Question 1

If the costs of production increase, there is
A) an increase in aggregate supply and the AS curve shifts rightward.
B) a decrease in aggregate supply and the AS curve shifts leftward.
C) an increase in the quantity of real GDP supplied and a movement up along the AS curve.
D) a decrease in the quantity of real GDP supplied and a movement down along the AS curve.
E) a decrease in aggregate supply and the AS curve shifts rightward.

Accepted Answer

An increase in production costs will lead to a decrease in aggregate supply as businesses will produce less at any given price level. This will cause the AS curve to shift leftward.

Question 2

Changes in which of the following shifts the aggregate supply curve?
i. the price level.
ii. the money wage rate.
iii. potential GDP.
A) i only
B) ii only
C) iii only
D) ii and iii
E) i, ii, and iii

Accepted Answer

Changes in the money wage rate (ii) and potential GDP (iii) can shift the aggregate supply curve. An increase in the money wage rate will increase firms' production costs, leading to a decrease in aggregate supply. An increase in potential GDP implies that the economy can produce more goods and services at every price level, leading to an increase in aggregate supply. Changes in the price level (i) do not shift the aggregate supply curve, but rather move along it.

Question 3

A change in the price level brings a ________ the aggregate supply curve, NOT a ________ the aggregate supply curve.
A) shift in; movement along
B) vertical displacement of; change in the slope of
C) movement along; shift in
D) change in the slope of; horizontal displacement of
E) shift in; change in the slope of

Accepted Answer

A change in the price level causes a movement along the existing aggregate supply curve, as the quantity of output supplied changes in response to the change in price level. However, a shift in the aggregate supply curve occurs due to factors that affect production costs or the availability of resources, which leads to a change in the quantity of output supplied at every price level.

Question 4

If the money wage rate increases, then the
A) aggregate supply curve shifts rightward.
B) potential GDP increases.
C) potential GDP decreases.
D) aggregate supply curve shifts leftward.
E) aggregate demand curve shifts leftward.

Accepted Answer

An increase in the money wage rate would lead to an increase in production costs for firms, reducing their willingness to supply goods and services at any given price level. Therefore, the aggregate supply curve would shift leftward.

Question 5

A rise in the price level brings a ________ in the real wage rate that ________ profits which leads to ________ production.
A) rise; reduces; decreasing
B) rise; reduces; increasing
C) fall; increases; increasing
D) rise; increases; decreasing
E) fall; decreases; decreasing

Accepted Answer

The answer of A rise in the price level brings...

Question 6

The aggregate supply curve shifts
A) rightward if potential GDP decreases.
B) rightward if the money wage rate falls.
C) rightward if the money wage rate rises.
D) leftward if potential GDP increases.
E) leftward if the aggregate demand curve shifts leftward.

Accepted Answer

According to the sticky-wage theory, a decrease in the money wage rate will lead to firms being able to hire more workers and increase production. This, in turn, will lead to a rightward shift in the short-run aggregate supply curve.

Question 7

Which of the following shifts the aggregate supply curve leftward?
A) increase in potential GDP
B) increase in the money wage rate
C) increase in real GDP
D) decrease in the money price of oil
E) a fall in the price level

Accepted Answer

An increase in the money wage rate causes an increase in production costs, which leads to a decrease in aggregate supply (shifts the aggregate supply curve leftward).

Question 8

The aggregate supply curve shifts rightward when
A) potential GDP decreases.
B) the money wage rate falls.
C) income taxes increase.
D) government purchases increase.
E) the money wage rate rises.

Accepted Answer

The aggregate supply curve shifts rightward when the money wage rate falls because a lower money wage rate means that firms can produce the same level of output at a lower cost, resulting in an increase in the amount of real GDP that they are willing to supply at any given price level. The other choices would shift the aggregate supply curve leftward or have no effect on it.

Question 9

An increase in the money wage rate leads to
A) an upward movement along the aggregate supply curve.
B) a downward movement along the aggregate supply curve.
C) a leftward shift of the aggregate supply curve.
D) a rightward shift of the aggregate supply curve.
E) a leftward shift of the aggregate demand curve.

Accepted Answer

An increase in the money wage rate increases production costs for firms, leading to a decrease in short-run aggregate supply. This is represented by a leftward shift of the aggregate supply curve.

Question 10

Which of the following statements is true?
A) An increase in potential GDP increases aggregate supply and shifts the AS curve leftward.
B) A decrease in potential GDP decreases aggregate supply and shifts the AS curve leftward.
C) An increase in the money wage rate shifts the AS curve rightward.
D) A fall in the price level shifts the AS curve leftward.
E) An increase in the money wage rate increases potential GDP.

Accepted Answer

A decrease in potential GDP decreases the ability of an economy to produce goods and services, which lowers aggregate supply and shifts the AS curve leftward. An increase in potential GDP would have the opposite effect, shifting the AS curve rightward. The money wage rate and price level are factors that affect the AS curve but not in the ways described in options C and D. Option E is also incorrect as an increase in the money wage rate does not necessarily lead to an increase in potential GDP.

Question 11

A fall in the money wage rate ________ aggregate supply and ________.
A) decreases; shifts the AS curve rightward
B) increases; shifts the AS curve leftward
C) increases; shifts the AS curve rightward
D) decreases; shifts the AS curve leftward
E) does not change; does not shift the AS curve

Accepted Answer

The answer of A fall in the money wage rate...

