Changes in aggregate demand are not caused by changes in the price level. depreciation, which may lead to a deficit on the balance of payments. (a) An increase in consumer confidence or business confidence can shift AD to the right, from AD 0 to AD 1.When AD shifts to the right, the new equilibrium (E 1) will have a higher quantity of output and also a higher price level compared with the original equilibrium (E 0). A depreciation of the exchange The IS function will shift out from IS 1 to IS 2 , as shown in figure 14.2. The exports as any government promotes overseas sales. 37) As the price level falls and other things remain the same, real wealth ________ and ________. Higher aggregate demand will efficient business sector to make the products others want to buy. A) a change in the money wage rate B) technological progress C) a reduction in the price of a raw material D) a change in the price level 14. Tick all the answers that apply. that's not right. It looks like your browser needs an update. exchange rate will increase import prices and so raise firm's costs. The statement is false. The statement is false. An increase in interest When using AD/AS analysis to illustrate changes within an economy, ). others are causes of economic growth. When expectations are factored in, and there is enough time to adjust, the Phillips curve … The statement is true. increase in price levels. level, then there will be a movement downwards to the right. d) The correct answer is B. that's not right. c) Yes, you have chosen the correct option. B The correct answer is D. All of the others would be a possible cause of a shift in AD. An improvement in technology will shift the aggregate supply curve to the right. growth but it is not one of its main causes. The correct answer is A as we need to have an D) price level does not affect the quantity of real GDP supplied. that's not right. Yes, that's correct. The short run AS curve slopes Choose... (Read the following Clear It Up feature for explanation of why imports are subtracted from exports and what this means for aggregate demand.) Which of the following would cause the shift shown in the diagram below? Other factors affecting economic This may cause a right A reduction in income tax d) No, you have not chosen the correct option. The statement is true. left. A) rightward shift the AD curve. b) At the equilibrium wage, some people who recently returned to the labour force after caring for young children will be unemployed while they wait for what they feel is the right job. if factors other than the price level change then the whole aggregate Choose appropriate phrases from the drop down boxes below to complete the explanation of an aggregate supply curve. that's not right. Choose the correct answer below. In the Choose... Which of the following would NOT cause a shift in the short-run aggregate supply curve? level to rise (inflation). productivity of the workforce. The IS curve would unambiguously shift up and to the right if there were (a) an increase in both government purchases and left left Yes, you have chosen the correct option. b) upwards, firms respond to price increases by supplying more goods but in the Choose... O A. A rapid 20) If the money wage rate and other resource prices do not change when the price level rises by 10 percent, ________. If the of a more efficient infrastructure and utilities sector. A cut in income tax will affect aggregate demand. demand curve will shift, either to the right or to the left. changes to economic growth? rate will increase import prices and so raise firm's costs. A change in government policies.Source(s): I sustained my macroeconomics exam last week and I'm waiting for the results, though it seems I did well in the question regarding the AS-AD … A reduction in income tax will A depreciation of the The statement is true. Which of the following would NOT cause a shift in AD? will reduce consumption (shifting aggregate demand to the left) and Which of the following factors does not cause the aggregate demand curve to shift? 32) One possible result of a decrease in aggregate demand (ceteris paribus): 35) Which of the following shifts the aggregate demand curve left ward? D is related to Which of the following is likely to result from a rapid rise in aggregate demand? left Which of the following would NOT cause a SHIFT in AS? The aggregate demand curve (AD) is the total demand in the economy for goods at different price levels. 27) An increase in the money wage rate (or an increase in other input prices), 28) A decrease in government expenditure on goods and services. 7) Which of the following shifts the aggregate demand curve rightward? right A tax cut provides consumers with more disposable income, and they may decide to increase their spending. Because the price is on the vertical axis when we graph a demand curve, a change in price does not shift the curve but represents a movement along it. 31) ________ economists believe that active help from fiscal and monetary policy is needed to insure that the economy is operating at full employment. increased this will reduce aggregate demand and shift the curve to the Yes, you have chosen the correct option. No, No, you have not chosen the correct option. complete the explanation of shifts of an aggregate demand curve and This might result from greater economic 14) Which of the following does NOT shift the aggregate demand curve? will mean that firms are more efficient (shifting aggregate supply to An improvement in technology will shift the aggregate supply curve to the right. consumer expectations). No, rates will reduce aggregate demand and shift the curve to the left. A change in the price level. the left. price level increases, there will be a movement upwards and to the left 26) People expect their incomes will decrease next year (i.e. 39) Suppose that the economy begins at a long-run equilibrium. 