Aggregate Demand and Aggregate Supply Analysis

2.1 Aggregate Demand
1) The basic aggregate demand and aggregate supply curve model helps explain A) short term fluctuations in real GDP and the price level.
B) long term growth.
C) price fluctuations in an individual market.
D) output fluctuations in an individual market. Answer: A
Comment: Recurring
Diff: 1 Page Ref: 788/384
Topic: Aggregate Demand
Objective: LO1: Identify the determinants of aggregate demand and distinguish between a movement along the aggregate demand curve and a shift of the curve. AACSB: Reflective Thinking
Special Feature: None
2) When the economy enters into a recession, your employer is ________ to reduce your wages because ________.
A) unlikely; output and input prices generally fall during recession
B) unlikely; lower wages reduce productivity and morale
C) likely; output prices always fall during recession
D) likely; aggregate demand is vertical in the long run
Answer: A
Diff: 1 Page Ref: 787/383
Topic: Business Cycle
Objective: LO1: Identify the determinants of aggregate demand and distinguish between a movement along the aggregate demand curve and a shift of the curve. AACSB: Reflective Thinking
Special Feature: Economics in YOUR LIFE!: Is an Employer Likely to Cut Your Pay During a Recession?
3) Because of the slope of the aggregate demand curve, we can say that
A) a decrease in the price level leads to a lower level of real GDP demanded.
B) an increase in the price level leads to no change in the level of real GDP demanded.
C) a decrease in the price level leads to a higher level of real GDP demanded.
D) an increase in the price level leads to a higher level of real GDP demanded. Answer: C
Comment: Recurring
Diff: 1 Page Ref: 789/385
Topic: Aggregate Demand
Objective: LO1: Identify the determinants of aggregate demand and distinguish between a movement along the aggregate demand curve and a shift of the curve. AACSB: Reflective Thinking
Special Feature: None
4) Which of the following best describes the...