Aggregate Demand And Supply
8 Questions
| Total Attempts: 143
Chap 16 & 17- Economics Course Companion (Oxford)
Questions and Answers
- 1.
Refer to the diagram. Assume the economy is initially at point a. A movement to point b might be caused by: - 2.What is Aggregate Demand?
- 3.What is Aggregate Supply?
- 4.
Refer to the diagram. Assume that wages are initially set on the basis of price level P1 and that the economy is operating at its full-employment level of Qf. The short-run effect of an increase in demand is best reflected by a move from:
- A.
Point e to point g
- B.
Point e to point b
- C.
Point e to point a
- D.
Point e to point c
- 5.Refer to the diagram above. If P1 is the price level and Qf is the full-employment output, then the long-run aggregate supply curve:
- A.
Is AS1
- B.
Connects points a and e
- C.
Is AS2
- D.
Connects points e, b, and d
- 6.
Refer to the diagram. Assume aggregate demand is initially given by AD1 and cost-push inflation pushes the aggregate supply curve from AS1 to AS2. If the government uses fiscal policy to restrain the inflation:
- A.
Aggregate demand will increase to AD2
- B.
Aggregate supply will shift even further to the left
- C.
Aggregate demand will shift to the left
- D.
The economy will move from point b to point a
- 7.
Refer to the diagram. If Q1 represents the full-employment output, then the curve labeled B is the:
- A.
LRAS curve
- B.
SRAS curve
- 8.If the economy is initially at a point on its long-run aggregate supply curve, a decrease in aggregate demand will:
- A.
Permanently increase unemployment
- B.
Temporarily increase unemployment
- C.
Permanently increase inflation
- D.
Temporarily increase inflation
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