GDP and a rise in the price level. B) an indeterminate change in real GDP and a rise in the price level. O C) rise in real GDP and a fall in the price level. O D) an indeterminate change in real GDP and a fall in the price level. O E) rise in real GDP but price level changes will be indeterminate. Question 2 (1 point) Which of the following could cause a movement along the economy's AS curve? O A) a change in the price level O B) a change in labour productivity O C) a change in the wage rate O D) a change in the cost of capital O E) a change in technology Question 3 (1 point) Consider our AD/AS model with the economy starting in long-run equilibrium at a price level of 100. Autonomous investment spending increases by $300 million. At a constant price level, this would cause aggregate demand to increase by $370 million. However, due to an upward sloping aggregate supply curve, prices rise to a price level of 108, and actual GDP increases by $285 million. What is the multiplier in this economy? (Answer to one decimal point.) Your Answer: Answer Question 4 (1 point) Aggregate supply shocks cause the price level and real GDP to change in O A) opposite directions with price changing by less than output. O B) opposite directions but by the same amount. O C) opposite directions and not necessarily by the same amount. O D) the same direction with price changing by more than output. O E) the same direction and by the same amount.Question 5 (1 point) Consider the economy's aggregate supply curve. Other things being equal, firms' unit costs will tend to increase if A) there is a reduction in the price of oil. O B) wages rise. O C) the government reduces payroll taxes. O D) wage increases exceed productivity increases. O E) wage and price controls are in effect. Question 6 (1 point) Which of the following is implied by a rightward shift in the economy's AS curve? A) At any given price level, a lower level of output will be supplied. O B) There is a decrease in aggregate supply. O C) The same output will be produced, but only at a higher price level. O D) There is a demand shock. O E) At any given price level, a higher level of output will be supplied. Question 7 (1 point) If the economy's AS curve is upward sloping, a negative shock to aggregate demand will result in O A) an increase in real GDP and no change in prices. O B) an increase in both real GDP and prices. O C) an increase in prices and no change in real GDP. O D) a decrease in both real GDP and prices. O E) a decrease in prices but no change in real GDP. Question 8 (1 point) Consider the AD/AS model in the short-run. All else equal, which of the following will lead to an decrease in the price level and in real GDP. a) An increase in average wages. O b) An increase in desired savings. O c) An increase in government transfer payments. O d) An improvement in production technology. O e) A decrease in the net tax rate.Question 9 (1 point) Which of the following would likely cause a downward parallel shift in the AE curve and a leftward shift in the AD curve? O A) a reduction in government purchases O B) an increase in the business confidence of firms O C) an increase in the price level O D) a decrease in the price level O E) a decrease in the MPC Question 10 (1 point) When the economy's AS curve is positively sloped, the multiplier in the AD/AS model is O A) larger than the simple multiplier. O B) constant. O C) smaller than the simple multiplier. O D) equal to one. O E) equal to the simple multiplier. Question 11 (1 point) Consider the AD/AS model. In the short-run, an increase in factor prices for business will cause: O a) A fall in real GDP and an increase in the price level. O b) Neither real GDP nor the price level are affected. O c) An increase in real GDP and a fall in the price level. O d) A fall in real GDP and in the price level. O e) An increase in real GDP and the price level. Question 12 (1 point) Consider the basic AD/AS model. When wage rates rise faster than the increase in labour productivity, the O A) AD curve shifts left. O B) AS curve shifts upward. O C) output gap falls. O D) output gap increases