#1
What is the definition of Aggregate Demand?
The total demand for goods and services in an economy at a given price level and in a given period
ExplanationTotal demand for goods and services in an economy at a given price level and period.
#2
What does the Aggregate Supply curve represent?
The total output of goods and services that firms are willing and able to produce at different price levels
ExplanationTotal output of goods and services that firms are willing to produce at different price levels.
#3
Which of the following is a component of Aggregate Demand?
Government expenditure
ExplanationGovernment expenditure.
#4
What does the Short-Run Aggregate Supply curve represent?
The total output of goods and services that firms are willing and able to produce at different price levels in the short run
ExplanationTotal output of goods and services firms are willing to produce at different price levels in the short run.
#5
Which of the following factors can cause a shift in the Aggregate Demand curve?
Changes in consumer income
ExplanationChanges in consumer income.
#6
Which of the following can cause a shift in the Short-Run Aggregate Supply curve?
Changes in input prices
ExplanationChanges in input prices.
#7
What is the long-run effect of an increase in Aggregate Demand?
An increase in the price level with no change in real GDP
ExplanationIncrease in price level with no change in real GDP.
#8
Which of the following is an example of a determinant of Aggregate Supply?
Changes in technology
ExplanationChanges in technology.
#9
What effect does an increase in government spending have on Aggregate Demand?
It increases Aggregate Demand
ExplanationIncreases Aggregate Demand.
#10
In the Aggregate Demand and Supply model, what happens if Aggregate Demand exceeds Aggregate Supply?
Inflationary pressures increase
ExplanationInflationary pressures increase.
#11
What is the concept of potential GDP in the context of Aggregate Supply?
The maximum sustainable level of real GDP that an economy can produce
ExplanationMaximum sustainable level of real GDP an economy can produce.
#12
What is the long-run effect of an increase in Aggregate Supply?
An increase in real GDP with no change in the price level
ExplanationIncrease in real GDP with no change in the price level.
#13
What is the main reason for the downward slope of the Long-Run Aggregate Supply curve?
The increasing opportunity cost
ExplanationIncreasing opportunity cost.
#14
What is the impact of a decrease in Aggregate Supply?
Inflationary pressures decrease
ExplanationInflationary pressures decrease.