25 May Question It shows the aggregate demand and aggregate supply schedule for a hypothetical ec
Question
It shows the aggregate demand and aggregate supply schedule for a hypothetical economy.
Type: T Topic: 4 Level: Moderate E: 196-197 MA: 196-197
135. Refer to the above table. The equilibrium price level and quantity of real domestic output will be:
A) 150 and $1000. B) 150 and $1500. C) 200 and $2000. D) 250 and $2500.
Type: T Topic: 4 Level: Moderate E: 196-198 MA: 196-198
136. Refer to the above table. If the quantity of real domestic output demanded increased by $1000 at each price level, the new equilibrium price level and quantity of real domestic output would be:
A) 150 and $2500. B) 250 and $2500. C) 200 and $2000. D) 300 and $3000.
Type: T Topic: 4 Level: Difficult E: 196-198 MA: 196-198
137. Refer to the above table. If the quantity of real domestic output demanded decreased by $500 and the quantity of real domestic output supplied increased by $500 at each price level, the new equilibrium price level and quantity of real domestic output would be:
A) 150 and $1500. B) 150 and $2000. C) 200 and $2000. D) 250 and $2000.
Use the following to answer questions 138-139:
Type: G Topic: 4 Level: Difficult E: 196-198 MA: 196-198 Status: New
138. Refer to the above graph. If an increase in government spending shifts the aggregate demand curve from AD1 to AD2, there will be:
A) cost-push inflation, and the new equilibrium price and quantity will be P2 and Q2.
B) demand-pull inflation, and the new equilibrium price and quantity will be P2 and Q2.
C) demand-pull inflation, the new equilibrium price and quantity will be P2 and Q4.
D) cost-push inflation, and the new equilibrium price and quantity will be P1 and Q3.
Type: G Topic: 4 Level: Moderate E: 196-198 MA: 196-198 Status: New
139. Refer to the above graph. If a recession shifts the aggregate demand curve from AD2 to AD1, but the aggregate supply curve is horizontal below output level Q2, what will be the output and price level in the economy?
A) P1 and Q1
B) P1 and Q2
C) P2 and Q4
D) P2and Q2
Type: A Topic: 4 Level: Easy E: 196 MA: 196
140. The massive increase in government spending during World War II moved the economy in the span of a few short years from mass unemployment and price stability to “overfull” employment and severe demand-pull inflation. This situation can be best characterized by:
A) a decrease in aggregate supply. C) an increase in aggregate demand.
B) an increase in aggregate supply. D) a decrease in aggregate demand.
Type: A Topic: 4 Level: Easy E: 196 MA: 196
141. Demand-pull inflation is associated with a(n):
A) decrease in aggregate demand. C) increase in aggregate supply.
B) increase in aggregate demand. D) decrease in aggregate supply.
Type: A Topic: 4 Level: Moderate E: 199-200 MA: 199-200
142. A decrease in aggregate supply means:
A) both the real domestic output and the price level would decrease.
B) the real domestic output would increase and rises in the price level would become smaller.
C) the real domestic output would decrease and the price level would rise.
D) both the real domestic output and rises in the price level would become greater.
Type: A Topic: 4 Level: Moderate E: 199-200 MA: 199-200
143. One reason why the aggregate supply curve might shift to the left is that:
A) consumer incomes have increased. C) government spending has increased.
B) per unit production costs have increased. D) businesses have become more optimistic.
Type: A Topic: 4 Level: Moderate E: 199-200 MA: 199-200
144. Cost-push inflation arises from:
A) a decrease in aggregate demand. C) an increase in aggregate demand.
B) a decrease in aggregate supply. D) an increase in aggregate supply.
Type: A Topic: 4 Level: Difficult E: 199-200 MA: 199-200
145. Cost-push inflation is characterized by a(n):
A) increase in aggregate supply and a decrease in aggregate demand.
B) increase in aggregate demand and no change in aggregate supply.
C) decrease in aggregate supply and no change in aggregate demand.
D) decrease in both aggregate supply and aggregate demand.
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