Question 5 of 10 A. high B. greater than the expected price level C. low D. less

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Question 5 of 10

A. high

B. greater than the expected price level

C. low

D. less than the expected price level

Question 6 of 10

A. aggregate demand equals long-run aggregate supply

B. short-run aggregate supply equals long-run aggregate supply

C. aggregate demand equals long-run and short-run aggregate supply

D. aggregate demand equals short-run aggregate supply

Question 7 of 10

A. short-run supply curve will shift upward

B. demand curve will shift rightward

C. short-run supply curve will shift downward

D. demand curve will shift leftward

Question 8 of 10

A. a drought that destroys agricultural crops

B. the introduction and greater availability of credit cards

C. a large oil-price increase

D. unions obtain a substantial wage increase

Question 9 of 10

A. environmental protection laws raise costs of production

B. the FED increases the money supply

C. unions push wages up

D. an oil cartel breaks up and oil prices fall

Question 10 of 10

A. more; less

B. less; less

C. more; more

D. less; more

Question 5 of 10

The short-run aggregate supply curve implies that real output exceeds its long-run level when the price level is:

A. high

B. greater than the expected price level

C. low

D. less than the expected price level

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Question 6 of 10

In the aggregate demand-supply model, a short-run equilibrium occurs at the combination of output and prices where

A. aggregate demand equals long-run aggregate supply

B. short-run aggregate supply equals long-run aggregate supply

C. aggregate demand equals long-run and short-run aggregate supply

D. aggregate demand equals short-run aggregate supply

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Question 7 of 10

In the short-run, if the price level is greater than the expected price level, then in the long run the aggregate

A. short-run supply curve will shift upward

B. demand curve will shift rightward

C. short-run supply curve will shift downward

D. demand curve will shift leftward

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Question 8 of 10

Which of the following is an example of a demand shock

A. a drought that destroys agricultural crops

B. the introduction and greater availability of credit cards

C. a large oil-price increase

D. unions obtain a substantial wage increase

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Question 9 of 10

A favorable supply shock occurs when:

A. environmental protection laws raise costs of production

B. the FED increases the money supply

C. unions push wages up

D. an oil cartel breaks up and oil prices fall

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Question 10 of 10

If the FED accommodates an adverse supply shock, then output falls __________, but prices rise ________.

A. more; less

B. less; less

C. more; more

D. less; more

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Explanation / Answer

6. D. aggregate demand equals short-run aggregate supply

Short run equilibrium is where AD intersects SRAS curve.

7. A. short-run supply curve will shift upward.

8. B. the introduction and greater availability of credit cards

Demand shock is a sudden event that temporarily increases or decreases demand for goods or services. A positive demand shock leads to an increase in demand, while a negative demand shock decreases demand.

9. D. an oil cartel breaks up and oil prices fall

Favourable supply shock is a factor which causes rightward shift of the supply curve. Fall in price of oil due to break of cartel causes increase in the supply of commodity in the market.

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