1- Which of the following causes the AD curve to shift left? Select one: a. a ta

Question

1-

Which of the following causes the AD curve to shift left?

Select one:

a. a tax cut

b. increased consumer confidence

c. increased import growth

d. an increase in business investment

2-

The SRAS curve is upward-sloping because:

Select one:

a. labor markets quickly adjust to equilibrium.

b. wages and prices are fully flexible in the short run.

c. wages and prices are sticky in the short run.

d. wages and prices are sticky in the long run.

3-

From an initial equilibrium in the AD-AS model, an unexpected increase in money supply growth will cause inflation:

Select one:

a. and real growth to increase in the short run.

b. to increase and real growth to decrease in the short run.

c. to increase and real growth to remain unchanged in the short run.

d. and real growth to remain unchanged.

4-

Which of the following real shocks would likely have the largest impact on U.S. GDP?

Select one:

a. a severe drought in the Midwest

b. a major hurricane that hits the Gulf coast

c. a reduction in the overall supply of oil

d. a decrease in the price of grain

5-

An unexpected increase in money growth leads to increased inflation in:

Select one:

a. the short run only.

b. the long run only.

c. both the short run and the long run.

d. neither the short run nor the long run.

6-

Which of the following causes a shift of the AD curve to the right?

Select one:

a. an increase in income taxes

b. an increase in consumer confidence

c. an increase in import growth

d. an increase in interest rates

7-

The “long run” is a period of time:

Select one:

a. long enough that prices and wages are sticky.

b. long enough that prices and wages are fully flexible.

c. longer than 1 year.

d. longer than 3 years.

8-

Which of the following would cause the AD curve to shift to the right?

Select one:

a. a decrease in consumer confidence

b. a decrease in the inflation rate

c. an increase in consumer wealth

d. an increase in the short-run aggregate supply curve

9-

A temporary positive shock to spending growth will lead to an increase in:

Select one:

a. output in both the short run and the long run.

b. both output and prices in the short run, but only prices in the long run.

c. both prices and output in the short run, but only output in the long run.

d. output and prices in the short run, but no change in either in the long run.

10-

The term “business fluctuations” refers to:

Select one:

a. the different stages of a product cycle.

b. changes in the prices of goods and services over time.

c. movement in real GDP around its long-term trend.

d. the trend in real GDP over a long period of time.

Explanation / Answer

1) Increased import growth Option C because the other three are components of AD that are directly related to it while imports are inversely related to AD.

2) Wages and price are sticky in the short run Option C which implies that it takes time for the labor market and goods market to adjust for changes in AD

3) Inflation is higher and also there is a real growth in GDP because the increase was unexpected. Option A

4) Option C because the country is a large importer of oil.

5) Option C

6) Option B

7) Option B

8) Option C

9) Option B

10) Option A

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