Microeconomics Answers

Which of the following statements is correct regarding the AD-AS model?

a. In the simple Keynesian model, prices are assumed to be variable.

O b. A decrease in aggregate demand is accompanied by a rise in total production and income.

O c. Higher unemployment accompanied by lower inflation rate is referred to as stagflation.

O d. A simultaneous increase in aggregate demand and a decrease in aggregate supply, will lead to an increase in the price level.

According to the classical cash reserve system, which of the following statements is/are true regarding banks in South Africa?

(a) They are required to hold a minimum cash reserve of 2,5% of their deposits.

(b) The level of the repo rate influences the interest rate at which the banks provide credit to individuals.

(c) The SARB provides cash reserves through accommodation policy to the banks experiencing liquidity shortage.

a. (b)

O b. (a)

c. (a) and (b)

O d. (c)

e. (a), (b) and (c)

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

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

d. leftward shift of aggregate supply and cost push inflation.

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

O c. rightward shift of aggregate supply and cost-push inflation.

The vertical distance between the average total cost curve and the average variable cost curve

D =200-25P. , S =-16+11P. Where D is demand in thousands and P is price in cedis. Assuming demand increases as result of an increase in disposable income consumers while supply remains the same.

b. What will be the effect on equilibrium quantity and equilibrium price

QD=100 000-5p

QD=-25000+20p

What is the price

What is the quantity demanded

What is the quantity supplies

If the given market demand and supply function are given as qd = 80-3p and qs = 9p-4

Which one of the following is NOT an effect of

higher inflation?

O a. An increase in the cost of living.

O b. An increase in the standard of living.

O c. Redistribution of wealth from the lender to

the borrower.

O d. A decrease of the real value of existing

savings.

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In response to the COVID-19 pandemic, countries

injected trillions of dollars into their economies to

provide relief to households and firms. This

response is an example of …. policy, which can

result in ... inflation, ceteris paribus.

O a. expansionary; demand-pull

O b. expansionary; cost-push

O c. contractionary; cost-push

O d. contractionary; demand-pull

The appropriate policy to combat cost-push

inflation would be to increase

illustrated by

which will be

O a. interest rates; leftward shift of the aggregate

demand curve

O b. government spending; rightward shift of the

aggregate demand curve

O c. productivity; rightward shift of the

aggregate supply curve

O d. wages; leftward shift of the aggregate

supply curve