AD AS Model Quiz

In the context of the AD-AS model, what does the intersection of the Aggregate Demand (AD) and Short Run Aggregate Supply (SRAS) curves represent?

• The level of unemployment

• The equilibrium price level and output

• The level of government spending

• The rate of inflation

In the long run, what is the primary effect of an increase in aggregate demand according to the AD-AS model?

• A permanent increase in output

• A permanent decrease in output

• An increase in the price level

• A decrease in the price level

In the long run, what happens to the natural rate of unemployment according to the AD-AS model?

• It increases

• It decreases

• It remains unchanged

• It fluctuates randomly

What happens to the price level and output in the short run if there is a sudden increase in oil prices?

• Price level decreases, output increases

• Price level increases, output decreases

• Price level and output both increase

• Price level and output both decrease

In the AD-AS model, what is the long-run effect of a decrease in aggregate demand?

• A permanent decrease in output

• A permanent increase in output

• A decrease in the price level

• An increase in the price level