Chapter 4 - ADAS Model

Which of the following will result in a leftward shift of the short run aggregate supply curve?

• The general price level falls.

• The stock market becomes more volatile.

• There is a increase in birth rate.

• The transportation cost of raw materials rises.

The aggregate demand curve of Hong Kong will shift to the left if

• the implicit GDP deflator rises continuously.

• the government raises the retirement age of all civil servants.

• the number of tourists from the Mainland decreases.

• the Mainland stock market booms.

If the government lowers the salary tax rate, the short-run equilibrium will be at _____ and the long-run equilibrium will be at _____.

• E₂ …. E₀

• E₂ …. E_l

• E₃ …. E₀

• E₃ …. E₄

The government provides cash subsidies for new-born children from their birth to age 10. Which of the following diagrams best illustrates the effect of the subsidies on the economy after twenty years?

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The government carried out the following two policies:

Policy 1: Reduce the profits tax rate for corporations with profit less than two million dollars.

Policy 2: Inject fifty billion dollars to develop innovation and technology.

 

Which of the following AD-AS diagrams could most likely show the effect on aggregate output caused by the above two policies?

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A country relaxed its immigration requirements to attract foreigners to work, live and study there. It is estimated that 50 000 foreigners will be settling there this year. Which of the following statements about the relaxation of immigration requirements is correct?

(1) The aggregate demand of the country will rise.

(2) The labour productivity of the country will rise.

(3) The long run aggregate supply of the country will rise.

• (1) and (2) only

• (1) and (3) only

• (2) and (3) only

• (1), (2) and (3)