Aggregate Supply and Demand

What are some factors that can affect aggregate supply?

• Changes in demand, inflation, interest rates, and consumer preferences.

• Global warming, natural disasters, and political instability.

• Labor strikes, technological advancements, and changes in consumer income.

• Changes in input prices, productivity, technology, government regulations, and external shocks.

List the determinants of aggregate demand.

• Consumption, Investment, Government Spending, Net Exports

• Exports, Savings, Taxes, Imports

• Investment, Imports, Exports, Taxes

• Consumption, Savings, Taxes, Government Spending

Explain how a change in technology can shift the aggregate supply curve.

• A change in technology can shift the aggregate supply curve by impacting international trade agreements.

• A change in technology can shift the aggregate supply curve by affecting the productivity of resources.

• A change in technology can shift the aggregate supply curve by altering government regulations.

• A change in technology can shift the aggregate supply curve by influencing consumer preferences.

Describe what causes movement along the aggregate demand curve.

• Government regulations

• Changes in consumer preferences

• Technological advancements

• Changes in the price level

How does government regulation impact aggregate supply?

• Government regulation has no impact on aggregate supply

• Government regulation always increases aggregate supply

• Government regulation only affects aggregate demand

• Government regulation can impact aggregate supply by affecting production costs, technology adoption, and overall business environment. For example, regulations that increase costs or restrict production can decrease aggregate supply, while regulations that promote innovation and efficiency can increase aggregate supply.

Discuss the effect of consumer confidence on aggregate demand.

• Consumer confidence only affects supply, not demand

• Consumer confidence has no impact on aggregate demand

• Consumer confidence leads to a decrease in government spending, not consumer spending

• Consumer confidence affects aggregate demand by influencing consumer spending behavior.

Illustrate how an increase in wages affects aggregate supply.

• An increase in wages positively affects aggregate supply by causing a rightward shift in the short-run aggregate supply curve.

• An increase in wages has no impact on aggregate supply.

• An increase in wages leads to a decrease in aggregate demand.

• An increase in wages negatively affects aggregate supply by causing a leftward shift in the short-run aggregate supply curve.

What role does interest rates play in determining aggregate demand?

• Interest rates influence borrowing costs, affecting spending behavior and ultimately impacting aggregate demand.

• Interest rates only affect individual spending, not aggregate demand

• Interest rates have a direct correlation with inflation, not aggregate demand

• Interest rates have no impact on aggregate demand

Explain the concept of a negative supply shock and its effect on the aggregate supply curve.

• A negative supply shock has no impact on the production capacity of an economy.

• A negative supply shock increases the production capacity of an economy, leading to a rightward shift of the aggregate supply curve.

• A negative supply shock leads to a decrease in demand, not supply.

• A negative supply shock reduces the production capacity of an economy, leading to a leftward shift of the aggregate supply curve.

Describe a scenario where there is a movement along the aggregate demand curve.

• A movement along the aggregate demand curve is caused by shifts in the aggregate supply curve

• A movement along the aggregate demand curve results from changes in consumer preferences

• A movement along the aggregate demand curve happens due to a change in the price level, leading to a change in the quantity of real GDP demanded.

• A movement along the aggregate demand curve occurs due to changes in the interest rate