pearson ch 12 AD AS

What is on the "Y" axis on an AD/AS Model?

• Real GDP
• ouput
• price level
• price

What is represented on the "X" axis on the AD/AS Model?

• price level
• price
• Real GDP
• Nominial GDP

What is the vertical line called on the AD/AS Model?

• short-run aggregate supply
• aggregate demand
• long run aggregate supply
• r GDP

What is a recessionary gap?

• when ouput falls below potential
• when output exceeds potentional
• when output increases
• when unemployment decreases

What is an inflationary gap?

• when output goes beyond full employment
• when output falls below full employment
• when unemployment increases
• when deflation is present in an economy

What would cause AD to decrease?

• an increase in taxes
• a decrease taxes
• an increase in government spending
• keeping government spending constant

Prices and wages tend to be: 

• flexible both upward and downward.
• inflexible both upward and downward.
• flexible downward, but inflexible upward.
• flexible upward, but inflexible downward.

the AD curve slopes down because 

• at high prices less is consumed and produced
• its the same as demand curve 
• supply has to cut across
• all of these reasons 

if there is an increases in wages and firms pay more in producing goods 

• AD shift right
• AD shift left
• AS shift right
• AS shift left

an increase in AD 

• means the Ad curve shifts left
• Ad curve shifts right
• movement along the AD curve up
• movement along the AD curve down wards