The figure illustrates aggregate demand and aggregate supply in Sparta. All the following events will increase Sparta's real GDP in the short run except ____________________.

an increase in investment
an increase in government purchases
an increase in resource prices
a decrease in taxes

Suppose the value of the U.S. dollar increases from $1.30 Canadian to $1.40 Canadian. U.S. exports will _______, U.S. imports will _______, and U.S. aggregate demand will _______.

decrease; increase; decrease
increase; increase; increase
decrease; increase; increase
increase; decrease; increase

People expect that the El Nino effect will cause drought in Australia in coming years. If most firms expect their profits will fall during the next five years, Australia's ______________________ this year.

aggregate demand will decrease
long-run aggregate supply will increase
short-run aggregate supply will increase
aggregate demand will increase

The figure illustrates aggregate demand and aggregate supply in Sparta. Sparta's price level will rise above 100 if ____________________.

the quantity of money increases
taxes increase
it uses better technology
the capital stock increases

A decrease in the capital stock shifts the __________ curve ________ and the __________ curve _________.

LAS; leftward; SAS; leftward
LAS; rightward; SAS; rightward
LAS; leftward; SAS; rightward
LAS; rightward; SAS; leftward

The Great Depression lasted many years and can be characterized as a _____________.

recessionary gap
full-employment equilibrium
long-run equilibrium
inflationary gap

An economy currently has a recessionary gap. An increase in wages will _______ the recessionary gap and ______the price level.

increase; increase
decrease; decrease
decrease; increase
increase; decrease

The country of Mu has continuous strong economic growth and persistently steady price level. This situation is most likely the result of aggregate demand growing _______________________aggregate supply.

at much the same pace as long-run
at the same pace as short-run
much slower than long-run
much faster than long-run

The economy is initially at point c in the figure. An increase in ______________ will move the economy to point __________ and then an increase in _______________ will move the economy to point _________.

government purchases; b; resource prices; a
taxes; d; government purchases; a
the wage rate; d; taxes; a
the wage rate; b; government purchases; a

If aggregate demand grows only slightly faster than potential GDP, then the economy will _________________.

experience economic growth with low inflation
be at a business-cycle peak
experience economic growth with high inflation
experience recession

Please enter your name and press the SEND button