Question :
101) Aggregate demand shocks have a large effect real GDP : 1384401
101) Aggregate demand shocks have a large effect on real GDP and a small effect on the price level
A) the steeper the AS curve.
B) on the downward-sloping portion of the AS curve.
C) the flatter the AS curve.
D) when the AS curve is vertical.
E) if the AD curve is steep.
Answer: C
Diff: 2
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
User2: Qualitative
102) If the economy’s AS curve is upward sloping, a positive aggregate demand shock will result in
A) an increase in prices but not output.
B) an increase in output but not prices.
C) an increase in both output and prices.
D) a decrease in both output and prices.
E) a decrease in output and an increase in prices.
Answer: C
Diff: 2
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
User2: Qualitative
103) Consider the basic AD/AS model with an upward-sloping AS curve. A positive aggregate demand shock will cause
A) a decrease in the price level.
B) the equilibrium point to move rightward along the AS curve.
C) a movement along the AD curve to the right.
D) a shift to the right in the AS curve.
E) the unemployment rate to remain constant.
Answer: B
Diff: 2
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
User2: Qualitative
104) If the economy’s AS curve is very steep and there is a negative aggregate demand shock, the result will be
A) an increase in the price level and a decrease in real national income.
B) an increase in both the price level and real national income.
C) a decrease in the price level with almost no change in real national income.
D) a decrease in the price level and an increase in real national income.
E) no change in either price level or output.
Answer: C
Diff: 2
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
User2: Qualitative
105) Consider the basic AD/AS model. Suppose firms are currently producing beyond their normal capacity. A change in AD leads to a relatively
A) large change in price level and a large change in real GDP.
B) large change in price level and a small change in real GDP.
C) small change in price level and a large change in real GDP.
D) small change in price level and a small change in real GDP.
E) no change in both price and output.
Answer: B
Diff: 2
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
Objective: REVISED
User2: Qualitative
106) Suppose firms are currently producing output at a level beyond their normal capacity. In this situation, the AS curve will be relatively ________ and a positive AD shock will result in ________.
A) steep; an increase in the price level with a small increase in real GDP
B) flat; an equal increase in the price level and in real GDP
C) flat; a very small increase in prices but a large increase in real GDP
D) flat; a very small decrease in the price level and a decrease in real GDP
E) steep; a decrease in the price level and a very small decrease in real GDP
Answer: A
Diff: 2
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
User2: Qualitative
107) In the basic AD/AS model, the effect of an aggregate demand shock is divided between a change in output and a change in the price level. How the effect is divided depends on the
A) amount of inflation in the economy.
B) position of the AE curve.
C) size of the simple multiplier.
D) slope of the AD curve.
E) slope of the AS curve.
Answer: E
Diff: 2
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
User2: Qualitative
108) Which of the following would cause a positive aggregate demand shock, but leave the aggregate supply curve unaffected?
A) A free trade agreement between Canada and the United States that leads Canadian businesses to increase investment expenditures.
B) A severe drought lasting for six months that destroys agricultural and forestry production.
C) A medical report confirming that improved health for Canadian workers caused fewer lost days of production.
D) An improvement in the computer literacy of workers.
E) A substantial increase in world oil prices.
Answer: A
Diff: 3
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
User2: Qualitative
109) If the economy is in macroeconomic equilibrium with a vertical AS curve, and then aggregate demand increases, we expect the AE function to shift to a
A) higher level and stay there.
B) higher level, but then shift part of the way down to its original position as the price level rises.
C) higher level but then return to its original position as the price level rises.
D) lower level and stay there.
E) lower level, but then return to its original position as the price level rises.
Answer: C
Diff: 3
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
User2: Qualitative
110) If the economy is in macroeconomic equilibrium with a vertical AS curve, and then aggregate demand decreases, we expect the AE function to shift to a
A) higher level and stay there.
B) higher level, but then shift part of the way down to its original position as the price level falls.
C) higher level but then return to its original position as the price level falls.
D) lower level and stay there.
E) lower level, but then return to its original position as the price level falls.
Answer: E
Diff: 3
Topic: 23.3b. AD shocks and AS shocks
Skill: Applied
User2: Qualitative
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