Question

31. Which one of the following would not shift the aggregate demand curve? a. a change in the price level. b. Depreciation of the international value of the dollar c. A decline in the interest rate at each possible price level. d. An increase in personal income tax rates. 32. The short-run aggregate supply curve (SRAS) shows the relationship between The general level of prices and the quantity of goods and services purchased by all consumer sin the economy. b. The general level of prices and the quantity of goods and services that domestic firms will supply. c. Prices and the profits of domestic firms. d. Profit of domestic firms and the quantity of goods and services that domestic firms will supply. 33. Which of the following explains why higher prices in the goods and services market will lead to an upward sloping short-run aggregate supply curve. a. The higher prices will temporarily improve profit margins because many of the cost components of firms will be fixed in the short run b. The higher prices will reduce the purchasing power of the fixed quantity of money and thereby stimulate additional output. G. The higher prices will expand the economy's resource base and thereby stimulate additional output d. The higher prices will improve technology and thereby stimulate additional output. . All of the above are true. 34. In the context of aggregate supply, the short run is defined as the period during which a. Some resource prices are set by contracts and cannot be adjusted b. Prices can change, but neither aggregate supply nor aggregate demand can shift. c. Individuals have sufficient time to modify their behavior in response to price changes. d. Quantity changes cannot occur in response to changes in relative prices

Answer 1

31. Option a. Changes in prices leads to movement along the demand curve but do not shift it

32. Option b. Prices and quantity of money that can be supplied

33. Option e.

34. Option d. As firms would need time to increase the supply through investment and new entrants, the aggregate supply would not shift