Recap : AD - AS

Explain the concept of aggregate demand.

• Aggregate demand is the total supply of goods and services within an economy.

• Aggregate demand refers to the demand for a specific product within an economy.

• Aggregate demand is the total demand for goods and services outside of an economy.

• Aggregate demand is the total demand for goods and services within an economy at a given price level and in a given period.

What factors can cause a shift in the aggregate demand curve?

• Changes in interest rates

• Changes in consumer confidence, government spending, investment levels, and net export levels.

• Changes in population growth

• Changes in income distribution

What factors can lead to a shift in the aggregate supply curve?

• Changes in demand, interest rates, and consumer preferences

• Political unrest, natural disasters, and technological advancements

• Changes in input prices, productivity, technology, government regulations, and expectations of future prices.

• Global economic stability, inflation rates, and exchange rates

Explain the concept of full employment in the context of aggregate supply.

• Full employment means there are no unemployed individuals in the economy

• Full employment leads to deflation in the economy

• Full employment implies that all industries are operating at maximum capacity

• Full employment in the context of aggregate supply means that the economy is producing at its maximum potential output level without causing inflation.

How does government spending affect aggregate demand?

• Increased government spending leads to a decrease in aggregate demand.

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

• Government spending has no impact on aggregate demand.

• Government spending only affects aggregate supply, not demand.

Define the concept of marginal propensity to save and its role in the saving function.

• Marginal propensity to save is the proportion of additional income that individuals save rather than consume.

• Marginal propensity to save is the total amount of savings in an economy.

• Marginal propensity to save is the percentage of income spent on consumption.

• Marginal propensity to save has no relation to the saving function.

What would be the effect of an increase in imports?

• Increase AD
• Decrease AD
• Increase SRAS
• Decrease SRAS

What will generally happen to the aggregate demand curve when consumer confidence is too low?

• Curve shifts left
• No change in curve
• Curve slopes up
• curve shifts right