Question 1

Which of the following shifts both short-run and long-run aggregate supply left?
A)a decrease in the actual price level
B)a decrease in the expected price level
C)a decrease in the capital stock
D)a decrease in the money supply

Accepted Answer

A decrease in the capital stock shifts both short-run and long-run aggregate supply left because there are fewer resources available for production.

Question 2

Which of the following shifts the short-run aggregate supply curve to the right?
A)an increase in the money supply
B)an increase in the price level
C)a decrease in the expected price level
D)All of the above are correct.

Accepted Answer

A decrease in the expected price level will encourage firms to produce more since they are uncertain about future prices. This will increase production and shift the short-run aggregate supply curve to the right. An increase in the money supply and an increase in the price level do not necessarily shift the short-run aggregate supply curve to the right.

Question 3

In the long run, an economy's production of goods and services depends on its supply of​
A)​labor, natural resources, capital, and available technology.
B)​labor, natural resources, and capital only.
C)​labor, and natural resources only.
D)​labor only.

Accepted Answer

An economy's production of goods and services depends on not only the availability of labor and natural resources but also on the availability of capital (machinery, tools, equipment, and buildings) and technology (the knowledge and skills that determine how efficiently the labor, natural resources, and capital are used). Therefore, option A is the correct answer.

Question 4

​Which of the following shifts long-run aggregate supply left?
A)​a decrease in either natural resources or the human capital stock.
B)​a decrease in the human capital stock, but not natural resources.
C)​a decrease in natural resources, but not the human capital stock.
D)​neither a decrease in natural resources nor the human capital stock.

Accepted Answer

A decrease in either natural resources or the human capital stock reduces the economy's productive capacity, shifting the long-run aggregate supply curve to the left.

Question 5

Which of the following shifts short-run aggregate supply left?
A)an increase in the actual price level
B)an increase in the expected price level
C)an increase in the capital stock
D)None of the above is correct.

Accepted Answer

An increase in the expected price level would shift short-run aggregate supply left as it would increase input costs for firms, leading to a decrease in output and a leftward shift of the SRAS curve. The other answer choices would either have no effect on the short-run aggregate supply curve or would shift it rightward.

Question 6

A decrease in the expected price level shifts short-run aggregate supply to the
A)right, and an increase in the actual price level shifts short-run aggregate supply to the right.
B)right, and an increase in the actual price level does not shift short-run aggregate supply.
C)left, and an increase in the actual price level shifts short-run aggregate supply to the left.
D)left, and an increase in the actual price level does not shift short-run aggregate supply.

Accepted Answer

The answer of A decrease in the expected price level...

Question 7

A decrease in the expected price level shifts
A)only the long-run aggregate supply curve right.
B)only the short-run aggregate supply curve right.
C)both the short-run and the long-run aggregate supply curve right.
D)Neither the short-run nor the long-run aggregate supply curve right.

Accepted Answer

A decrease in the expected price level will shift the short-run aggregate supply curve rightward due to the sticky wages and prices in the short-run. However, in the long-run, the expected price level and actual price level converge, and the long-run aggregate supply curve remains unchanged.

Question 8

Which of the following shifts the short-run aggregate supply curve right?
A)both an increase in the price level that is greater than expected and an increase in the expected price level.
B)an increase in the price level that is greater than expected, but not an increase in the expected price level.
C)an increase in the expected price level, but not an increase in the price level that is greater than expected.
D)neither an increase in the price level that is greater than expected nor an increase in the expected price level.

Accepted Answer

The answer of Which of the following shifts the short-run...

Question 9

An increase in the expected price level shifts the
A)short-run and long-run aggregate supply curves left.
B)the short-run but not the long-run aggregate supply curve left.
C)the long-run but not the short-run aggregate supply curve left.
D)neither the long-run nor the short-run aggregate supply curve left.

Accepted Answer

The answer of An increase in the expected price level...

Question 10

An increase in the expected price level shifts short-run aggregate supply to the
A)right, and an increase in the actual price level shifts short-run aggregate supply to the right.
B)right, and an increase in the actual price level does not shift short-run aggregate supply.
C)left, and an increase in the actual price level shifts short-run aggregate supply to the left.
D)left, and an increase in the actual price level does not shift short-run aggregate supply.

Accepted Answer

The answer of An increase in the expected price level...

Question 11

​The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level
A)​decreases by more than expected so that firms believe the relative price of their output has decreased.
B)​decreases by more than expected so that firms believe the relative price of their output has increased.
C)​decreases by less than expected so that firms believe the relative price of their output has decreased.
D)​decreases by less than expected so that firms believe the relative price of their output has increased.

Accepted Answer

According to the misperceptions theory, if the price level decreases by more than expected, firms may mistakenly believe that the relative price of their output has decreased, leading them to reduce output. This is because they may take time to realize that the decrease in the price level was due to a general decrease in prices and not a decrease in their relative price. Therefore, choice A is the correct answer.

Question 12

Which of the following shifts short-run aggregate supply right?
A)an increase in the price level
B)an increase in the minimum wage
C)a decrease in the price of oil
D)more people migrate abroad than immigrate from abroad

Accepted Answer

A decrease in the price of oil would lower production costs for businesses, leading to an increase in short-run aggregate supply. Choices A and B would shift short-run aggregate supply left, and choice D relates to factors that do not directly impact short-run aggregate supply.

