Aggregate Demand and Aggregate Supply Analysis

What are the determinants of aggregate demand?

• Exports, Savings, Taxes, Imports

• Consumption, Inflation, Government Spending, Net Exports

• Investment, Consumption, Inflation, Imports

• Consumption, Investment, Government Spending, Net Exports

Explain how the aggregate supply curve shifts.

• The aggregate supply curve shifts due to changes in demand, interest rates, and exchange rates.

• The aggregate supply curve shifts due to changes in production costs, technology, government policies, and expectations of future prices.

• The aggregate supply curve shifts due to changes in consumer preferences, advertising, and competition.

• The aggregate supply curve shifts due to changes in weather patterns, natural disasters, and population growth.

Describe the concept of equilibrium in the AD-AS model.

• Equilibrium is not relevant in the AD-AS model.

• Equilibrium in the AD-AS model is when aggregate demand equals aggregate supply.

• Equilibrium is when aggregate supply exceeds aggregate demand.

• Equilibrium is when aggregate demand exceeds aggregate supply.

How does fiscal policy affect aggregate demand?

• Fiscal policy affects aggregate demand by influencing consumer preferences.

• Fiscal policy affects aggregate demand by changing government spending and taxation levels.

• Fiscal policy affects aggregate demand by altering the money supply.

• Fiscal policy affects aggregate demand by changing interest rates.

Discuss the effects of monetary policy on aggregate supply.

• Monetary policy can impact aggregate supply by influencing interest rates, investment, and inflation. Expansionary policy can boost aggregate supply by stimulating investment and consumption, while contractionary policy can reduce aggregate supply by dampening investment and consumption.

• Monetary policy has no impact on aggregate supply

• Expansionary policy reduces aggregate supply

• Contractionary policy boosts aggregate supply

Explain the impact of long-run economic growth on the economy.

• Long-run economic growth leads to decreased productivity

• Long-run economic growth has no impact on the economy

• Long-run economic growth positively impacts the economy by boosting productivity, increasing employment opportunities, raising incomes, and fostering technological advancements.

• Long-run economic growth results in lower incomes for individuals

What factors can cause a shift in aggregate demand?

• Changes in consumer confidence, government spending, interest rates, and foreign trade.

• Variations in population growth

• Shifts in the stock market

• Changes in inflation rates

In the AD-AS model, what happens when there is excess demand in the economy?

• Unemployment decreases due to increased demand

• Producers lower prices to match the higher demand

• Prices rise as producers increase prices to match the higher demand.

• Consumers reduce their spending to balance the demand

How does an increase in government spending affect aggregate demand?

• An increase in government spending leads to a decrease in aggregate demand.

• An increase in government spending leads to an increase in aggregate demand.

• An increase in government spending has no effect on aggregate demand.

• An increase in government spending leads to a decrease in government revenue.

What role does the money supply play in influencing aggregate supply?

• The money supply affects aggregate supply by influencing interest rates and investment, leading to changes in overall economic activity.

• The money supply has no impact on aggregate supply

• The money supply directly determines the level of aggregate supply

• Increasing the money supply decreases aggregate supply