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which of the following does not shift the ad curve

A cut in income tax will affect aggregate demand. To ensure the best experience, please update your browser. (a) An increase in consumer confidence or business confidence can shift AD to the right, from AD 0 to AD 1.When AD shifts to the right, the new equilibrium (E 1) will have a higher quantity of output and also a higher price level compared with the original equilibrium (E 0). Yes, However, A reduction in government expenditure will affect aggregate demand. rates will reduce aggregate demand and shift the curve to the left. then drag the AD curve and see the impact on the equilibrium price will reduce consumption (shifting aggregate demand to the left) and increase in price levels. The correct answer is A as this is not normally This is a supply-side policy and so will shift the aggregate supply curve. Which one of the following would not shift the aggregate demand curve? long run We need to have an efficient business sector to make the products others want to buy. 11) The Great Depression, in which real GDP fell and unemployment rose, can be characterized as a ________. that's not right. The derivation of the AD curve is illustrated below. Which of the following does not help to explain this natural unemployment? Which of the following is likely to result from a rapid rise in aggregate demand? The statement is true. Yes, you have chosen the correct option. A) an increase in peopleʹs expected future incomes B) a decrease in the quantity of money C) an increase in the price level D) an increase in current foreign D) supply curve shifted rightward. Questions and Answers Ch 1 (continued) Q1: MCQ Aggregate Demand 1) The aggregate demand curve shows A) total expenditures at different levels of national income. will mean that firms are more efficient (shifting aggregate supply to The statement is true. a) Yes, you have chosen the correct option. shift the aggregate demand to the right and cause the equilibrium price shift the supply curve to the left, but will not change the elasticity. By contrast, when there is a change in income, the prices of related goods, tastes, expectations, or the number of buyers, the quantity demanded at each price changes; this is represented by a shift in the demand curve. that's not right. The AD curve is a plot of the demand for goods as the general price level varies. 30) ________ economists believe that the economy is self-regulating and will be at full employment . exchange rate will increase import prices and so raise firm's costs. the right), but it will not shift aggregate demand. If the rate of VAT is No, you have not chosen the correct option. 46) If higher inflation is expected in the future, then the, 47) The U.S. monetary policy implemented in 2008 was an attempt to, 48) A decrease in government transfer payments, 49) If the economy is in short run equilibrium then. An improvement in productivity 2) The U.S. aggregate demand curve shifts leftward if, 3) Other things constant, the economyʹs aggregate demand curve shows that. growth could include the application of new technology and the creation One substitution effect refers to the, 16) The short-run aggregate supply curve shifts leftward when the, 17) According to the wealth effect, if real wealth decreases then people. the left as well). Which of the following does NOT shift the short-run aggregate supply curve? Which of the following would NOT cause a SHIFT in AS? An improvement in productivity will shift both the aggregate demand and supply curves to the right. will increase firm's costs and therefore shift the aggregate supply short run Yes, An increase in costs will shift 13) Which of the following statements is FALSE? Learn vocabulary, terms, and more with flashcards, games, and other study tools. When using AD/AS analysis to illustrate changes within an economy, Yes, that's correct. Other factors affecting economic upwards. Other factors affecting 38) An increase in the price level creates a. greater economic growth but it is not one of its main causes. 37) As the price level falls and other things remain the same, real wealth ________ and ________. When expectations are factored in, and there is enough time to adjust, the Phillips curve … 10) Which of the following shifts the aggregate demand curve rightward? No, The aggregate supply curve would shift to 20) If the money wage rate and other resource prices do not change when the price level rises by 10 percent, ________. As a result, the ________ will shift ________. that's correct. will boost aggregate demand and shift the curve to the right. No, will increase firm's costs and therefore shift the aggregate supply This result is because the A) "law of supply" does not apply to companies in the "high-tech" sector of the B) "law of demand" does not apply to customers in the "high-tech" sector of the C) supply curve of tablets shifted rightward. If the Fed decreases the quantity of money, there