New Classical AS

When there has been a favourable shift in AD, in the SR there will be:

• No changes to AD or AS

• An increase in the APL and an increase in output

• An increase in the full employment level of output and the APL

• An increase in the APL but no change to the level of output

• An increase in the full employment level of output but no change to the APL

Which of the following would cause an unfavourable shift in SRAS?

• A break of a drought

• The development of new technology

• An increase in business confidence

• An increase in the nominal wage rate

• All of the other answers

If there is a favourable shift in SRAS, then what would happen to output and the APL in the LR?

• Both the APL and the level of output would increase

• Both the APL and the level of output would decrease

• The APL would decrease but the level of output would stay the same

• Both the APL and the level of output would decrease

If there is a favourable shift in the LRAS curve, then:

• The extra output may not be sustainable

• The SRAS curve will need to shift to the right also

• There is a greater likelihood of inflation

• There is a greater likelihood of unemployment

If there is a deflationary (or recessionary) gap in the economy:

• In the SR businesses will shift their prices down

• In the SR there will be unemployment

• In the SR output will be below the full employment rate of output

• All of the other answers

Which of the following is true about how long it takes to get to the LRAS position?

• When more of the economy can predict and understand what is going on

• When more of the economy react to changes as, or near after, they occur

• When the economy is operating at a very fast rate of growth

• When the economy is experiencing no changes