Question

1. Inflationary pressure in the AS-AD model can be shown as a

a) supply shock that shifts the AD to the left.

b) rise in input prices affecting most firms across the economy shifting AS curve to the right.

c) rise in input prices affecting most firms across the economy shifting AS curve to the left.

2. Which of the following would cause a positive demand shock (shift to the right) in aggregate demand?

a) decreased availability of capital stock.

b) availability of social capital increasing.

c) increased consumer confidence and spending.

3. In the chart below concerning the shifts in aggregate supply, arrow B represents an economy that is moving in response to ________  

S1 S2 Aggregate Price Level Shifts in Aggregate Supply

a) a decrease in productivity

b) a decrease in consumer confidence

c) an decrease in input prices

4. Which correctly describes the AD-AS model?

a) The potential GDP curve always slopes downwards from left to right.

b) Real GDP is shown on the vertical axis.

c) The price level is shown on the vertical axis.

Answer 1