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Other things equal, what effect will each of the following have on the equilibrium price level and level of real output?

a. An increase in aggregate demand in the steep portion of the aggregate supply curve.

b. An increase in aggregate supply, with no change in aggregate demand (assume that prices and wages are flexible upward and downward).

c. Equal increase in aggregate demand and aggregate supply.

d. A reduction in aggregate demand in the relatively flat portion of the aggregate supply curve.

e. An increase in aggregate demand and a decrease in aggregate supply.

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Insha Fatima
Insha FatimaLv10
28 Sep 2019

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Related questions

1. Which of the following would most likely increase aggregate supply?

a. an increase in the prices of imported goods

b. an increase in productivity

c. an increase in government subsidies to business

d. a decrease in net exports

Ā 

2. One reason why the aggregate supply curve might shift to the left is that:

a. consumer incomes have increased

b. production costs have increased

c. government spending has increased

d. businesses have become more optimistic

Ā 

3. A reduction in taxes may:

a. increase aggregate demand and decrease aggregate supply

b. increase aggregate demand and increase aggregate supply

c. decrease aggregate demand and decrease aggregate supply

d. decrease aggregate demand and increase aggregate supply

If we observe an increase in real GDP and an increase in the price level after an increase in aggregate demand, we can conclude that

A. the aggregate supply curve is upward sloping.

B. the economy is now at full employment.

C. the aggregate supply curve is vertical.

D. the aggregate supply curve is horizontal.


An inflationary gap occurs when

A. the equilibrium level of real GDP is greater than the long-run aggregate supply curve.

B. short-run aggregate supply falls, but other things remain constant.

C. the equilibrium level of real GDP is less than the long-run aggregate supply curve.

D. aggregate demand falls, but other things remain constant.


Cost-push inflation is

A. inflation caused by decreases in aggregate supply that are not matched by decreases in aggregate demand.

B. inflation caused by decreases in aggregate supply that generate an even larger decrease in aggregate demand.

C. inflation caused by increases in aggregate demand that generate an even larger increase in aggregate supply.

D. inflation caused by increases in aggregate demand that are not matched by increases in aggregate supply.


A stronger dollar in world exchange markets is shown by

A. a dollar buying less units of foreign currency than it could before.

B. a dollar buying more units of foreign currency than it could before.

C. a dollar buying the same amount of foreign currency than it could before, with gold backing up the value of the dollar.

D. foreigners selling the dollars that they have.

Other things equal, an improvement in productivity will:

A. increase the equilibrium price level.

B. shift the aggregate supply curve to the left.

C. shift the aggregate supply curve to the right.

D. shift the aggregate demand curve to the left.

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