Question 1

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

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

Question 2

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 increases the cost of production, which reduces the profitability of businesses and thus reduces the quantity of goods and services they are willing to supply. This causes a leftward shift of the aggregate supply (AS) curve.

Question 3

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

A decrease in the money wage rate reduces firms' production costs, allowing them to produce more output at any given price level. Therefore, the aggregate supply curve shifts rightward. Potential GDP, income taxes, and government purchases are all factors that can affect aggregate demand, and changes in these factors would not directly shift the aggregate supply curve. The rise in the money wage rate would shift the aggregate supply curve leftward.

Question 4

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 aggregate supply curve, not a shift in the aggregate supply curve. A shift would require a change in factors such as technology, input prices, or the available quantity of resources. The vertical displacement and change in the slope of the aggregate supply curve are caused by changes in these underlying factors, not by changes in the price level.

Question 5

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 6

________ 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

When the money wage rate rises, it increases the cost of production for firms, which in turn decreases their profitability and incentive to produce. As a result, firms reduce their level of output and aggregate supply decreases.

Question 7

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

I. Change in price level affects movement along the aggregate supply curve, but not a shift in the curve itself. 
II. Change in potential GDP shifts the aggregate supply curve since it reflects changes in the available resources for production. 
III. Change in the money wage rate shifts the aggregate supply curve since it represents a change in input costs for firms. Therefore, both ii and iii shift the aggregate supply curve.

Question 8

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 9

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

The aggregate supply curve shifts rightward if the money wage rate falls. This is because a decrease in wage rate reduces firms' costs of production, causing them to produce more outputs at every price level, which in turn increases the economy's aggregate supply.

Question 10

An increase in the money wage rate ________ and an increase in the money prices of raw materials ________.
A)shifts the AS curve rightward; shifts the AS curve rightward
B)shifts the AS curve leftward; shifts the AS curve leftward
C)shifts the AS curve rightward; shifts the AS curve leftward
D)shifts the AS curve leftward; shifts the AS curve rightward
E)shifts the AS curve leftward; does not shift the AS curve

Accepted Answer

The answer of An increase in the money wage rate...

Question 11

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

The answer of An increase in the money wage rate...

Question 12

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 oil prices would lower production costs for firms and increase their profit margins, leading to an increase in their willingness to supply goods and services. This would result in a rightward shift of the aggregate supply curve.

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 and shift the AS curve. An increase in the price of a major resource will decrease AS and shift the curve leftward, while a decrease in the price of a major resource will increase AS and shift the curve rightward. 
ii. Increases in the amount of capital will increase the potential output and shift the AS curve rightward. 
iii. A change in the money income of consumers might influence the demand for goods and services but not directly affect the AS curve.

Question 14

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

When the costs of production increase, firms are less willing to supply the same quantity of goods and services at the previous prices. This results in a decrease in aggregate supply and a leftward shift of the AS curve. This is because higher costs of production lead to lower profitability, which prompts firms to reduce their production levels. As a result, the prices of goods and services increase, leading to a decrease in the aggregate quantity demanded. The decrease in the aggregate supply can be shown graphically by a leftward shift of the AS curve.

Question 15

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

If the money wage rate increases, the production costs of firms will increase, causing a decrease in the short-run aggregate supply. This means that the aggregate supply curve will shift leftward.

Question 16

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 17

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 will increase firms' production costs, reducing their willingness to supply goods and services at any given price level, resulting in a leftward shift of the aggregate supply curve. The other choices would shift the aggregate supply curve to the right.

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

I. The money wage rate rising would shift the aggregate supply curve leftward as it increases the cost of production for firms.
II. Potential GDP increasing would shift the aggregate supply curve rightward as it increases the amount of goods and services that can be produced in the economy.
III. Government expenditure on goods and services increasing would shift the aggregate demand curve rightward, not the aggregate supply curve.

Question 19

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 more output at a lower cost. This leads to an increase in aggregate supply, and the AS curve shifts rightward. With a rightward shift of the AS curve, at any given price level, the quantity of real GDP supplied will increase.

Question 20

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...

Quiz 19: Aggregate Supply and Aggregate Demand

Changes in which of the following shifts the aggregate supply curve? I. the price level Ii. the money wage rate Iii. potential GDP

A rise in the money wage rate shifts the

The aggregate supply curve shifts rightward when

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

A fall in the money wage rate aggregate supply and .

________ decreases aggregate supply.

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 .

The aggregate supply curve shifts

An increase in the money wage rate and an increase in the money prices of raw materials .

An increase in the money wage rate leads to

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?

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

If the costs of production increase, there is

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.

Which of the following shifts the aggregate supply curve leftward?

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.

If the costs of production decrease, there is

Changes in which of the following do NOT shift the AS curve? I. the price level Ii. potential GDP Iii. the money wage rate