Title: QUIZ: Aggregate Demand and Aggregate Supply: Positive Demand Shock
Course: Kelly's Copy-Export Course > Section: Aggregate Demand and Aggregate Supply: Positive Demand Shock

Q: Which of the following is an example of a positive demand shock?
- Businesses decrease their spending on capital goods.
- Businesses increase their spending on capital goods.
- Consumers feel confident about the economy.
- The government increases its purchase of military tanks.
A: Businesses increase their spending on capital goods.

Q: Which of the following best describes the short-run adjustments to a positive demand shock?
- AD shifts right, causes inflationary expansion, decreased unemployment rate, increased output
- AD shifts left, causes a recession, increased unemployment rate, decreased output
- AS shifts right, causes inflation, decreased unemployment rate, increased output
- AS shifts right, long-run equilibrium, full employment, increased output
A: AD shifts right, causes inflationary expansion, decreased unemployment rate, increased output

Q: “Too much money, chasing too few goods” results in the price level __________ and is also known as________ ______ ______.
- increasing, cost-push inflation
- decreasing, demand-pull inflation
- increasing, demand-pull inflation
- decreasing, cost-push inflation
A: increasing, demand-pull inflation

Q: In the long-run, firms will offer higher nominal wages due to the lower unemployment rates. As a result, the prices of other inputs may increase.
- True
- False
A: True

Q: When there is a positive demand shock, the flexibility of the prices of inputs in the long- run cause the following effects on the economy:
- Decrease AD, the economy returns to potential output at a lower price level
- Increase SRAS, the economy moves beyond potential output at a higher price level
- Increase AD, the economy returns to potential output at a lower price level
- Decrease SRAS, the economy returns to potential output at a higher price level
A: Decrease SRAS, the economy returns to potential output at a higher price level