Study Game - Topic 3.6

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Changes in the AD-AS Model in the Short-Run

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Zachary Foust

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Study Game - Topic 3.6


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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Study Game - Topic 3.6

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About this activity

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Download the paper version to play

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Study Game - Topic 3.6Online version

by Zachary Foust

Which of the following changes will necessarily cause inflation?

An economy is in long-run macroeconomic equilibrium. What will be the short-run effects of an increase in investment spending?

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?

Which of the following causes a negative supply shock?

Which of the following causes a positive demand shock?

During staflation, what happens to the aggregate price level and real GDP?

Which of the following will most likely cause the change shown on the graph?

Assume that the expected rate of inflation increases. How will this affect the price level and real GDP?

Assume that the government undertakes a massive building project. How will this affect the price level and real GDP in the short-run?

Assume that the unemployment rate falls. Which of the following most likely caused this change to occur?

What is a positive demand shock?

What is a negative demand shock?

What is a negative supply shock?

What is a positive supply shock?

What is demand-pull inflation?

What is cost-push inflation?