Economics QUESTIONS HELP!!?

Posted on 2014-04-21 12:51:00 in Economics by PEPPER

. (Points: 1)

Refer to the AS/AD Figure below. If the initial (non equilibrium) price level were 400, which of the following best describes the process that follows.





a. Quantity of AS>Quantity of AD, Business Inventories Fall, Price level Rises

b. Quantity of AD>Quantity of AS, Business Inventories Rise, Price level Rises

c. Quantity of AS>Quantity of AD, Business Inventories Rise, Price level Falls

d. Quantity of AD>Quantity of AS, Business Inventories Fall, Price level Falls

e. AS < AD, Output Rises

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4. (Points: 1)

List ALL the letters below which correctly describe why the Aggregate Demand (AD) curve is downward sloping. (CAN be more than one answer, e.g. A and C and E)



a. The Wealth effect, a fall in Price level, leads to decreased purchasing power, leads to Decreased levels of Consumption, and so lower quantity of AD

b. The Wealth effect, a fall in Price level, leads to increased purchasing power, leads to Increased levels of Consumption, and so higher quantity of AD

c. The International trade effect, a fall in Price level, leads to a weaker dollar, higher Exports and lower Imports, and so higher quantity of AD

d. The International trade effect, a fall in Price level, leads to a stronger dollar, higher Exports and lower Imports, and so lower quantity of AD

e. The Interest rate effect, a fall in Price level, leads to lower interest rates, and higher levels of Investment and Consumption, and so higher quantity of AD

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5. (Points: 1)

If household and business expectations become more Optimistic, we would expect which of the following to occur?



a. A fall in Aggregate Quantity Demanded (movement down an existing curve)

b. A decline in Consumption and Investment expenditures

c. Aggregate Demand Decreases now (curve shifts left)

d. A decrease in Net Exports

e. Aggregate Demand Increases now (curve shifts right)

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6. (Points: 1)

A Long-Run (LR, Classical theory) Macroeconomic equilibrium occurs when:



1. We never actually reach it (as the LR is purely a theoretical time frame) the economy is only ever driven towards it--so exact location is changeable

2. Wherever the Aggregate Demand curve, and Short-Run Aggregate Supply curve both intersect at a Macroeconomic market-clearing Price Level

3. The Aggregate Demand curve, Short-Run Aggregate Supply curve, and Long-Run Aggregate Supply curve all intersect at Full employment GDP

4. The Short-Run Aggregate Supply curve, intersects the Long-Run Aggregate Supply curve, intersect below beyond full employment Price Level

5. The Aggregate Demand curve, Short-Run Aggregate Supply curve, intersect beyond full employment GDP

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7. (Points: 1)

The Long-Run Classical equilibrium is optimal because:



a. Economy is located at full employment real GDP

b. The Macroeconomy exhibits price stability

c. All participants in the economy have obtained enough information to adjust their behavior correctly

d. In the labor market the actual unemployment rate is equal to the full employment unemployment rate

e. All of the above are correct

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8. (Points: 1)

In the Classical Macroeconomic theory ______ is a vertical line at Full Employment Real GDP



a. The Long-Run Aggregate Supply curve

b. The Production Possibilities Frontier

c. The Short-Run Equilibrium

d. The Aggregate Demand curve

e. The Short-Run Aggregate Supply curve

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9. (Points: 1)

If there is a big increase in the population of the USA leading to an increase in the number of American workers, what would we expect to happen to the U.S.'s Production Possibilities Frontier (PPF) and its Long-Run Aggregate Supply curve (LRAS).



a. We would expect the PPF to shift inwards and the LRAS to shift to the left

b. We would expect the PPF to shift right and the LRAS to shift to the left

c. We would expect the PPF to shift left and the LRAS to shift to up

d. We would expect the PPF to shift outwards and the LRAS to shift to the right

e. We would expect the PPF to remain the same and the LRAS to shift down

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10. (Points: 1)

In terms of the Classical SRAS in the Short-Run Workers face ____ and Firms face ______



1. Increasing Wages -- Decreasing Resource prices

2. Sticky Wages -- Sticky Resource prices

3. Inflexible Wages -- Constant Prices

4. Decreasing Wages -- Increasing Resource prices

5. Constant Wages -- Constant Prices

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