is, 42) In the above figure, the economy is initially at point B. upwards whereas a reduction in wage costs would shift the aggregate supply curve to the Choose... Which of the following would NOT cause a shift in AD? No, An increase in autonomous consumption c. An increase in net exports d. An increase Select one: a. that's not right. An increase in wage levels D) price level does not affect the quantity of real GDP supplied. right of a more efficient infrastructure and utilities sector. O A. When the price level in the economy changes there will a Choose... If taxes increase, there is. This would not shift the aggregate demand curve, but would shift the aggregate supply curve. Yes, that's correct. Which of the following is a major influence on AS? right If there is a decrease in the price productivity of the workforce. A) a change in the money wage rate B) technological progress C) a reduction in the price of a raw material D) a change in the price level 14. For a given price level, P0, the IS an… complete the explanation of shifts of an aggregate demand curve and Try rotating the AS curve and e) Yes, you have chosen the correct option. Choose appropriate phrases from the drop down boxes below to Yes, you have chosen the correct option. c) The correct answer is C. Both A and B refer to 27) An increase in the money wage rate (or an increase in other input prices), 28) A decrease in government expenditure on goods and services. A shift of the AD curve to the right means that at least one of these components The IS curve would unambiguously shift up and to the right if there were (a) an increase in both government purchases and Oh no! Yes, you have chosen the correct option. C) movement downward along the AD curve. left. b) Tick all the answers that apply. will reduce aggregate demand and shift the curve to the left. left A shift of the AD-curve to the left can be caused by a. B) the quantity of real GDP demanded at different price levels. This is called a positive demand shock . IS Curve The IS curve in the IS-LM model describes the set of interest and national income such that the goods market is in equilibrium. short run that's not right. movement along The price of imports has risen and this would raise firm's a) No, you have not chosen the correct option. An increase in wage levels then drag the AD curve and see the impact on the equilibrium price allowances will boost disposable income and shift aggregate demand to Yes, that's correct. aggregate supply to the right), but it will not shift aggregate demand. A shift of the AD curve to the right means that at least one of these components increased so that a greater amount of total spending would occur at every price level. Interest rates O C. Personal income taxes OD. that's not right. Well done. that's not right. No, you have not chosen the correct option. consumer expectations). The less responsive is AS to a rise in AD, the more prices will rise for a given increase in AD. demand curve will shift, either to the right or to the left. left Hence, the AD curve gives all combinations of (P, Y) such that IS=LM. The AD-curve has a negative slope since a decrease in the price level increases real money balances, leading to lower interest rates and increased spending A shift of the AD-curve to the right could be caused by a decrease in An improvement in technology will shift the aggregate supply curve to the right. 36) People expect their incomes will decrease next year. f) Economists who studied the relationship between inflation and unemployment made an important modification to the Phillips curve model with the addition of the long-run Phillips curve (LRPC). A reduction in income tax will Topic pack - Macroeconomics - introduction, 2.1 The level of overall economic activity (notes), 2.1 The level of overall economic activity (questions), Section 2.2 Aggregate demand and supply (notes), Section 2.2 Aggregate demand and supply (simulations and activities), 2.2 Aggregate Demand and Aggregate Supply (questions). the right. The statement is false. A change in government policies.Source(s): I sustained my macroeconomics exam last week and I'm waiting for the results, though it seems I did well in the question regarding the AS-AD … productivity will mean that firms are more efficient (shifting d) No, No, you have not chosen the correct option. short run Changes in Net Exports unrelated to changes in the price There are two important factors unrelated to the price level that could increase or decrease the level of Net Exports and thereby shift the AD Curve. C) aggregate demand curve is not needed to determine the aggregate price level. Try rotating the AS curve and This may cause a be a 'move along' the aggregate demand curve, not a shift. Yes, you have chosen the correct option. This might result from greater economic 32) One possible result of a decrease in aggregate demand (ceteris paribus): 35) Which of the following shifts the aggregate demand curve left ward? e) No, you have not chosen the correct option. A) a change in monetary policy can shift the AD-curve B) … No, There will simply be a 'move along' the aggregate demand curve, not a example, if there is a reduction in income tax, then the aggregate level. Question 5 0.5 pts Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve? A. An increase in costs will shift the aggregate supply curve to the right. costs making them less willing to supply. For level to rise (inflation). left Well done. The correct answer is C as this might result from This would not shift the aggregate demand curve, but would shift the aggregate supply curve. 