In the aggregate demand-aggregate supply model, economic growth can best be represented by a

rightward shift of the long-run aggregate supply curve

leftward shift of the long-run aggregate supply curve

rightward shift of the short-run aggregate supply curve

rightward shift of the aggregate demand curve

Which of the following best describes an economy at full employment?

There is frictional, but not cyclical, unemployment.

The rate of unemployment is zero.

There is only structural and cyclical unemployment.

There is cyclical, but not structural, unemployment.

According to the graph above, which of the following statements about the economy is true?

Wages will eventually decrease, restoring full employment in the long run.

The economy is in long-run equilibrium.

The LRAS curve will automatically shift to the right, restoring long-run equilibrium.

In the short run, if wages are sticky the SRAS will shift to the right, lowering prices.

The multiplier effect shows

How spending is magnified in the economy

How much consumers can spend from their paychecks

How much the government can spend from their budget

How often the economy can survive recessions

When price levels increase, lenders need to charge higher interest rates which decreases consumer and business investment spending.

“Sticky Wages” prevents wages from falling. The government should deficit spend to close the gap.

Price levels effect purchasing power which effects spending

When U.S. price levels rise, then GDP decreases due to an increase in imports and a decrease in exports.

Price levels and economy will fix itself. No Government involvement required

When U.S. price levels rise, then GDP decreases due to an increase in imports and a decrease in exports.

“Sticky Wages” prevents wages from falling. The government should deficit spend to close the gap.

Price levels effect purchasing power which effects spending

Price levels and economy will fix itself. No Government involvement required

When price levels increase, lenders need to charge higher interest rates which decreases consumer and business investment spending.

Output is high and unemployment is less than NRU. Actual GDP is above potential GDP.

Output is low and unemployment is more than NRU. Actual GDP is below potential GDP.

Laws that reduce inflation, decrease GDP (Close an Inflationary Gap) –G or + taxes (- C)

A gap with higher prices and a decrease in GDP

Laws that reduce unemployment and increase GDP (Close a Recessionary Gap) + G or – taxes (+C)

Output is low and unemployment is more than NRU. Actual GDP is below potential GDP.

Laws that reduce inflation, decrease GDP (Close an Inflationary Gap) –G or + taxes (- C)

Output is high and unemployment is less than NRU. Actual GDP is above potential GDP.

A gap with higher prices and a decrease in GDP

Laws that reduce unemployment and increase GDP (Close a Recessionary Gap) + G or – taxes (+C)

Part of the reason that aggregate demand is downward sloping is because

higher price levels decrease the purchasing power of money which decreases the quantity of consumption

here is a direct relationship between price level and the real GDP demanded.

lower price levels increase the demand for consumer goods

lower price levels cause real interest rates to increase and increase investment

A decrease in the price of inputs will result in which of the following in the short run?

An increase in short-run aggregate supply and a decrease in price level

An increase in short-run aggregate supply and an increase in long-run aggregate supply

An increase in short-run aggregate supply and a decrease in output

A decrease in aggregate demand and a decrease in price level

A decrease in government spending by a given amount accompanied by a decrease in taxes by the same amount will cause which of the following?

Aggregate demand to stay the same

Which of the following will increase aggregate demand?

a decrease in personal income taxes

a decrease in government spending

an increase in corporate income taxes

a decrease in the capital stock

untitled

Authored by Zachary Constanti

History

12th Grade

Used 3+ times

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25 questions

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MULTIPLE CHOICE QUESTION

1 min • 1 pt

What is the vertical line called on the AD/AS Model?

short-run aggregate supply

aggregate demand

long run aggregate supply

r GDP

MULTIPLE CHOICE QUESTION

1 min • 1 pt

What is a recessionary gap?

when ouput falls below potential

when output exceeds potentional

when output increases

when unemployment decreases

MULTIPLE CHOICE QUESTION

1 min • 1 pt

What is an inflationary gap?

when output goes beyond full employment

when output falls below full employment

when unemployment increases

when deflation is present in an economy

MULTIPLE CHOICE QUESTION

1 min • 1 pt

What would cause AD to decrease?

an increase in taxes

a decrease taxes

an increase in government spending

keeping government spending constant

MULTIPLE CHOICE QUESTION

1 min • 1 pt

The business cycle depicts:

the phases a business goes through from when it first opens to when it finally closes.

the evolution of technology over time.

short-run fluctuations in output and employment.

fluctuations in the general price level.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Alice's disposable income increases by $1,000, and she spends $600 of this increase in disposable income. For Alice, her:

MPS is 0.40 and she saves $400.

MPC is 0.40 and she saves $400.

MPS is 0.40 and she saves $600

MPC is 0.60 and she consumes $400.

MPC is 0.60 and she consumes $1,000

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Which of the following is always true of an
economy operating on its production possibilities
frontier?

Its resources are fully employed.

It is allocatively efficient.

It cannot trade with other nations because it
is the most efficient producer of tradeable
goods.

It will necessarily operate on the same frontier the following year.

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untitled

What is the vertical line called on the AD/AS Model?

What is a recessionary gap?

What is an inflationary gap?

What would cause AD to decrease?

The business cycle depicts:

Alice's disposable income increases by $1,000, and she spends $600 of this increase in disposable income. For Alice, her:

Which of the following is always true of aneconomy operating on its production possibilitiesfrontier?

In the aggregate demand-aggregate supply model, economic growth can best be represented by a

Which of the following best describes an economy at full employment?

According to the graph above, which of the following statements about the economy is true?

Access all questions and much more by creating a free account

Similar Resources on Wayground

Popular Resources on Wayground

Discover more resources for History

Which of the following is always true of an
economy operating on its production possibilities
frontier?