Question

1) Increases in the availability of natural resources will cause the aggregate supply curve to a.  ...

1) Increases in the availability of natural resources will cause the aggregate supply curve to

a.   becomes steeper.

b.   becomes flatter.

c.   shifts outward.

d.   shifts inward.

e.   shifts inward and becomes flatter.

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2) A decrease in the price level causes the amount of real GDP demanded to increases because:

a.   The decrease in the price level causes net exports to decrease.

b.   The decrease in the price level causes interest rates to decrease which, it turn, causes investment to decrease.

c.   The decrease in the price level causes consumer wealth to increase.

d.   The decrease in the price level causes the level of net exports to be indeterminant .

e.   The decrease in the price level causes the aggregate demand curve to shift leftward.
     

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3) Suppose an economy is experiencing an increase in real GDP and high inflation. This can be attributed to

a.   a reduction in aggregate demand.

b.   a reduction in aggregate supply.

c.   growth in aggregate supply.

d.   growth in aggregate demand.

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Homework Answers

Answer #1

Answer : 1) The answer is option c.

If natural resources increase then production level increase. As a result, the supply curve shift to outward. Hence except option c other options are not correct. Therefore, option c is the correct answer.

2) The answer is option c.

If price level decrease then people get more money on their hand to spend. As a result, the real GDP demanded increase. Hence except option c other options are not correct. Therefore, option c is the correct answer.

3) The answer is option d.

If aggregate demand increase then both the inflation rate and real GDP increase. Hence except option d other options are not correct. Therefore, option d is the correct answer.

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