#1
Which of the following represents the equilibrium condition in a macroeconomic model?
AD = AS
ExplanationAggregate demand equals aggregate supply.
#2
Which of the following is NOT a component of aggregate demand?
Wages
ExplanationWages are a factor in production, not directly in aggregate demand.
#3
What does the Phillips curve illustrate in macroeconomics?
The relationship between unemployment and inflation
ExplanationInverse relationship between unemployment and inflation.
#4
What would cause a rightward shift in the aggregate demand curve?
Increase in consumer confidence
ExplanationGreater consumer confidence leads to increased spending, shifting AD to the right.
#5
In the long run, the aggregate supply curve is primarily affected by changes in which of the following factors?
Technology and productivity
ExplanationTechnological advancements and improvements in productivity influence long-run AS.
#6
If the economy is operating below full employment equilibrium, what is likely to happen to prices in the long run?
Prices will increase
ExplanationAs demand increases to meet supply, prices rise towards equilibrium.
#7
If there is a decrease in labor productivity in an economy, what would be the impact on the short-run aggregate supply curve?
A leftward shift
ExplanationLower labor productivity leads to decreased output, shifting SRAS to the left.
#8
Which of the following would result in stagflation?
An increase in aggregate demand and a decrease in aggregate supply
ExplanationCombination of increased demand and decreased supply leads to stagflation.
#9
In the AD-AS model, what is the effect of a decrease in the price level in the short run?
Causes a movement along the AD curve
ExplanationDecrease in price level leads to higher real wealth, shifting along the AD curve.