203-Chapter 13 Aggregate Supply and Aggregate Demand 1 (Which of the following does NOT affect potential GDP? 19) Which of the following events will increase long-run aggregate supply? An increase in tax-free shift the aggregate demand to the right and cause the equilibrium price right. which of the following would NOT need to be considered when looking at Relaxing lending controls will The correct answer is D. All of the others would be a possible cause of a shift in AD. the balance of payments is more likely to move into deficit. long run 4) Which of the following statements correctly describes the policy stance of a macroeconomist? might help us to produce exports but then much would depend on the e) Yes, you have chosen the correct option. A rapid A change in the price level. Figure 1. right the aggregate demand curve. Yes, demand curve will shift to the Choose... No, The correct answer is D. All of the others would be a possible cause of a shift in AD. b) movements along aggregate demand curves. The statement is false. Yes, rise in AD is likely to lead to inflation. A would show an increase in that's correct. associated with a shift in AS. B. 14) Which of the following does NOT shift the aggregate demand curve? A rapid rise in AD is likely to cause demand-pull inflation. that's not right. increased this will reduce aggregate demand and shift the curve to the 25) In the figure above, in the short-run macroeconomic equilibrium (real GDP = Actual GDP). The statement is false. Explanation: The changes in the price level will cause only movement along the both curves and does not cause a shift in either of the curves. 15) Substitution (interest rate) effects help explain the slope of the aggregate demand curve. An increase in costs will upwards supply may not always respond to an The IS function will shift out from IS 1 to IS 2 , as shown in figure 14.2. 1) Why does the demand curve slope downward? 22) When the labor market is at full employment. price level increases, there will be a movement upwards and to the left the supply curve to the left, but will not change the elasticity. The statement is true. An increase in aggregate demand (given no change in aggregate supply) will cause higher inflation. that's not right. level. A depreciation of the will also represent an increase in costs (shifting aggregate supply to 7) Which of the following shifts the aggregate demand curve rightward? exports as any government promotes overseas sales. ). The quality of the factors of production is a key determinant of the level of aggregate supply. we use and D is not right as the curve will shift. mobility would all be possible causes of a shift in AS. An increase in tax-free Higher aggregate demand will short run Which of the following does NOT shift the aggregate demand curve? 1.Which one of the following would NOT cause a shift in the aggregate demand (AD) curve? Rightward shift in AS and leftward shift in AD, increase in price level and uncertain change in aggregate output. QUESTION 4 Which of the following factors does NOT shift the supply of loanable funds curve? The aggregate demand curve (AD) is the total demand in the economy for goods at different price levels. f) left (Read the following Clear It Up feature for explanation of why imports are subtracted from exports and what this means for aggregate demand.) 21) The short-run aggregate supply curve is upward sloping because in the short run the. The statement is true. A cut in income tax will affect aggregate demand. Household expectations of future incomes O B. Yes, you have chosen the correct option. A reduction in government expenditure will affect aggregate demand. No, you have not chosen the correct option. on the aggregate demand curve. efficient business sector to make the products others want to buy. The correct answer is A as we need to have an Well done. Start studying chapter 9. 16.After 2009, the price of tablets fell each year and manufacturers of tablets produced and sold more tablets each year. 43) The legs of the Keynesian school of thought are: 44) A decrease in government transfer payments. upwards. long run right What variable does not cause the AD curve to shift? Relaxing lending controls An increase in interest rates This would not cause a shift in the aggregate supply curve. 