56.A change in the price level causes a a. Shift in b. Movement along c. Tilting
ID: 1118419 • Letter: 5
Question
56.A change in the price level causes a a. Shift in b. Movement along c. Tilting of d. Curvature in the aggregate demand 57.Expectations, changes in governmental policies, and changes in the world economy cause a the aggregate demand curve. a. Shift in b. Movement along c. Tilting of d. Curvature in 58.As households become more pessimistic and concerned regarding their future incomes, jobs, and well-being a. Aggregate demand will increase b. Aggregate supply will increase c. Aggregate supply will decrease d. Aggregate demand will decrease 59. What will occur if the government lowers taxes on households? a. Aggregate demand will increase b. Aggregate supply will increase c. Aggregate supply will decrease d. Aggregate demand will decrease 60. What is the shape of the long-run aggregate supply curve? a. It is upward sloping b. It is horizontal at the natural level of real output c. It is vertical at the natural level of real output d. It is downward sloping 61. In the short run, firms can increase output as the price level rises because a. Labor and raw material costs will not rise as quickly as output prices b. Labor and raw material costs rise more rapidly that output prices c. Technology reduces the costs of production. d. Production costs, in the short run, are fixed 62. What is the shape of the short-run aggregate supply curve? a. It is upward sloping b. It is horizontal at the natural level of real output c. It is vertical at the natural level of real output d. It is downward sloping 63.As the price level rises, in the short run, producers will be motivated to a. Increase output b. Decrease output c. Increase exports d. Increase investment spendingExplanation / Answer
56. A change in price level causes Movement along the demand curve, as price level is not a determinant of the aggregate demand. Change in those factors which don't determine the aggregate demand causes a movement along the aggregate demand curve.
Answer- option (b)
57. Expectations, change in Government policy etc all of these are determinant of aggregate demand. These factors determine the aggregate demand in the economy and thus changes in these factors causes shift of aggregate demand.
For example, people expect the price level to be higher in next period. So, in this period they will demand more as in next period they will be unable to purchase larger quantities. This will shift the demand curve rightward.
Another example - Government performs an expansionary fiscal policy i.e. raising government expenditure, decreasing tax rate etc. This will obviously increase the aggregate demand and shift the aggregate demand curve rightward.
Answer- option (a)
58. If household become more pessimistic, and concerned regarding their future incomes, well-being etc. they will decrease their current consumption to save for future. Decrease in consumption will decrease the AD and that will shift the AD curve leftward.
Answer- option (d).
59. If the government lower taxes on household, that means it is performing an expansionary fiscal policy. Now the households have to pay less tax, that means their disposable income will increase. So, consumption expenditure will also increase and that will cause the Aggregate demand curve to shift rightward.
Answer- option (a)
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