Session 12 Quiz

How will an increase in the world price of crude oil influence the economy of an oil-importing country such as the United States?

Aggregate supply will decrease, leading to a decrease in real GDP.

Using the AD-AS model, if consumers and business become more optimistic about the future direction of the economy and increase spending, then:

aggregate demand will increase.

A decrease in aggregate supply can result in:

cost-push inflation.

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:

demand to shift inward.

Stagflation occurs when the economy experiences:

high unemployment and rapid inflation

Demand-pull inflation is associated with a(n)

increase in the aggregate demand curve.

The interest-rate effect is the impact on real GDP caused by the direct relationship between the interest rate and the:

price level.

The aggregate supply curve indicates the:

quantity of goods and services producers will supply at different price levels.

The aggregate demand curve:

shows the level of real GDP purchased in the economy at different possible price levels during a period of time.

The concurrent problems of inflation and unemployment are termed:

stagflation.

Advances in technology will shift the aggregate:

supply curve rightward.

The aggregate supply curve is defined as:

the real GDP produced at different price levels.

Aggregate supply increases when:

wage rates or interest rates decrease while the economy's price level remains unchanged.