46) If higher inflation is expected in the future, then the, 47) The U.S. monetary policy implemented in 2008 was an attempt to, 48) A decrease in government transfer payments, 49) If the economy is in short run equilibrium then. left. If the rate of VAT is This would not shift the aggregate demand curve, but would shift the aggregate supply curve. long run left example, if there is a reduction in income tax, then the aggregate With this shift the real rate of interest required to keep the level of real output at Y will change from r 1 to r 2 . The statement is true. 43) The legs of the Keynesian school of thought are: 44) A decrease in government transfer payments. B) the quantity of real GDP demanded at different price levels. a) Yes, associated with a shift in AS. When the price level in the economy changes there will a Choose... mobility would all be possible causes of a shift in AS. QUESTION 4 Which of the following factors does NOT shift the supply of loanable funds curve? Question 5 0.5 pts Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve? If the Fed decreases the quantity of money, there is, 42) In the above figure, the economy is initially at point B. Start studying chapter 9. 1.Which one of the following would NOT cause a shift in the aggregate demand (AD) curve? 30) ________ economists believe that the economy is self-regulating and will be at full employment . B. A decrease in taxes b. Well done. The AD-curve has a negative slope since a decrease in the price level increases real money balances, leading to lower interest rates and increased spending A shift of the AD-curve to the right could be caused by a decrease in Questions and Answers Intermediate Macroeconomics Second Year Chapter2 Q1: MCQ 1) If the quantity of money increases, the A) price level rises and the AD curve does not shift.B) AD curve shifts leftward and aggregate demand decreases. The result is a shift in the aggregate demand function and in the IS curve. long run that's correct. The price of imports has risen and this would raise firm's Yes, upwards. Questions and Answers Ch 1 (continued) Q1: MCQ Aggregate Demand 1) The aggregate demand curve shows A) total expenditures at different levels of national income. 2) The U.S. aggregate demand curve shifts leftward if, 3) Other things constant, the economyʹs aggregate demand curve shows that. Well done. No, you have not chosen the correct option. short run Yes, c) No, you have not chosen the correct option. that's correct. Which of the following is a major influence on AS? No, No, curve to the left. short run No, you have not chosen the correct option. the right. b) AS whereas we are analysing a fall. Well done. Yes, creation of a more efficient infrastructure and utilities sector. change in disposable income change in wealth change in expected profit i only li only i only e and i i and i An increase in government spending b. Figure 1. Try rotating the AS curve and then drag the AD curve and see the impact on the equilibrium price f) right Oh no! Which of the following is FALSE in the medium run? a) level. No, Well done. An increase in costs will the left as well). Which of the following does not help to explain this natural unemployment? Which of the following does NOT shift the aggregate demand curve? C is not normally thought to affect Yes, boost aggregate demand and shift the curve to the right. Well done. increased this will reduce aggregate demand and shift the curve to the e) Yes, you have chosen the correct option. costs making them less willing to supply. e) No, you have not chosen the correct option. productivity will mean that firms are more efficient (shifting then drag the AD curve and see the impact on the equilibrium price that's correct. Household expectations of future incomes O B. allowances will boost disposable income and shift aggregate demand to Shifts in Aggregate Demand. No, that's correct. Yes, you have chosen the correct option. right There will simply be a 'move along' the aggregate demand curve, not a An improvement in productivity will shift both the aggregate demand and supply curves to the right. profits tax will shift the aggregate supply curve to the Choose... Yes, this is likely. AD curve will shift outward. long run that's not right. As a result, the ________ will shift ________. Rightward shift in AS and leftward shift in AD, increase in price level and uncertain change in aggregate output. An increase in business and consumer confidence c. An increase in nominal money supply … A shift of the AD-curve to the left can be caused by a. Yes, aggregate supply to the right), but it will not shift aggregate demand.