Aggregate Supply and Demand

What does the vertical axis represent on the aggregate demand curve?

• Total Input
• Total Output
• Price Level
• Both A&B

What term best describes the total demand for final goods and services at a range of price levels during a stated period of time?

• Aggregate Supply
• Total Supply
• Total Demand
• Aggregate Demand

Which of the following is not a determinant of aggregate demand ?

• Change in Consumer Spending
• Change in Political Parties
• Change in Government Spending
• Change in investment Spending

What will generally happen to the aggregate demand curve when consumer confidence is too low?

• Curve shifts left
• No change in curve
• Curve slopes up
• curve shifts right

The foreign purchases effect suggests that a decrease in Canada's price level relative to other countries will: 

• shift the aggregate demand curve leftward.
• shift the aggregate supply curve leftward.
• decrease Canada's exports and increase Canada's imports.
• increase Canada's exports and decrease Canada's imports.

A decline in investment will shift the AD curve to the: 

• left by a multiple of the change in investment.
• left by the same amount as the change in investment.
• right by the same amount as the change in investment.
• right by a multiple of the change in investment.

If investment decreases by $20 billion and the economy's MPC is .5, the aggregate demand curve will shift

• leftward by $40 billion at each price level.
• rightward by $20 billion at each price level.
• rightward by $40 billion at each price level.
• leftward by $20 billion at each price level.

In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to: 

• affect neither aggregate supply nor aggregate demand.
• increase aggregate demand.
• reduce aggregate demand.
• reduce aggregate supply.

The aggregate supply curve (short-run) slopes upward and to the right because: 

• changes in wages and other resource prices completely offset changes in the price level.
• the price level is flexible upward but inflexible downward.
• supply creates its own demand.
• wages and other resource prices adjust only slowly to changes in the price level.

Other things equal, an improvement in productivity will: 

• shift the aggregate demand curve to the left.
• shift the aggregate supply curve to the left.
• shift the aggregate supply curve to the right
• increase the price level.