4.2.2.2 Aggregate demand and aggregate supply analysisNOTES

What happens to the quantity demanded when the price level decreases?

• It decreases

• It remains unchanged

• It increases

• It fluctuates unpredictably

Which factor is likely to shift the AD curve?

• Change in consumer confidence

• Change in the quality of capital

• Change in technology

• Change in resource prices

What does a rightward shift in the long-run AS curve indicate?

• A decrease in potential output

• A temporary economic shock

• An economic recession

• An increase in potential output

Which of the following is a factor affecting short-run aggregate supply?

• Growth in labor force

• Increases in consumer spending

• Improvements in technology

• Population growth

What represents the economy's potential output level when all resources are fully employed?

• Short-run aggregate supply

• Aggregate demand

• Long-run aggregate supply

• Macroeconomic equilibrium

What occurs at macroeconomic equilibrium?

• Aggregate supply is less than aggregate demand

• Aggregate demand equals aggregate supply

• There is a significant economic downturn

• Aggregate demand is less than aggregate supply

What can cause a demand-side shock?

• Changes in consumer confidence

• Technological advancements

• Improvements in productivity

• Change in resource prices

Which of the following is NOT a factor that shifts the long-run AS curve?

• Improvements in productivity

• Changes in consumer spending

• Capital accumulation

• Technological advancements

What is the effect of a supply-side shock?

• It affects aggregate supply

• It stabilizes price levels

• It leads to a balanced economy

• It affects aggregate demand

What is the impact of a decrease in government spending on the AD curve?

• It shifts to the right

• It shifts to the left

• It remains unchanged

• It becomes more elastic