ECO 205 - Quiz 08

1.What does the aggregate demand (AD) curve show?

• A) The relationship between the price level and the quantity of goods produced

• B) The total quantity of goods and services demanded at different price levels

• C) The supply of labor in the economy

• D) The impact of fiscal policy on unemployment

2.Which factor is most likely to shift the aggregate demand curve to the right?

• A) An increase in interest rates

• B) A decrease in government spending

• C) A decrease in consumer confidence

• D) An increase in net exports

3.What does the long-run aggregate supply (LRAS) curve represent?

• A) The output at different price levels in the short run

• B) The economy's output when unemployment is zero

• C) The economy's potential output at full employment, regardless of price level

• D) The relationship between inflation and unemployment

4.Which of the following would cause the short-run aggregate supply curve to shift to the left?

• A) Higher expected price

• B) Technological advancements

• C) A decrease in the price of raw materials

• D) An increase in labor productivity

5.What is stagflation?

• A) A period of falling output
  and rising prices

• B) High growth with low inflation

• C) Low unemployment with high GDP growth

• D) A stable economy with no inflation

6.What would happen to aggregate supply if wages rise faster than productivity?

• A) The SRAS curve would shift to the right

• B) The SRAS curve would shift to the left

• C) The AD curve would shift to the left

• D) The LRAS curve would shift to the right

7.What happens to aggregate supply when the government imposes stricter environmental regulations on industries?

• A) The SRAS curve shifts to the left

• B) The SRAS curve shifts to the right

• C) The AD curve shifts to the right

• D) The LRAS curve shifts to the right

8.Analyze the likely effect on aggregate demand if a country's currency depreciates significantly.

• A) Aggregate demand would decrease due to reduced exports

• B) Aggregate demand would increase as exports become cheaper and imports more expensive

• C) No impact on aggregate demand

• D) Only the aggregate supply curve would shift

9.Which of the following would cause a movement along the aggregate demand curve rather than a shift of the curve?

• A) A change in consumer wealth

• B) A change in the price level

• C) A change in government spending

• D) A change in investment due to technological progress

10.What is the impact of improved technology on the short-run and long-run aggregate supply curves?

• A) Shifts both SRAS and LRAS to the left

• B) Shifts SRAS to the left

• C) Shifts both SRAS and LRAS to the right

• D) Shifts LRAS to the right