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AD As Model Quesstions Quiz

Navigation   » List of Schools  »  Pierce College  »  Economics  »  Economics 002 – Principles of Economics II  »  Fall 2020  »  AD As Model Quesstions Quiz

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Below are the questions for the exam with the choices of answers:

Question #1
In an AD/AS diagram, an increase in structural unemployment will:
A  shift AS to the right.
B  shift AS to the left.
C  have no effect on AS or AD.
D  shift AD to the left.
Question #2
Aggregate supply (AS) denotes the relationship between the __________________ that firms choose to produce and sell and the _________________, holding the price of inputs fixed.
A  type of goods; input price of raw materials
B  total quantity; price level for output
C  total inputs; types of goods
D  price of goods; number of employees
Question #3
Potential GDP in the U.S. will be unaffected by ____________________.
A  technology
B  the unemployment rate
C  the amount of capital available
D  government institutions
Question #4
The ____________ describes a situation where sufficient credit is available, but the economy experiences a reduction in consumption and investment.
A  inflation rate effect
B  wealth effect
C  price effect
D  interest rate effect
Question #5
When the economy of a country is operating close to its full capacity:
A  the unemployment rate is less than the natural rate of unemployment.
B  unemployment is close to zero.
C  the unemployment rate is greater than the natural rate of unemployment.
D  cyclical unemployment is close to zero.
Question #6
In macroeconomics, _____________________ denotes the relationship between the total quantity of goods and services and the price level for output.
A  aggregate demand (AD)
B  macroeconomic equilibrium
C  potential GDP
D  aggregate supply (AS)
Question #7
Melanie decided to save 20% of her annual earnings for 10 years so she would have a down payment for a house. After 5 years, what change in the economy would cause an increase in the purchasing power of the funds she has managed to save?
A  stagflation
B  deflation
C  depression
D  recession
Question #8
Why is productivity growth considered to be the most important factor in the AD/ASAD/AS model?
A  it shifts the AD curve in the short-term
B  it shifts the AS curve in the long-term
C  it shifts the AD curve in the long-term
D  it shifts the AS curve in the short-term
Question #9
Economic production has fallen to less than full potential due to inadequate incentives for firms to produce. The duration of this economic condition will likely be:
A  indefinite
B  unknown
C  short-term
D  long-term
Question #10
Aggregate supply curves are ________________________ for low levels of output, and ____________________________ for high levels of output.
A  relatively steep; relatively flat
B  relatively flat; remain flat
C  relatively flat; relatively steep
D  relatively steep; remain steep
Question #11
Which of the following will have the greatest influence on the slope of the demand curve in a single market model?
A  higher wages
B  wealth effects
C  full employment
D  substitute goods
Question #12
As the aggregate price level in an economy rises, ____________________.
A  interest rates increase
B  investment increases
C  consumer demand increases
D  exports decrease
Question #13
_______________________ happens when the economy is producing at its potential and unemployment is at the natural rate of unemployment.
A  The foreign price effect
B  The interest rate effect
C  Full employment GDP
D  Stagflation
Question #14
When prices of outputs in an economy become sufficiently high causing production to exceed potential GDP, the resulting:
A  lower prices will lead to a lower quantity of demand.
B  higher wages will encourage workers to produce more at high prices.
C  downward slope in aggregate supply curve will be short run.
D  hyper-intense production will be unsustainable in the long run.
Question #15
_________________ results when an economy experiences high unemployment and high inflation at the same time.
A  Recession
B  Stagflation
C  Reflation
D  Deflation
Question #16
In an AD/ASAD/AS diagram, __________________________ could explain a rise in cyclical unemployment?
A  a shift in AS to the left
B  a shift to the left in either AS or AD
C  a shift in AD to the left
D  a shift in AS to the right
Question #17
_______________________ are economists who generally emphasize the importance of aggregate supply in determining the size of the macroeconomy over the _____________.
A  Neoclassical economists; short run
B  Keynesian economists; long run
C  Neoclassical economists; long run
D  Keynesian economists; short run
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