ECON 1015 EXAM 3 QUESTIONS + ANSWERS
Would this cause the short-run aggregate supply to increase, decrease or neither:
The price level increases - Answer -neither, it's a movement along the curve;
Would this cause the short-run aggregate supply to increase, decrease or neither:
Input prices decrease - Answer -increase; because costs of production fall
Would this cause the short-run aggregate supply to increase, decrease or neither:
Firms and workers expect the price level to fall. - Answer -increase because employers
will negotiate lower wages
Would this cause the short-run aggregate supply to increase, decrease or neither:
The price level decreases. - Answer -neither, it's a movement along the supply curve
Would this cause the short-run aggregate supply to increase, decrease or neither:
New policies increase the cost of meeting government regulations - Answer -decreases
because costs of production increase;
Would this cause the short-run aggregate supply to increase, decrease or neither:
The number of workers in the labor force increases. - Answer -increases LRAS, thus
increases SRAS
Would this cause the aggregate demand to increase, decrease or neither:
The price level increases - Answer -neither, it's a movement along the curve
Would this cause the aggregate demand to increase, decrease or neither:
Investment decreases - Answer -decreases, since I is part of AD;
Would this cause the aggregate demand to increase, decrease or neither:
Imports increase and exports decreased. - Answer -decreases since NX=exports-
imports and NX is a part of AD
Would this cause the aggregate demand to increase, decrease or neither:
Consumer optimism improves. - Answer -increases since C, consumption spending
increases
Would this cause the aggregate demand to increase, decrease or neither:
Government increases infrastructure spending - Answer -increases since G is a part of
AD
Would this cause the aggregate demand to increase, decrease or neither:
Stock market crashes. - Answer -decreases since C and I decrease.
Land, labor and capital are considered - Answer -resources
Would this cause the short-run aggregate supply to increase, decrease or neither:
The price level increases - Answer -neither, it's a movement along the curve;
Would this cause the short-run aggregate supply to increase, decrease or neither:
Input prices decrease - Answer -increase; because costs of production fall
Would this cause the short-run aggregate supply to increase, decrease or neither:
Firms and workers expect the price level to fall. - Answer -increase because employers
will negotiate lower wages
Would this cause the short-run aggregate supply to increase, decrease or neither:
The price level decreases. - Answer -neither, it's a movement along the supply curve
Would this cause the short-run aggregate supply to increase, decrease or neither:
New policies increase the cost of meeting government regulations - Answer -decreases
because costs of production increase;
Would this cause the short-run aggregate supply to increase, decrease or neither:
The number of workers in the labor force increases. - Answer -increases LRAS, thus
increases SRAS
Would this cause the aggregate demand to increase, decrease or neither:
The price level increases - Answer -neither, it's a movement along the curve
Would this cause the aggregate demand to increase, decrease or neither:
Investment decreases - Answer -decreases, since I is part of AD;
Would this cause the aggregate demand to increase, decrease or neither:
Imports increase and exports decreased. - Answer -decreases since NX=exports-
imports and NX is a part of AD
Would this cause the aggregate demand to increase, decrease or neither:
Consumer optimism improves. - Answer -increases since C, consumption spending
increases
Would this cause the aggregate demand to increase, decrease or neither:
Government increases infrastructure spending - Answer -increases since G is a part of
AD
Would this cause the aggregate demand to increase, decrease or neither:
Stock market crashes. - Answer -decreases since C and I decrease.
Land, labor and capital are considered - Answer -resources
