1. In the LONG run, which of the following could be correct regarding the aggreg

Question

1. In the LONG run, which of the following could be correct regarding the aggregate supply curve and aggregate demand curve?
I. Quantity demanded is inversely related to the price level. IL Quantity supplied is upward sloping
(A) I only
(B) II only
(C) Both I and II
(D) Neither I nor II

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2. A nation 's SHORT-term aggregate supply cu e is dependent on

I. price levels

II. technology and capital available

III. labor and materials available

(A) I, II, and III

(B) II and III

(C) I only

(D) None of the above

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3. Large INCREASES in input costs such as direct labor and direct material would result in

(A) real gross domestic product (GDP) increasing

(B) real GDP decreasing

(C) an increase in price levels

(D) the aggregate supply curve shifting to the left

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4. If the US dollar grows in value,

I. net exports will fall

IL supply of foreign goods in the US would decrease

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

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5. Inflation does :

I. help those on a fixed income

II. increase the price level

(A) I only

(B) II only

(C) Both I and II

(D) Neither I nor II

please explain answer

Explanation / Answer

1 A) I only

Quantity demanded is inversely proportional, it is not proportional

2 A) 1, 2, 3

3. c) increase in price levels, direct material & labour costs increase

This will lead to a decrease in real GDP, and, higher inflation

4. A) I only

As Dollar's value increases, imports increase & exports decrease

5 A) I only

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