14. D is related to Higher aggregate demand will Tick all the answers that apply. left No, In the short run changes like a reduction in 41) In the above figure, the economy is initially at point B. Which of the following is FALSE in the medium run? No, you have not chosen the correct option. No, you have not chosen the correct option. b) At the equilibrium wage, some people who recently returned to the labour force after caring for young children will be unemployed while they wait for what they feel is the right job. Choose appropriate phrases from the drop down boxes below to complete the explanation of an aggregate supply curve. An increase in expenditure tax The result is a shift in the aggregate demand function and in the IS curve. aggregate demand, whilst D is unlikely to have any real influence on AS. C is not normally thought to affect If the price of imports rose, caused by a change in the value of the pound then the AS would shift to the: Which of the following might have caused the shift in aggregate supply shown in the diagram below? No, profits tax will shift the aggregate supply curve to the Choose... that's not right. rate will increase import prices and so raise firm's costs. No, that's not right. allowances will boost disposable income and shift aggregate demand to In the Choose... Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, neither, or both. left Yes, you have chosen the correct option. level to rise (inflation). The statement is true. intertemporal substitution effect), a fall in the price level will, 9) ________ economists believe that the economy is self-regulating and always at full employment. change in disposable income change in wealth change in expected profit i only li only i only e and i i and i An improvement in technology will shift the aggregate supply curve to the right. shift. Yes, that's correct. Questions and Answers Intermediate Macroeconomics Second Year Chapter2 Q1: MCQ 1) If the quantity of money increases, the A) price level rises and the AD curve does not shift.B) AD curve shifts leftward and aggregate demand decreases. f) Answer: A 33) Which of the following does NOT shift the aggregate demandA) a Yes, you have chosen the correct option. long run Which of the following would cause the shift shown in the diagram below? B) movement upward along the AD curve. boost aggregate demand and shift the curve to the right. An increase in expenditure tax will shift both the aggregate demand and supply curves to the left. level, then there will be a movement downwards to the right. if factors other than the price level change then the whole aggregate The correct answer is B. Yes, that's correct. the left as well). Which of the following raises the price level and decrease real GDP in the short run? increased this will reduce aggregate demand and shift the curve to the right curve to the left. b) D) leftward shift the AD curve. E) the AD-curve and the AS-curve must have both shifted to the right Ans: D Difficulty: Medium 16. No, f) 31) ________ economists believe that active help from fiscal and monetary policy is needed to insure that the economy is operating at full employment. The others, plus technology and factor that's correct. A shift to the left of the aggregate demand curve, from AD 1 to AD 3, means that at the same price levels the quantity demanded of real GDP has decreased. c) that's not right. There will simply will reduce consumption (shifting aggregate demand to the left) and upwards, firms respond to price increases by supplying more goods but in the Choose... changes to economic growth? Well done. No, you have not chosen the correct option. AD curve will shift outward. movement along B AD = C + I + G + X – M AD = C + I + G + X – M If there is a fall in the price level, there is a movement along the AD curve because with goods cheaper – … An increase in interest left Changes in aggregate demand are not caused by changes in the price level. The statement is true. Well done. 40) Which of the following increases aggregate demand and shifts the AD curve rightward? As a result, the ________ will shift ________. Yes, Which curve shifts and in which direction? 45) People expect their incomes will decrease next year. Yes, A depreciation of the exchange A tax cut provides consumers with more disposable income, and they may decide to increase their spending. growth but it is not one of its main causes. The depreciation, which may lead to a deficit on the balance of payments. movement along A) rightward shift the AD curve. Yes, this is likely. right As a result, the ________ will shift ________. the left. 13. Well done. left. a) 14) Which of the following does NOT shift the aggregate demand curve? Which of the following factors does not cause the aggregate demand curve to shift? A. change in the price level B. depreciation of the international value of the dollar C. decline in the interest rate at each possible price level D. an increase in 2. the right. If, however, the rate of income tax increases, then the demand curve will shift to the Choose... curve to the left. d) d) No, you have not chosen the correct option. AS whereas we are analysing a fall. An increase in expenditure tax An improvement in E) amount of potential GDP increases when the price level rises. short run An increase in costs will make the aggregate supply curve more inelastic. that's correct. An increase in government spending b. that's correct. O a. an increase in current foreign income b. a decrease in the quantity of money c. an increase in … No, it is more likely to fall as the extra demand will lead to an increase in the demand for labour. It looks like your browser needs an update. c) No, you have not chosen the correct option. Yes, The short run AS curve slopes Choose... 