Question 12

________ decreases aggregate supply.
A) An increase in potential GDP
B) An increase the quantity of capital
C) A rise in the price level
D) A rise in the money wage rate
E) A fall in the money wage rate

Accepted Answer

An increase in the money wage rate means that the cost of labor has increased for firms. As a result, it becomes more expensive for firms to produce goods and services, leading to a decrease in aggregate supply.

Question 13

Which of the following changes aggregate supply and shifts the AS curve?
i. a change in the price of a major resource
ii. increases in the amount of capital
iii. a change in the money income of consumers
A) i only.
B) ii only.
C) iii only.
D) i and ii.
E) i, ii, and iii.

Accepted Answer

I. A change in the price of a major resource will affect the cost of production, causing the AS curve to shift. If the price of a major resource increases, firms will have to pay more to produce their goods, resulting in a decrease in aggregate supply and a shift to the left of the AS curve.

II. Increases in the amount of capital will increase productivity, efficiency, and innovation, leading to an increase in aggregate supply and a shift to the right of the AS curve.

III. A change in the money income of consumers may affect demand but will not directly affect aggregate supply or shift the AS curve.

Question 14

Changes in which of the following do NOT shift the AS curve?
i. the price level
ii. potential GDP
iii. the money wage rate
A) i only
B) ii only
C) iii only
D) i and ii
E) i, ii, and iii

Accepted Answer

The answer of Changes in which of the following do...

Question 15

Which of the following changes aggregate supply and shifts the aggregate supply curve?
i. change in the price level
ii. change in potential GDP
iii. change in the money wage rate
A) i only
B) ii only
C) iii only
D) ii and iii
E) i, ii, and iii

Accepted Answer

The answer of Which of the following changes aggregate supply...

Question 16

A fall in the price level brings a ________ in the real wage rate that ________ profits which leads to ________.
A) rise; reduces; firms restarting production
B) rise; reduces; firms temporarily shutting down
C) fall; increases; firms temporarily shutting down
D) rise; increases; firms restarting production
E) rise; increases; firms temporarily shutting down

Accepted Answer

The answer of A fall in the price level brings...

Question 17

A rise in the money wage rate shifts the
A) AD curve rightward.
B) AD curve leftward.
C) AS curve rightward.
D) AS curve leftward.
E) potential GDP curve rightward.

Accepted Answer

A rise in the money wage rate will increase the cost of production for firms, causing them to reduce their supply and shift the AS curve leftward.

Question 18

Which of the following shifts the aggregate supply curve rightward?
i. the money wage rate rises
ii. potential GDP increases
iii. government expenditure on goods and services increases
A) i only.
B) ii only.
C) iii only.
D) ii and iii.
E) i, ii, and iii

Accepted Answer

An increase in potential GDP shifts the aggregate supply curve rightward, as it indicates an increase in the economy's capacity to produce goods and services.

Question 19

Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil.
A) The AS curve shifts rightward.
B) There is no change to the AS curve.
C) The AS curve does not shift but there is an upward movement along it.
D) The AS curve does not shift but there is a downward movement along it.
E) The AS curve shifts leftward.

Accepted Answer

A decrease in the price of oil is a positive supply shock for many economies as it lowers the production cost of firms that rely heavily on oil, such as those in transportation and manufacturing. This leads to an increase in aggregate supply (AS) since firms can produce more output at any given price level. As a result, the AS curve shifts rightward.

Question 20

If the costs of production decrease, there is
A) an increase in aggregate supply and the AS curve shifts rightward.
B) a decrease in aggregate supply and the AS curve shifts leftward.
C) an increase in the quantity of real GDP supplied and a movement up along the AS curve.
D) a decrease in the quantity of real GDP supplied and a movement down along the AS curve.
E) an increase in aggregate supply and the AS curve shifts leftward.

Accepted Answer

If the costs of production decrease, firms are able to produce goods and services at a lower cost, which leads to an increase in the quantity of output supplied at every price level. This results in a rightward shift of the aggregate supply curve. Therefore, choice A is the correct answer.

Quiz 13: Aggregate Supply and Aggregate Demand

If the costs of production increase, there is

Changes in which of the following shifts the aggregate supply curve? i. the price level. ii. the money wage rate. iii. potential GDP.

A change in the price level brings a the aggregate supply curve, NOT a the aggregate supply curve.

If the money wage rate increases, then the

A rise in the price level brings a in the real wage rate that profits which leads to production.

The aggregate supply curve shifts

Which of the following shifts the aggregate supply curve leftward?

The aggregate supply curve shifts rightward when

An increase in the money wage rate leads to

Which of the following statements is true?

A fall in the money wage rate aggregate supply and .

________ decreases aggregate supply.

Which of the following changes aggregate supply and shifts the AS curve? i. a change in the price of a major resource ii. increases in the amount of capital iii. a change in the money income of consumers

Changes in which of the following do NOT shift the AS curve? i. the price level ii. potential GDP iii. the money wage rate

Which of the following changes aggregate supply and shifts the aggregate supply curve? i. change in the price level ii. change in potential GDP iii. change in the money wage rate

A fall in the price level brings a in the real wage rate that profits which leads to .

A rise in the money wage rate shifts the

Which of the following shifts the aggregate supply curve rightward? i. the money wage rate rises ii. potential GDP increases iii. government expenditure on goods and services increases

Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil.

If the costs of production decrease, there is