Question

A. If AS curve shifts to the left as productivity decreases, it will result in a combination of

1. lower output, higher unemployment, and higher inflation

2. lower output, lower unemployment, and lower inflation

3. higher output, lower unemployment , and lower inflation

4. higher output, higher unemployment and higher inflation.


B. Inflation is likely to

1. reduce the cost of living

2. raise the standard of living

3. reduce the purchasing power of currency

4. increase the purchasing power of a currency

C. In AD-AS model, an expansionary fiscal policy may lead to a

1. rightward shift of aggregate demand and demand-pull inflation

2. leftward shift of aggregate demand and demand-pull inflation

3. rightward shift of aggregate supply and cost- push inflation

4. leftward shift of aggregate supply and cost-push inflation

Answer 1

A. 1. lower output, higher unemployment, and higher inflation

B. 3. reduce the purchasing power of currency

C. 1. rightward shift of aggregate demand and demand-pull inflation