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Tutorial
Econ Tutorial
Aggregate Supply and Aggregate Demand
As you progress through the tutorial, the question sequences will become available. You must complete all the question sequences to receive credit for this tutorial.
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Question 1 of 2
Questions
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31
Question
Which of the following best describes how the invention of electricity shifted the U.S. SRAS curve?
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B.
C.
D.
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Question
In 2012, the city of Scranton, PA decided to “solve” their budget crisis by slashing all government workers’ wages to minimum wage. If this “solution” were imposed on all government workers in the U.S. (around 8% or all workers), how would this affect the SRAS curve?
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B.
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D.
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Question 1 of 2
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Question
Imagine that, because of the continued high unemployment from the 2008 financial crisis, America elected a president who believes he has the solution that will create jobs: destroy all of the computers in the nation. What would happen to the LRAS curve, other things equal?
A.
B.
C.
D.
No, that's not it. LRAS shifts left if there is a decrease in technology, physical capital, human capital, or the labor force.
Great job!
No, that's not it. LRAS shifts left if there is a decrease in technology, physical capital, human capital, or the labor force.
Great job!
Question
Imagine that, because of the continued high unemployment from the 2008 financial crisis, America elected a president who believes he has the solution that will create jobs: vast increases in government spending for bridges, roads and other infrastructure. What would happen to the LRAS curve, other things equal?
A.
B.
C.
D.
No, that's not it. LRAS shifts right if there is an increase in technology, physical capital, human capital, or the labor force.
Great job!
No, that's not it. LRAS shifts right if there is an increase in technology, physical capital, human capital, or the labor force.
Great job!
Question 1 of 1
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27
Question
Which of the following will shift aggregate demand to the left?
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B.
C.
D.
No, that's not it. Factors that shift aggregate demand to the left include: #5) Expansionary monetary policy (i.e. decrease in money supply or increase in interest rates).
Great job!
No, that's not it. Factors that shift aggregate demand to the left include: #5) Expansionary monetary policy (i.e. decrease in money supply or increase in interest rates).
Great job!
Question 1 of 3
Questions
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Question
Using the aggregate supply and demand model, predict the impact of the following scenario on equilibrium real GDP and aggregate price level (other things equal)? Congress authorizes a new income tax increase.
A.
B.
C.
D.
No, that's not it. An increase in taxes shifts the AD curve leftward, which will cause a decline in price level and real GDP.
Great job!
No, that's not it. An increase in taxes shifts the AD curve leftward, which will cause a decline in price level and real GDP.
Great job!
Question
Using the aggregate supply and demand model, predict the impact of the following scenario on equilibrium real GDP and aggregate price level (other things equal)? The price of electricity rises substantially, increasing production costs rapidly.
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B.
C.
D.
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Question
Using the aggregate supply and demand model, predict the long-run impact of the following scenario on equilibrium real GDP and aggregate price level (other things equal)? A housing bubble increases wealth rapidly.
A.
B.
C.
D.
No, that's not it. An increase in household wealth will shift AD to the right. This pulls the price level up, then as wages adjust upward the cost of production increases, pulling SRAS leftward. We are left at the original real GDP level, but a new higher price.
Great job!
No, that's not it. An increase in household wealth will shift AD to the right. This pulls the price level up, then as wages adjust upward the cost of production increases, pulling SRAS leftward. We are left at the original real GDP level, but a new higher price.