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

Suppose the value of the Canadian dollar increases from $0.70 U.S. to $0.75 U.S. Canadian exports will _______, Canadian imports will _______, and Canadian aggregate demand will _______.

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

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

Please enter your name and press the SEND button