Question
Please select the correct letter for each question, little to no explanation needed just simply the correct answer, thanks! 1: The economy's short run aggregate
Please select the correct letter for each question, little to no explanation needed just simply the correct answer, thanks!
1: The economy's short run aggregate supply (SRAS) curve is assumed to slope upward because
A: firms' unit costs rise as output increases
B: inputs become less expensive at higher levels of output
C: aggregate demand increases at higher levels of national income.
D: inputs become more expensive at higher levels of output.
E: firms' unit costs fall as output increases.
2: Consider the following news headline: "The Covid-19 virus event (and accompanying decrease in the world oil prices) causes Canadian exports to decrease." Assuming the aggregate output is demand-determined, what effect will this have, all other things equal, on the AE function and on equilibrium national income?
A: The AE function will rotate downward (become flatter) and national income will fall.
B: There will be no change in the AE function or in equilibrium national income.
C: The AE function will shift down parallel to itself and equilibrium national income will fall.
D: The AE function will rotate upward (become steeper) and equilibrium national income will rise.
E: The AE function will shift up parallel to itself and equilibrium national income will rise.
3: Other things being equal, if the price level rises exogenously, the aggregate expenditure (AE) function shifts
A: upward and the economy moves upward to the left along the AD curve.
B: down and the economy will move downward to the right along the AD curve.
C: to the right and the AD curve will also shift to the right.
D: upward and the economy moves downward to the right along the AD curve.
E: down and the economy will move upward to the left along the AD curve.
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