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Free CFA-Level-I Exam Braindumps (page: 342)

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An improvement in technology would shift which of the following curves?

  1. aggregate demand and long-run aggregate supply
  2. short-run and long-run aggregate supply
  3. only short-run aggregate supply
  4. aggregate demand and short-run aggregate supply
  5. only aggregate demand

Answer(s): B

Explanation:

Improvements in technology permit the economy to squeeze a larger output from a specific resource supply.
Thus, such improvements enhance productivity and thereby shift the LRAS curve to the right.Before such technology shifts the long run aggregate supply however, the short run aggregate supply is affected. Thus, both the SRAS and LRAS curves shift outward under a technology improvement.



Which of the following determine(s) the supply curve?

  1. Supply curves of factor resources.
    II. Total money supply flowing in the economy.
    III. Cost of running operating capacity at a given level. IV. Prices of related goods.
  2. I & III
  3. III & IV
  4. I, II, III & IV
  5. I, II & III

Answer(s): D

Explanation:

Note that the total money supply in the economy determines the values plotted on the price-axis of a supply curve.



Under a monetary expansion, aggregate demand can be expected to ________.

  1. stay the same
  2. rise
  3. fall, then rise
  4. fall
  5. rise, then fall

Answer(s): B

Explanation:

Under a monetary expansion, individuals posses more money balances. Since they invest/save more and consume more, aggregate demand increases due to increased consumption.



If you were asked to study the economy over the past five years, you would use the real GDP series rather than the nominal GDP series because

  1. the nominal GDP series reflects changes in both output and prices, whereas the real GDP series, roughly speaking, merely reflects changes in output.
  2. the nominal GDP series fails to account for transfer payments, whereas the real GDP series includes these payments.
  3. the real GDP series accounts for imports, making it more precise than the nominal GDP series.
  4. exports are excluded from the real GDP series, making it less complicated than the nominal GDP series.

Answer(s): C

Explanation:

It is almost always true that economists are interested in real changes rather than nominal changes because nominal changes look at both changes in the amount of goods and services produced and prices. Real changes focus only on changes in the amount of goods and services produced.






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