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Quiz 3 - Macroeconomics

The document contains a 10 question quiz about aggregate supply and demand. It tests understanding of how shifts in aggregate supply and demand curves impact output and price levels. Correct answers depend on interpreting graphs showing the aggregate supply and demand curves and how they shift with different economic changes.

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23 views3 pages

Quiz 3 - Macroeconomics

The document contains a 10 question quiz about aggregate supply and demand. It tests understanding of how shifts in aggregate supply and demand curves impact output and price levels. Correct answers depend on interpreting graphs showing the aggregate supply and demand curves and how they shift with different economic changes.

Uploaded by

gregbaccay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Quiz 3.

Aggregate Supply and Demand

1. An increase in the price level will:


A) increase net exports
B) reduce the value of household debt and increase investment
C) increase production costs and reduce short-run aggregate supply
D) reduce the purchasing power of household wealth and
reduce consumption

2. Answer the next question using the following graph:

Refer to the graph. The shift from AD1 to AD2 may have been caused by:
A) a reduction in the price level
B) a reduction in aggregate supply
C) a decline in personal taxes
D) a decrease in government spending

3. Answer the next question using the following graph:

Refer to the graph. Suppose aggregate demand falls from AD1 to AD2.
Initially, this will cause output to:
A) fall to Q2 and the price level to P2
B) fall to Q2 but the price level to remain at P1
C) fall to Q3 but the price level to remain at P1
D) remain unchanged but the price level will fall to P2
4. The short-run aggregate supply curve:
A) assumes that wages and salaries fully match any change in the
price level
B) is a vertical line located at the full-employment level of output
C) shows the amount of real output supplied at various price
levels
D) becomes increasingly flatter as output expands

5. A leftward shift of the short-run aggregate supply curve would illustrate:


A) demand-pull inflation
B) an inflationary gap
C) a positive GDP gap
D) cost-push inflation

6. At very low levels of output, the short-run aggregate supply curve is


relatively:
A)flat, because firms are reluctant to give their current workers
raises when output is so low
B)flat, because firms can expand output with relatively little
increase in per-unit production costs
C)steep, because increasing output will cause relative large
increases in per-unit production costs
D) steep, because increasing output will cause aggregate demand to
increase

7. The aggregate demand curve slopes downward to the right:


A) because a lower domestic price level reduces net exports
B) because of the income and substitution effects of lower prices
C) at low prices, but not at high prices
D) because a lower price level reduces the demand for money,
which lowers the interest rate and increases desired investment

8. An increase in the incomes of Philippines trading partners would shift the


Philippines:
A) aggregate demand curve to the right
B) aggregate demand curve to the left
C) aggregate supply curve to the right
D) aggregate supply curve to the left

9. Higher prices of imported resources will:


A) move the economy downward and to the right along the
aggregate demand curve
B) make the aggregate demand curve steeper
C) shift the aggregate supply curve to the left
D) shift the aggregate demand curve to the left

10. In the short run, a reduction in aggregate demand is:


A) likely to cause a reduction in the price level
B) unlikely to cause a reduction in the price level because of the
interest rate effect
C) unlikely to cause a reduction in the price level because of
menu costs and efficiency wages
D) likely to cause a reduction in aggregate supply

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