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The economic model of aggregate demand curve and aggregate supply curve helps explain the A. three...

The economic model of aggregate demand curve and aggregate supply curve helps explain the

A. three goals of economic policy which are economic growth, high inflation, and full employment.
B. expansion and contractions in individual markets.
C.

shifts in real GDP and the price level.

Which of the following descriptions reflects the AD-AS model most accurately?

A. Real GDP is shown on the vertical axis and the price level is shown on the horizontal axis.
B. Aggregate supply is shown on the horizontal axis and aggregate demand is show on the vertical axis.
C. Real GDP is shown on the horizontal axis and price level is shown on the vertical axis

Which of the following will cause the aggregate demand curve to have a downward slope?

A. The decrease in production costs.
B. The level of employment.
C. The foreign price effect.
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Answer #1

1. Ans: C ) shifts in real GDP and the price level.

2. Ans: C ) Real GDP is shown on the horizontal axis and price level is shown on the vertical axis

3. Ans: C ) The foreign price effect.

Explanation:

The economic model of aggregate demand curve and aggregate supply curve helps to explain the shifts in real GDP and the price level. In the Ad - AS graph , real GDP is shown on the horizontal axis and price level is shown on the vertical axis. The aggregate demand curve slopes downward due to the wealth effect , interest rate effect and foreign price effect or net export effect.

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