Study Game - Topic 3.6Online version Changes in the AD-AS Model in the Short-Run by Zachary Foust 1 Which of the following changes will necessarily cause inflation? a A decrease in aggregate demand and a decrease in short-run aggregate supply. b A decrease in aggregate demand and an increase in short-run aggregate supply. c A decrease in aggregate demand with no change in short-run aggregate supply. d An increase in aggregate demand and a decrease in short-run aggregate supply. 2 An economy is in long-run macroeconomic equilibrium. What will be the short-run effects of an increase in investment spending? a An increase in real output, an increase in unemployment, and a decrease in the price level b An increase in real output, an increase in unemployment, and an increase in the price level c An increase in real output, a decrease in unemployment, and an increase in the price level d A decrease in real output, a decrease in unemployment, and a decrease in the price level 3 Assume the countries of Ornania and Kumbagi are major trading partners. Ornania is currently in long-run macroeconomic equilibrium. As a result of a recession in its economy, Kumbagi decreases its demand for goods produced in Ornania. Which of the following will occur in Ornania in the short run? a The aggregate demand curve will shift to the right, causing the actual rate of unemployment to exceed the natural rate of unemployment. b The aggregate demand curve will shift to the left, resulting in an inflationary gap. c The aggregate demand curve will shift to the left, resulting in a recessionary gap. d The short-run aggregate supply curve will shift to the left, resulting in an inflationary gap. 4 Which of the following causes a negative supply shock? a A technological advance b An increase in productivity c An increase in oil prices d A decrease in the expected inflation rate 5 Which of the following causes a positive demand shock? a An increase in wealth b Pessimistic consumer expectations c A decrease in government spending d An increase in taxes 6 During staflation, what happens to the aggregate price level and real GDP? a The price level decreases, and real GDP increases. b The price level decreases, and real GDP decreases. c The price level increases, and real GDP increases. d The price level increases, and real GDP decreases. 7 Which of the following will most likely cause the change shown on the graph? a An increase in government purchases of goods and services b An increase in personal income taxes c A decrease in interest rates d The depreciation of the country's currency 8 Assume that the expected rate of inflation increases. How will this affect the price level and real GDP? a The price level will increase, and the real GDP will increase. b The price level will increase, and the real GDP will decrease. c The price level will decrease, and the real GDP decrease. d The price level will decrease, and the real GDP will remain unchanged. 9 Assume that the government undertakes a massive building project. How will this affect the price level and real GDP in the short-run? a The price level will increase, and the real GDP will increase. b The price level will increase, and the real GDP will decrease. c The price level will decrease, and the real GDP decrease. d The price level will decrease, and the real GDP will increase. 10 Assume that the unemployment rate falls. Which of the following most likely caused this change to occur? a The price of oil, a key input in the production of many goods and services, increased. b The government decreased purchases of goods and services. c Congress reduced personal income taxes. d Households became more pessimistic. 11 What is a positive demand shock? a An event that increases aggregate demand b An event that decreases aggregate demand c An event that increases short-run aggregate supply d An event that decreases short-run aggregate supply 12 What is a negative demand shock? a An event that increases aggregate demand b An event that decreases aggregate demand c An event that increases short-run aggregate supply d An event that decreases short-run aggregate supply 13 What is a negative supply shock? a An event that increases aggregate demand b An event that decreases aggregate demand c An event that increases short-run aggregate supply d An event that decreases short-run aggregate supply 14 What is a positive supply shock? a An event that increases aggregate demand b An event that decreases aggregate demand c An event that increases short-run aggregate supply d An event that decreases short-run aggregate supply 15 What is demand-pull inflation? a Inflation caused by an increase in aggregate demand b Inflation caused by a decrease in aggregate demand c Inflation caused by an increase in short-run aggregate supply d Inflation caused by a decrease in short-run aggregate supply 16 What is cost-push inflation? a Inflation caused by an increase in aggregate demand b Inflation caused by a decrease in aggregate demand c Inflation caused by an increase in short-run aggregate supply d Inflation caused by a decrease in short-run aggregate supply
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