IT's Time To Learn About Aggregate Supply Quiz

25 Questions | Total Attempts: 211

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Aggregate supply is one of the things that every economist should understand clearly so as to estimate market prices and get accurate turn over. Do you think you understand all there is about aggregate supply? If you said yes then take up this simple quiz to see what you should read up more on.


Questions and Answers
  • 1. 
    What is the definition of Aggregate Supply?
    • A. 

      The total supply of goods and services at a given price during a certain period of time.

    • B. 

      The total spending on goods and service in a period of time at a given price level.

    • C. 

      The level of demand for services and goods during a given time period.

    • D. 

      The average supply of goods and services in an economy.

  • 2. 
    What does a Short Run Aggregate Supply Curve look like?
    • A. 

      Downward sloping.

    • B. 

      Upward sloping.

    • C. 

      Horizontal.

    • D. 

      Vertical.

  • 3. 
    There is a _______________ relationship between the price level and the amount of output that a country's industries will supply.
    • A. 

      Positive

    • B. 

      Negative

    • C. 

      Inverse

    • D. 

      Equal

  • 4. 
    What is the short run?
    • A. 

      The amount of production during two quarters of the year.

    • B. 

      The amount of production during a specified period of time.

    • C. 

      The period of time when the prices of the factors of production do not change.

    • D. 

      The period of time when the amount of production finally changes.

  • 5. 
    If a larger level of output is produced, firms are likely to face _____________ average costs of production.
    • A. 

      Higher

    • B. 

      Lower

    • C. 

      Equal

    • D. 

      Minimum

    • E. 

      Maximum

  • 6. 
    What is the law of diminishing returns?
    • A. 

      Marginal and average costs will rise as output increases in the long run.

    • B. 

      Marginal and average costs will lower as output increases in the long run.

    • C. 

      Marginal and average costs will rise as output increases in the short run.

    • D. 

      Marginal and average costs will lower as output increases in the short run.

  • 7. 
    What will lead to a shift in the Aggregate Supply Curve?
    • A. 

      Price

    • B. 

      Any other component

  • 8. 
    A decrease in costs results in a(n) _______________ in aggregate supply.
    • A. 

      Increase

    • B. 

      Decrease

    • C. 

      No change

  • 9. 
    An increase in wages will result in a(n) ____________ in the cost of production to firms, and therefore a ______ in aggregate supply.
    • A. 

      Increase, decrease

    • B. 

      Decrease, increase

    • C. 

      Increase, increase

    • D. 

      Decrease, decrease

  • 10. 
    In the short run, does Aggregate Demand equal Aggregate Supply?
    • A. 

      Yes

    • B. 

      No

  • 11. 
    The full capacity level of output is known as...
    • A. 

      Long Run Aggregate Supply

    • B. 

      Short Run Aggregate Supply

    • C. 

      Full employment level of output

  • 12. 
    What type of shift would we expect in a LRAS curve when a country's factors of production are constantly changing?
    • A. 

      No change.

    • B. 

      Steady increases in the LRAS.

    • C. 

      Steady decreases in the LRAS.

    • D. 

      Factors of production does not affect the LRAS curve.

  • 13. 
    A shift in the ___________ can be shown from either a Keynesian perspective or a neo classical perspective.
    • A. 

      Long Run Aggregate Demand Curve

    • B. 

      Short Run Aggregate Demand Curve

    • C. 

      Long Run Aggregate Supply Curve

    • D. 

      Short Run Aggregate Supply Curve

  • 14. 
    The increase in the full employment level of output is equivalent to the _______ shift of the PPC.
    • A. 

      Upward

    • B. 

      Downward

    • C. 

      Inward

    • D. 

      Outward

  • 15. 
    What does PPC stand for?
    • A. 

      Post production curve

    • B. 

      Pre production curve

    • C. 

      Production possibilities curve

    • D. 

      Production potential curve

  • 16. 
    Which of the following is NOT an example of something that will cause the shift in the LRAS curve to the right?
    • A. 

      New sources

    • B. 

      Prices

    • C. 

      Education

    • D. 

      Technological advances

    • E. 

      Employment

  • 17. 
    True or False.Supply side policies can be divided into two categories: Market Oriented Policies and Interventionists Policies.
    • A. 

      True

    • B. 

      False

  • 18. 
    Which of the following is a market oriented supply side policy:
    • A. 

      Reduction in Income Taxes

    • B. 

      Reductions in Corporate Taxes

    • C. 

      Deregulation

    • D. 

      Answers A & B

    • E. 

      All of the above

  • 19. 
    If people work harder and make more money it is possible that they will have to pay ______ taxes on the higher levels of income.
    • A. 

      Less

    • B. 

      Lower

    • C. 

      Higher

    • D. 

      Equal

  • 20. 
    It can be argued that a government set minimum wage keeps the price of labour above its ______________________.
    • A. 

      Normal value

    • B. 

      Free market level

    • C. 

      Minimal value

  • 21. 
    Which of the following is a government's way to actively encourage growth?
    • A. 

      Invest & Save

    • B. 

      Research & Development

    • C. 

      Education & Training

    • D. 

      Options B & C

    • E. 

      All of the above

  • 22. 
    What does R & D stand for?
    • A. 

      Research and Development

    • B. 

      Renew and Develop

  • 23. 
    In order to produce more, firms will have to provide _________ to workers to produce a larger amount. Choose the more correct answer.
    • A. 

      Snacks

    • B. 

      Breaks

    • C. 

      Incentives

    • D. 

      Higher wages

  • 24. 
    True or false. Governments can actively encourage R&D by firms by offering tax incentives.
    • A. 

      True

    • B. 

      False

  • 25. 
    True or False. Market oriented supply side policies are a sale of public, government owned firms to the private sector. 
    • A. 

      True

    • B. 

      False

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