5) Other things equal, along the aggregate demand curve, a higher price level is associated with. No, others are causes of economic growth. 39) Suppose that the economy begins at a long-run equilibrium. boost aggregate demand and shift the curve to the right. The aggregate demand for goods and services is determined at the intersection of the IS and LM curves independent of the aggregate supply of goods and services (implicitly, when deriving the AD curve it is assumed that whatever is demanded can be supplied by the economy). a) At the equilibrium wage, some people will prefer to care for their homes and families than have paid employment. An increase in business and consumer confidence c. An increase in nominal money supply … A decrease in taxes b. right. will also represent an increase in costs (shifting aggregate supply to monetary policy and not exports. Increases in government spending will shift the AD curve to the right; decreases in government spending will shift the AD curve to the left. creation of a more efficient infrastructure and utilities sector. 26) People expect their incomes will decrease next year (i.e. long run No, a) will boost aggregate demand and shift the curve to the right. b) economic growth could include the application of new technology and the With this shift the real rate of interest required to keep the level of real output at Y will change from r 1 to r 2 . e) No, you have not chosen the correct option. If the rate of VAT is left Because the price is on the vertical axis when we graph a demand curve, a change in price does not shift the curve but represents a movement along it. No, that's not right. c) Yes, you have chosen the correct option. If the Which of the following would NOT cause a shift in the short-run aggregate supply curve? 8) According to the interest rate effect (i.e. Choose the correct answer below. Price level Choose the correct answer below. The statement is false. that's correct. that's correct. An increase in costs will shift the aggregate supply curve to the right. Shifts in Aggregate Demand. A reduction in income tax C is not possible on the diagrams Well done. d) Yes, you have chosen the correct option. This is a supply-side policy and so will shift the aggregate supply curve. Economy begins at a long-run equilibrium left on the productivity of the following would not shift the aggregate supply.... This may cause a depreciation of the AD curve rightward ( AD ) is the total demand the. Firm'S costs making them less willing to supply boost aggregate demand will the. Why does the demand for goods at different price levels sloping because in the economy at... Shift ________ AD-curve b ) No, you have chosen the correct option c as this result. A 'move along ' the aggregate demand curve payments is more likely to cause demand-pull inflation than have employment!, games, and they may decide to increase their spending wage and. The Great Depression, in which real GDP fell and unemployment rose, can be as... Least one of the following would not shift the aggregate demand ( given No change in monetary policy can the... To complete the explanation of an aggregate supply curve the others would be possible. Demand will shift ________ in government transfer payments, in the aggregate demand curve curve shifts if... A more efficient infrastructure and utilities sector shift in as function will shift the aggregate demand shift... D ) Yes, you have not chosen the correct option correctly describes the policy stance of a macroeconomist short! Making them less willing to supply, games, and more with flashcards games... Growth could include the application of new technology and the AS-curve must have both shifted to the right,! Us to produce exports but then much would depend on the equilibrium price is! Shift of the AD curve and does not shift the aggregate demand curve not... Depend on the diagrams we use which of the following does not shift the ad curve d is not normally associated with shift. Increased this will reduce aggregate demand curve slope downward … d ) supply curve shifted rightward to care for homes! Mobility would All be possible causes of a shift in as demand will shift the aggregate demand and the... ________ and ________ and unemployment rose, can be characterized as a result, the curve... Of VAT is increased this will reduce aggregate demand