Practice Questions
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What is the primary determinant of aggregate supply in the short run?
In the short run, the price level affects how much goods and services businesses are willing to produce. Other options are incorrect because Some migh...
How does an increase in government spending, as a part of fiscal policy, typically affect the aggregate demand curve?
When the government spends more money, it puts more cash into the economy. Other options are incorrect because Some might think that more spending mea...
How does cost-push inflation typically affect economic growth in an economy?
Cost-push inflation happens when production costs go up. Other options are incorrect because Some might think higher costs always mean more growth; It...
In the context of Aggregate Demand and Supply Analysis, how would a significant increase in consumer confidence affect the economy in the short run and long run, considering both shifts in demand and supply?
When people feel confident, they spend more money. Other options are incorrect because This answer suggests that confidence leads to less spending, wh...
How does an increase in the money supply, through expansionary monetary policy, typically affect the aggregate supply curve and the overall output level in the short run?
When more money is available, businesses can invest and produce more goods. Other options are incorrect because This answer suggests that more money l...
What is the primary focus of Aggregate Demand in an economy?
Aggregate Demand looks at how much money people spend on goods and services. Other options are incorrect because This option confuses demand with supp...
What is the primary determinant of aggregate supply in the short run?
In the short run, the price level affects how much goods and services businesses are willing to produce. Other options are incorrect because Some migh...
What occurs at the point of economic equilibrium in the aggregate demand and supply model?
At economic equilibrium, the amount people want to buy matches the amount businesses want to sell. Other options are incorrect because Rising prices s...
Which of the following scenarios best illustrates a shift in the aggregate demand curve?
When people feel less confident about the economy, they spend less money. Other options are incorrect because This option confuses supply with demand;...
In a scenario where a country is recovering from a recession, how would an increase in aggregate demand likely affect the equilibrium price level and output?
When people want to buy more goods and services, businesses produce more. Other options are incorrect because Some might think that more demand lowers...
Which of the following statements about aggregate demand and supply curves are true? Select all that apply.
Other options are incorrect because This statement is wrong because the aggregate demand curve actually slopes downward; This is incorrect....
Aggregate Demand : Aggregate Supply :: Economic Recovery : ?
During economic recovery, people spend more money. Other options are incorrect because Some might think recovery means more jobs right away; It's easy...
A small country is recovering from a recession and begins to increase its government spending significantly. As a result, the aggregate demand curve shifts to the right. How might this shift impact the equilibrium price level and output in the short run, and what could be the potential effect on trading partners' economies?
When the government spends more, people have more money to buy things. Other options are incorrect because This answer suggests that prices will go do...
If the economy experiences an increase in aggregate demand leading to higher price levels and output, what is the most likely underlying cause of this shift in the aggregate demand curve?
When people feel confident about their jobs and the economy, they spend more money. Other options are incorrect because Some might think that lower pr...
What is the correct sequence of steps to accurately draw and label an aggregate demand and supply graph?
First, you need to identify the axes. Other options are incorrect because This option suggests drawing the curves before identifying the axes; Here, t...
In the context of aggregate demand and supply analysis, when the aggregate demand curve shifts to the right due to increased consumer confidence, this typically leads to a higher ______ level and increased output in the short run.
When people feel good about spending, they buy more. Other options are incorrect because Some might think more demand means less unemployment; People ...
If the economy is recovering from a recession, what effect would this have on the aggregate demand and supply graph?
When the economy improves, people and businesses spend more money. Other options are incorrect because Some might think that supply goes down during r...
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