Question 13

Which of the following shifts short-run aggregate supply right?
A)an increase in the minimum wage
B)an increase in immigration from abroad
C)an increase in the price of oil
D)an increase in the actual price level

Accepted Answer

An increase in immigration from abroad would shift short-run aggregate supply right because it would increase the number of available workers, increasing the potential output of the economy.

Note: the other options would shift short-run aggregate supply left. An increase in the minimum wage would increase the cost of labor for firms, leading to a decrease in profits and a decrease in output. An increase in the price of oil would increase production costs for firms, leading to a decrease in output. An increase in the actual price level (the overall level of prices in the economy) would increase production costs for firms, also leading to a decrease in output.

Question 14

Which of the following, other things the same, would make the price level increase and real GDP decrease?​
A)​long-run aggregate supply shifts left.
B)​long-run aggregate supply shifts right.
C)​aggregate demand shifts right.
D)​aggregate demand shifts left.

Accepted Answer

A leftward shift in long-run aggregate supply indicates a decrease in the economy's potential output, leading to higher prices (inflation) and lower real GDP.

Question 15

The aggregate demand and aggregate supply model implies monetary neutrality
A)only in the short run.
B)only in the long run.
C)in both the short run and the long run.
D)in neither the short run nor long run.

Accepted Answer

The aggregate demand and aggregate supply model implies monetary neutrality in the long run. In the long run, changes in the money supply only affect nominal variables like prices, not real variables like output or employment. This is because in the long run, prices and wages adjust to changes in the money supply so that the real economy is unaffected. However, in the short run, changes in the money supply can affect output and prices.

Question 16

Which of the following shifts both the short-run and long-run aggregate supply right?
A)an increase in the actual price level
B)an increase in the expected price level
C)an increase in the capital stock
D)None of the above is correct.

Accepted Answer

An increase in the capital stock shifts both the short-run and long-run aggregate supply right as it leads to an increase in productivity and potential output. Increases in actual or expected price levels do not affect the productive capacity of the economy and do not shift aggregate supply.

Question 17

Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that
A)real GDP and the price level are lower in country B.
B)real GDP, but not the price level, is lower in country B.
C)the price level, but not real GDP is lower in country B.
D)neither the price level or real GDP is lower in country B.

Accepted Answer

The money supply affects the price level, not real GDP, in the long run. With a lower money supply, economy B likely has a lower price level.

Question 18

Which of the following shifts short-run, but not long-run aggregate supply right?
A)a decrease in the actual price level
B)a decrease in the expected price level
C)a decrease in the capital stock
D)an increase in the money supply

Accepted Answer

A decrease in the expected price level shifts the short-run aggregate supply curve to the right because it reduces firms' production costs and increases their incentives to produce. However, it does not affect the long-run aggregate supply curve because in the long run, the expected price level adjusts, and the economy returns to its potential output level. The other choices either shift both the short-run and long-run aggregate supply curves, or only shift the long-run aggregate supply curve.

Question 19

Which of the following shifts the short-run aggregate supply curve to the right?
A)a decrease in the actual price level
B)an increase in the actual price level
C)a decrease in the expected price level
D)an increase in the expected price level

Accepted Answer

A decrease in the expected price level will shift the short-run aggregate supply curve to the right, as firms will reduce their production costs and increase their output in anticipation of lower prices.

Question 20

A change in the expected price level is likely to cause which of the following?
A)a shift in the short-run aggregate supply curve and long-run aggregate supply curve
B)a shift in the short run aggregate supply curve
C)a shift in the aggregate demand curve
D)a shift in the long-run aggregate supply curve

Accepted Answer

A change in expected price level only affects short-run aggregate supply, so the correct answer is B, which states that it will cause a shift in the short run aggregate supply curve. It will not cause a shift in the long-run aggregate supply or the aggregate demand curve.

Quiz 33: Aggregate Demand and Aggregate Supply

Which of the following shifts both short-run and long-run aggregate supply left?

Which of the following shifts the short-run aggregate supply curve to the right?

In the long run, an economy's production of goods and services depends on its supply of​

​Which of the following shifts long-run aggregate supply left?

Which of the following shifts short-run aggregate supply left?

A decrease in the expected price level shifts short-run aggregate supply to the

A decrease in the expected price level shifts

Which of the following shifts the short-run aggregate supply curve right?

An increase in the expected price level shifts the

An increase in the expected price level shifts short-run aggregate supply to the

​The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level

Which of the following shifts short-run aggregate supply right?

Which of the following shifts short-run aggregate supply right?

Which of the following, other things the same, would make the price level increase and real GDP decrease?​

The aggregate demand and aggregate supply model implies monetary neutrality

Which of the following shifts both the short-run and long-run aggregate supply right?

Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that

Which of the following shifts short-run, but not long-run aggregate supply right?

Which of the following shifts the short-run aggregate supply curve to the right?

A change in the expected price level is likely to cause which of the following?

In the long run, an economy's production of goods and services depends on its supply of

Which of the following shifts long-run aggregate supply left?

The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level

Which of the following, other things the same, would make the price level increase and real GDP decrease?