Question

1. A cut in government spending, a decrease in income abroad, an increase in taxes, or an expectation that future consumer income will fall will all cause aggregate:

A) demand to shift rightward.

B)demand to shift leftward.

C)supply to shift rightward.

D)supply to shift leftward.

E) supply and aggregate demand to both shift equally inward.

2. A decrease in aggregate supply can result in:

A) Unemployment

B) demand- pull inflation

C) prosperity

D) cost- push inflation

E) a recession

3.A decrease in aggregate supply will cause the price level to:

A) A rise to GDP to fall

B) A rise to GDP to rise

C)Rise and the unemployment rate to fall

D) fall and GDP to rise

E) fall and the unemployment rate to rise

4.A reduction in regulation will shift the aggregate:

A) supply curve leftward

B) supply curve rightward

C) demand curve leftward

D) demand curve rightward

5.An increase in the price level caused by a rightward shift of the aggregate demand curve is called:

A) cost-push inflation

B) Supply shock inflation

C) demand shock inflation

D) demand-pull inflation

Answer 1

1. A cut in government spending, decrease in income abroad, increase in taxes or an expectation that future consumer income will fall will all cause aggregate demand to shift leftward.

2. A decrease in aggregate supply can result in unemployment.

3. A decrease in aggregate supply will cause the price level to rise and GDP to fall because supply curve shifts to the left.

4. A reduction in regulation will shift the aggregate supply curve rightward.

5. An increase in the price level caused by a rightward shift of the aggregate demand curve is called demand pull inflation.