Question

Below are pairs of real GDP growth rates and unemployment rates. Economists might be shocked to see some of these pairs. Which pair of real GDP growth rates and unemployment rates is (are) realistic for the U.S. economy?
(x) 0.6 percent growth, 4.3 percent unemployment
(y) – 1 percent growth, 9.2 percent unemployment
(z) 2.8 percent growth, 5.1 percent unemployment
A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only
E. (x) only

Which of the following shifts aggregate demand to the right?
A. increased spending on new roads and bridges by state governments
B. increases in the profitability of capital due perhaps to technological progress.
C. a decrease in the price level
D. All of the above
E. A and B, only

7. Which of the statements about the aggregate demand and aggregate supply model is correct?
A. The price level adjusts to bring aggregate demand and aggregate supply into balance.
B. A rise in the price level shifts the aggregate demand curve to the right.
C. A fall in the price level shifts the aggregate demand curve to the left.
D. All of the above are correct.
E. B and C, only

Answer 1

Answer 1) Below are pairs of real GDP growth rates and unemployment rates. Economists might be shocked to see some of these pairs. Which pair of real GDP growth rates and unemployment rates is (are) realistic for the U.S. economy -  0.6 percent growth, 4.3 percent unemployment,
– 1 percent growth, 9.2 percent unemployment. Hence option B is the correct answer.

2) Which of the following shifts aggregate demand to the right-  increased spending on new roads and bridges by state governments , increases in the profitability of capital due perhaps to technological progress. Hence option E is the correct answer. Both are the components of AD that's why increase in their spending would lead to shift in AD.

3) Which of the statements about the aggregate demand and aggregate supply model is correct - The price level adjusts to bring aggregate demand and aggregate supply into balance. When AD/AS is not at equilibrium then price level will keep on changing until equilibrium level is achieved. Hence option A is the correct answer.