Macroeconomics - Chapter IV (AD & AS Model)

Aggregate demand and Aggregate supply model uses to show the determination of __________ in an economy.

• Real GDP and income level

• Real GDP and standard of living

• Real GDP and price level

• Real GDP and cost level

The quantity of goods and services purchased at all possible price levels is known as.

• Demand

• Supply

• Aggregate demand

• Aggregate supply

What is true about aggregate demand?

• AD = C + I + G + X + M

• AD = C - I - G - X - M

• AD = C + I + G + (X + M)

• AD = C + I + G + (X - M)

The relationship between quantity demanded of real GDP (AD) and the price level is __________.

• Positive

• Negative

• Constant

• Linear

Which of the following is a reason for increase in AD?

• Decrease in consumption

• Decrease in investment

• Decrease in export

• Decrease in import

There is a positive response between price level and ___________.

• Aggregate demand

• Aggregate supply

• Real GDP demanded

• Real GDP purchased

A fall in price cause a __________ in AS.

• Expansion

• Contraction

• Increase

• None of the options

An increase in the quantity of capital makes the AS curve to shift __________.

• Inward or Left side

• Outward or Right side

• Both inward and outward

• Both Left and Right side

What is true at macroeconomic equilibrium?

• AD = AS

• AD > AS

• AD < AS

• AD + AS = 1

What is true about equilibrium price level?

• Firms will not be able to sell what they want to sell

• Consumers will not be able to buy what they want to buy

• Firms sell what they want to sell and consumers buy what they want to buy

• There will be either surplus or shortage of products in the economy