AD/AS Practice

What does the AD curve represent?

• The total output supplied at various price levels
• The total demand for goods and services at various price levels
• Government spending over time
• The value of net exports

Which of the following would cause a rightward shift in the AD curve?

• An increase in interest rates
• A fall in government spending
• An increase in consumer confidence
• Higher taxes on income

Which component is NOT part of Aggregate Demand?

• Consumption
• Investment
• Net exports
• Wages

A decrease in aggregate supply may be caused by:

• A fall in oil prices
• Increased productivity
• Higher wage costs
• Technological improvements

In the AD/AS model, an increase in exports will likely:

• Shift the AS curve to the left
• Shift the AD curve to the right
• Cause a movement along the AD curve
• Have no impact on GDP

A leftward shift in the AS curve is likely to cause:

• Lower prices and output
• Higher prices and lower output
• Higher output and stable prices
• A recession with deflation

If AD shifts left, what happens to real GDP and price level?

• GDP falls, price level rises
• GDP and price level both fall
• GDP rises, price level falls
• No change in GDP or price level

Which of the following shifts AD to the left?

• An increase in business investment
• A rise in consumer income
• An increase in imports
• A fall in interest rates

What does the AS curve show?

• Total demand in the economy
• Total production at different price levels
• Government budget trends
• Spending on exports

Which policy would shift AD to the right?

• Increased interest rates
• Higher income taxes
• Increase in government infrastructure spending
• Increased imports