Question

1.Which of the following is most likely to increase long-run aggregate supply in an economy?​

a. A reduction in the cost of using computers​

b. A deterioration in the quality of the labor force​

c. An increase in the price level​ ​

d. A decrease in the size of the labor force

e. An increase in aggregate demand​

2. Which of the following is true in the short run?​ ​

a. The aggregate supply curve is horizontal.

b. Firms' total costs of production decrease as output expands beyond the potential level.​

c. The aggregate supply curve is vertical.​

d. Per-unit costs do not increase as much as output prices when the price level rises.​

e. An increase in price per unit results in a decrease in profit per unit

3. The American Recovery and Reinvestment Act, signed by President Barack Obama in 2009, aimed at:

a. closing an expansionary gap through a contractionary fiscal policy.

b. removing the supply bottlenecks in the economy.

c. stimulating the aggregate demand in the economy.

d. providing higher unemployment benefits to the residents of the economy.

e. ensuring free trade flows across the world.

Answer 1

1.Which of the following is most likely to increase long-run aggregate supply in an economy?​

a. A reduction in the cost of using computers​

The reduction in cost of using computers would increase productivity of workers, thus aggregate supply will rise.

2. Which of the following is true in the short run?​ ​

a. The aggregate supply curve is horizontal.

According keynesian analysis, the Supply curve is likely to be horizontal in short run due to lower level of output or economy has extra capacity.

3. The American Recovery and Reinvestment Act, signed by President Barack Obama in 2009, aimed at:

c. stimulating the aggregate demand in the economy.

This act was aimed at stimulating aggregate demand in economy, economy was in deep recession due to financial crisis of 2008-9.