An increase in aggregate demand will have a smaller long-run effect on real GDP if the:
a. aggregate demand curve is flat.
b. short-run aggregate supply curve is horizontal.
c. economy is well below potential output.
d. economy is already at potential output.
e. aggregate demand curve is fairly steep.
QUESTION 2Given the aggregate demand curve, an increase in the supply of a productive resource will:
a. increase output but leave prices unchanged.
b. decrease both output and prices.
c. increase the price level and decrease output.
d. decrease the price level and increase output.
e. increase the price level but leave output unchanged.
QUESTION 3In the long run, if the money supply increases:
a. most of the resulting rise in nominal GDP will be a result of increases in the exchange rate.
b. most of the resulting rise in nominal GDP will be a result of increases in the price level.
c. most of the resulting rise in real GDP will be a result of increases in the price level.
d. most of the resulting rise in real GDP will be a result of increases in the interest rate.
e. most of the resulting rise in real GDP will be a result of increases in aggregate expenditure.
QUESTION 4The main effect of a decrease in the stock of capital is a(n):
a. rightward shift of the short-run aggregate supply curve.
b. rightward shift of the aggregate demand curve.
c. leftward shift of the long-run aggregate supply curve.
d. leftward shift of the aggregate demand curve.
e. increase in the price and output levels.
QUESTION 5Which of the following variables are assumed to be more or less constant in the quantity theory of money equation?
a. The price level
b. The real GDP
c. The money supply
d. The nominal GDP
e. The velocity of money
QUESTION 6Suppose an economy is initially in long-run equilibrium and it then experiences a supply shock in the form of exceptionally high energy prices. Which of these will be true in this economy?
a. The short-run aggregate supply curve will shift leftward, and the long-run supply curve will shift rightward.
b. The short-run aggregate supply curve and the long-run supply curve will shift rightward.
c. The short-run aggregate supply curve will not shift, and the long-run aggregate supply curve will shift rightward.
d. The short-run aggregate supply curve will shift rightward, but the long-run aggregate supply curve will not shift.
e. The short-run aggregate supply curve and the long-run supply curve will shift leftward.
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