Question 1

Which statement below regarding aggregate demand is true?

a.It represents a positive relationship between price level and RGDP.

b.It represents the fixed amount of RGDP that can be produced.

c.It expresses an inverse relationship between price level and RGDP.

d.It represents the relationship between price level and the amount of RGDP that producers are willing to produce.

Question 2

If the market price of a product happens to be at equilibrium, which of the following will happen next?

a.The price will decrease and consumers will purchase more.

b.The price will increase and consumers will purchase less of that item.

c.Nothing will happen since the market is already clearing.

d.Surplus will be created.

Question 3

If a certain brand of furry boots are suddenly all the rage and the market price increases to $500 a pair,but very few people buy them because they are too expensive, which of the following will happen next?

a.The price will continue to rise indefinitely.

b.The price will stay the same.

c.The price will rise until it reaches equilibrium.

d.The price will fall until it reaches equilibrium.

Question 4

Which statement below about producer surplus is NOT true?

a.Producer surplus represents the revenue generated from sales over and above the minimum price at which sellers are willing to sell.

b.When producer surplus drops to zero, firms stop producing.

c.Producer surplus is basically the same as profit.

d.Producer surplus is a similar concept to consumer surplus.

Question 5

Select the statement below that is true of ONLY price ceilings.

a.The market is allowing for trade to occur between buyers and sellers

b.Are binding when they are above equilibrium

c.The market clears, there are no shortages or surpluses

d.Can course a shortage of product

Question 6

Select the event below that will NOT cause a shift in demand.

a.The unemployment rate increases, so people can purchase less.

b.The number of people who consume butter increases.

c.The market price for four tires increases to $300.

d.The fad for beanbag animals comes to an end.