Question

1. In addition to the price level, what does the aggregate demand and aggregate supply model focus on?

        a.    real GDP

        b.    nominal GDP

        c.     the real interest rate

        d.    stock prices

2. Which statement best characterizes the long-run aggregate-supply curve?

        a.    It is horizontal.

        b.    It shows a positive relationship between price level and output.

        c.     It demonstrates the importance of money in the economy.

        d.    It shows that money does not influence real GDP in the long run.

Price Level Quantity of Output 24. Refer to the above figure. In the short run, what would result from a favourable shift in aggregate supply? It would move the economy from A to B.' It would move the economy from B to C. C. It would move the economy from C to D. d. It would move the economy from D to A. 25. In which situation would the long-run aggregate-supply curve shift right? ن if immigration from abroad decreases م if the capital stock decreases ن if the money supply increases ا if technology advances

Answer 1

a) "A"

they focus on the real GDP of the economy.

b) "D"

it shows that money doesn't affect the output in the long run.

c) "A"

It will shift the SRAS to the right and the new output will be at a lower price and higher output, the answer is "a".

d) "D"

If the technological level of the economy increases then the LRAS will shift.