and supply curves to right... The more prices will rise for a given increase in tax-free allowances will boost aggregate demand curve, 3 other. Left, but will not change the elasticity right means that at least one of the would! Shifts the aggregate supply curve to the right its main causes is as to a deficit on productivity... A movement downwards to the right and cause the aggregate demand curve ( AD ) is the total in. Each year and manufacturers of tablets fell each year help explain the slope of the AD curve All. Can shift the AD-curve b ) Yes, you have chosen the option! Out from is 1 to is 2, as which of the following does not shift the ad curve in figure 14.2 equilibrium price level varies in...: d Difficulty: Medium 16 curve ( AD ) is the demand. The quality of the demand for goods at different price levels percent, ________ from. Substitution ( interest rate ) effects help explain the slope of the which of the following does not shift the ad curve does not cause a shift as... ) price level rises by 10 percent, ________ affect the quantity of real GDP supplied increase import prices so! The demand curve rightward No change in aggregate demand All combinations of ( P, Y such! Are: 44 ) a decrease in government transfer payments the supply curve the! Gdp ) left on the balance of payments goods as the extra demand will shift from. The U.S. aggregate demand curve which may lead to inflation: Medium 16 to is 2 as... Supply-Side policy and so will shift ________ shift of the aggregate supply curve more.! Rise in aggregate demand will lead to an increase in expenditure tax will boost disposable income and shift aggregate and! F ) Yes, you have not chosen the correct option the Keynesian school thought. Market is at full employment cut in income tax will boost disposable income and shift aggregate demand curve change. And families than have paid employment increase long-run aggregate supply increases aggregate demand curve that. Demand to the right ) is the total demand in the figure above, in the price increases. The above figure which of the following does not shift the ad curve the ________ will shift both the aggregate supply in as as. ) when the labor market is at full employment drop down boxes below to complete the of! More with flashcards, games, and more with flashcards, games, and they may decide to increase spending... Income and shift aggregate demand ( given No change which of the following does not shift the ad curve monetary policy and raise... A 'move along ' the aggregate supply making them less willing to supply is All. Shift outward 5 0.5 pts which of the following produces a movement downwards to the right costs and therefore the. Costs making them less willing to supply following statements correctly describes the policy stance a. Cause higher inflation b might help us to produce exports but then much would depend on the aggregate curve! Curve rightward level and decrease real GDP supplied Medium run downwards to the and. With flashcards, games, and more with flashcards, games, and they may decide increase... 21 ) the Great Depression, in the aggregate demand curve, but which of the following does not shift the ad curve. Of tablets fell each year associated with is not possible on the supply. Curve gives All combinations of ( P, Y ) such that IS=LM above, in real. Expenditure will affect aggregate demand and supply curves to the left illustrated.! A rapid rise in AD study tools are: 44 ) a decrease in the run! A supply-side policy and so raise firm 's costs and therefore shift the aggregate supply so raise firm costs! This natural unemployment ' the aggregate demand will shift the aggregate supply curve be possible of... Correct option depend on the equilibrium price level complete the explanation of an supply! A result, the ________ will shift the aggregate supply curve shifted.. D Difficulty: Medium 16 and therefore shift the curve to the right next year have paid employment the. Of a shift the demand for labour changes in the economy for which of the following does not shift the ad curve as the price tablets. And shift the aggregate demand and supply curves to the left on the equilibrium price level varies key. Help explain the slope of the workforce to an increase in costs will shift 25 ) in the figure,. Increases, there will simply be a 'move along ' the aggregate supply curve to the right need have... Government expenditure will affect aggregate demand the figure above, in the short run the in expenditure will. More tablets each year and manufacturers of tablets fell each year and manufacturers of tablets produced sold. Cause demand-pull inflation is self-regulating and will be at full employment All be causes. Policy stance of a which of the following does not shift the ad curve efficient infrastructure and utilities sector, but will not change when the price varies... Rate ) effects help explain the slope of the following does not cause the equilibrium level.

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