Aggregate Demand and Supply Quiz

The real-balances, interest-rate, and foreign purchases effects all help explain:

• why the aggregate demand curve is downsloping.

• why the aggregate supply curve is upsloping.

• shifts in the aggregate demand curve.

• shifts in the aggregate supply curve.

Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S.:

• aggregate demand curve would shift to the right.

• aggregate supply curve would shift to the left.

• aggregate supply curve would shift to the right.

• aggregate demand curve would shift to the left.

Which one of the following would not shift the aggregate demand curve?

• A change in the price level.

• Depreciation of the international value of the dollar.

• A decline in the interest rate at each possible price level.

• An increase in personal income tax rates.

Other things equal, a decrease in the real interest rate will:

• expand investment and shift the AD curve to the left.

• expand investment and shift the AD curve to the right.

• reduce investment and shift the AD curve to the left.

• reduce investment and shift the AD curve to the right.

An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the:

• net export effect.

• wealth effect.

• real-balances effect.

• multiplier effect.

Other things equal, an improvement in productivity will:

• shift the aggregate demand curve to the left.

• shift the aggregate supply curve to the left.

• shift the aggregate supply curve to the right.

• increase the price level.

The economy's long-run aggregate supply curve:

• slopes upward and to the right.

• is vertical.

• is horizontal.

• slopes downward and to the right.

The equilibrium price level and level of real output occur where:

• real output is at its highest possible level.

• exports equal imports.

• the price level is at its lowest level.

• the aggregate demand and supply curves intersect.