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Dynamic change. Economic fluctuations, and the AD-AS model

06.01.2023

Dynamic change. Economic fluctuations, and the AD-AS model.

Dynamic change refers to the process of change or evolution that occurs over time in an economic system. Economic fluctuations are short-term changes in economic activity, such as changes in GDP, employment, and inflation. These fluctuations can be caused by a variety of factors, including changes in consumer and business confidence, changes in monetary and fiscal policy, and external shocks such as natural disasters or economic crises.

The AD-AS model, also known as the aggregate demand-aggregate supply model, is a framework used in macroeconomics to analyze the determinants of economic activity and the interactions between different sectors of the economy. The AD curve represents the relationship between the overall level of economic activity and the overall level of prices, while the AS curve represents the relationship between the overall level of economic activity and the overall level of production costs.

The AD-AS model is a useful tool for understanding the dynamics of economic fluctuations and the factors that drive them. It helps to explain how changes in aggregate demand, such as changes in consumer spending or government spending, can lead to changes in the overall level of economic activity, and how changes in aggregate supply, such as changes in production costs or technological advancements, can lead to changes in the overall level of prices.

Overall, the AD-AS model is an important framework for understanding how dynamic changes in the economy, including economic fluctuations, are caused by the interactions between different sectors and the influence of government policies on the economy.

1.An unanticipated increase in aggregate demand in an economy will:
2.A new law restricts the immigration of highly trained or qualified foreigners. This is likely to cause:
3.If a country experiences economic growth caused by capital formation, then:
4.Which of the following is likely to cause a rightward shift in the short-run aggregate supply curve?
5.If individuals become pessimistic about an economy’s future, there will be a(n):
6.Which of the following will cause a downward movement along the aggregate demand curve of an economy?
7.Identify the correct statement about shifts in the aggregate demand curve of an economy.
8.Within the AD-AS model, if consumers increase their savings and cut back on their spending, the
9.Suppose Canada’s imports increase because of the appreciation of the Canadian dollar. This will cause:
10.An economic growth due to a technological improvement in a country:
11.If the actual rate of inflation is greater than the anticipated rate of inflation in an economy, then:
12.If the exchange rate value of the dollar depreciates relative to other currencies, we would expect
13.If a country experiences a stock market crash, then:
14.Which of the following measures is likely to lead to an increase in the aggregate demand of an economy?
15.Which of the following is likely to cause a leftward shift in the aggregate demand curve of an economy?
16.The fictional country of Radisova has experienced drought for the past two years. As a result of the drought, there has been a major reduction in crop yield, causing:
17.Suppose a flood destroys most of the cultivable land in the fictional country of Antardia. This is likely to cause a(n):
18.When an economy experiences an economic boom when the economy is already at full employment, the:
19.Suppose housing prices in the fictional country of Corinthia increased by 85 percent in 2014. This will:
20.Which of the following is likely to cause a rightward shift in the aggregate demand curve of an economy?
21.Suppose a country has experienced drought for the past three months. This will cause:
22.Identify the correct statement about unanticipated changes in an economy.
23.Which of the following is likely to cause a leftward shift in the long-run aggregate supply curve of an economy?
24.Which of the following will most likely occur in the short run when the long-run equilibrium of an economy is disturbed by an unanticipated decrease in aggregate demand?
25.If the general level of prices is lower than business decision makers anticipated when they entered into long-term contracts for raw materials and other resources, which of the following is most likely to occur?
26.Productivity is defined as:
27.An increase in the general level of prices in the goods and services market that is accompanied by a short-run expansion in output is most likely caused by
28.Which of the following is an outcome of a recession in an economy?
29.Which of the following is likely to be true when the real interest rate in an economy decreases?
30.Which of the following is most likely to shift the short-run aggregate supply curve of an economy to the left?
31.If sellers in the goods and services market expect the future rate of inflation to decrease, they would want to sell their products at higher prices in the current period. This will cause:
32.When an economy is in a recession, the:
33.Which of the following is likely to be true when an economy experiences an economic boom when the economy is already at full employment?
34.Which of the following is true of productivity?
35.A new government comes into power in Vanadia, a fictional country. This is expected to increase its employment rate and gross domestic product. Which of the following statements is likely to be true if the citizens of Vanadia expect economic prosperity in the future?
36.If an economy experienced a sudden increase in aggregate demand, then:
37.During an economic boom, the real interest rate:
38.Which of the following is likely to be true when an economy experiences a stock market boom?
39.Which of the following is likely to occur as a result of the discovery of oil reserves in an economy?
40.If decision-makers become pessimistic about the future of an economy, then:
41.One of the main reasons for the recession in the United States during 2008–2009 was a(n):
42.Which of the following occurs during an economic downturn?
43.A crash in the stock market that decreases the real wealth of people will cause:
44.Suppose Erbia is one of the leading importers of Radisovian goods. An increase in consumer income in Erbia is likely to cause an increase in the:
45.If there is an unanticipated increase in aggregate demand, which of the following is most likely to occur?
46.In the long run, the real GDP of the fictional country of Vanadia has grown at about 0.25 percent. The government feels it is necessary to increase the level of productivity in order to increase the growth rate of real GDP. The government decides to provide mandatory computer training to all the workers. This will cause:
47.A temporary increase in the price of imported oil in an economy is likely to cause a(n):
48.When output is greater than the economy’s long-run capacity, which of the following is most likely to occur?
49.Which of the following is likely to cause a rightward shift in the long-run aggregate supply curve?
50.Which of the following is likely to cause the aggregate demand curve to shift to the right?

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