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QUESTION 6 Event: Climate change reduces the amount of land available for farming (Long Run). Question:...

QUESTION 6

  1. Event: Climate change reduces the amount of land available for farming (Long Run).

    Question: What is the change in aggregate demand?

    a.

    Increase
    b.

    Decrease
    c.

    No change
    d.

    Indeterminate

QUESTION 7

  1. Event: Climate change reduces the amount of land available for farming (Long Run).

    Question: What is the change in short run aggregate supply (SRAS)?

    a.

    Increase
    b.

    Decrease
    c.

    No change
    d.

    Indeterminate

QUESTION 8

  1. Event: Climate change reduces the amount of land available for farming (Long Run).

    Question: What is the change in long run aggregate supply (LRAS)?

    a.

    Increase
    b.

    Decrease
    c.

    No change
    d.

    Indeterminate

QUESTION 9

  1. Event: Climate change reduces the amount of land available for farming (Long Run).

    Question: What is the change in equilibrium price level?

    a.

    Increase
    b.

    Decrease
    c.

    No change
    d.

    Indeterminate

QUESTION 10

  1. Event: Climate change reduces the amount of land available for farming (Long Run).

    Question: What is the change in equilibrium real gross domestic product?

    a.

    Increase
    b.

    Decrease
    c.

    No change
    d.

    Indeterminate
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Answer #1

If there is a reduction in the farmland this reduces the amount of resources available and so the production possibilities Frontier shift inside. Long run aggregate supply curve and short run aggregate supply curve will be shifting to the left while there will be no change in the aggregate demand. This will result in reducing the level of output and increasing the general price level

6) option C is correct

7) option B is correct

8) option B is correct

9) option A is correct

10) option B is correct.

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