AD/AS

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

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

Refer to the above diagram. If the initial aggregate demand and supply curves are AD₀ and AS₀, the equilibrium price level and level of real domestic output will be: 

• F and C, respectively.
• G and B, respectively.
• F and A, respectively.
• E and B, respectively.

The diagram above shows the aggregate demand (AD), the short-run aggregate supply

(SRAS) and the long-run aggregate supply (LRAS) curves for an economy.

The economy is currently operating at point X. At this point, the economy must be

experiencing

• inflation caused by excess demand.

• inflation caused by increasing costs.

• unemployment of labour.

• a low rate of economic growth.

Point A is the initial economic equilibrium and then the economy moves to point B, then there was

• an increase in Aggregate Supply

• a decrease in Aggregate Supply

• an increase in Aggregate Demand

• a decrease in Aggregate Demand