AD/AS

What does "aggregate" mean in the context of aggregate demand?

• The sum of all individual demands

• The average price of goods and services

• The total number of goods in one particular market

• The specific demand for a single product

Which of the following is NOT one of the six major factors affecting consumer spending?

• Wealth

• Consumer Confidence

• Education

• Interest Rates

What does a recessionary gap indicate about the economy?

• The economy is producing at its full potential.

• The economy is 'too hot' and is producing too much.

• The economy is 'too cold' and is not living up to its potential.

• The economy is in perfect equilibrium.

What does an inflationary gap suggest about the economy's performance?

• The economy is in a state of deflation.

• The economy is 'too cold' and is not producing enough.

• The economy is balanced with no gaps.

• The economy is 'too hot' and is producing too much.

In the context of the diagrams, what does the point where the SRAS curve intersects the AD curve represent?

• Long-run economic equilibrium

• The point of maximum economic output

• Short-run macroeconomic equilibrium

• The beginning of a recession

Which curve represents the Long-Run Aggregate Supply (LRAS) in the diagrams?

• The downward-sloping curve

• The upward-sloping curve

• The vertical curve

• The horizontal curve

What happens to the Short-Run Aggregate Supply (SRAS) curve when there is a loss in productivity?

• It shifts to the right.

• It remains unchanged.

• It shifts to the left.

• It becomes steeper.

What can be a consequence of fewer workers in the economy?

• The Long-Run Aggregate Supply (LRAS) shifts to the right.

• The Long-Run Aggregate Supply (LRAS) shifts to the left.

• The Aggregate Demand (AD) shifts to the right.

• The Aggregate Demand (AD) remains unchanged.

What happens to aggregate demand (AD) when interest rates increase?

• AD shifts to the left

• AD shifts to the right

• AD remains unchanged

• AD becomes more vertical

What is the effect of a $100 increase in new spending if the spending multiplier is 2.5?

• $250 increase in aggregate output

• $100 increase in aggregate output

• $400 increase in aggregate output

• $150 increase in aggregate output