(1A) Typically, if consumer and business confidence is falling then and if consumer and business confidence is rising then . (a) AD shifts to the right; AD shifts to the left (b) AD shifts to the left; AD shifts to the right (c) AD does not shift; AD shifts to the right (1B) Consider the following table and identify equilibrium GDP. If the potential GDP is at 12.0, what can you conclude about price levels and the unemployment rate? Current Price Level Real GDP-quantity demanded per trillion Real GDP-quantity supplied per trillion 120 6.0 10.0 115 8.0 8.0 110 11.0 6.0 100 13.0 5.0 (A) The economy has stable price levels and low unemployment because it is operating above the potential GDP. (B) The economy has high unemployment but experiences stable price levels because the economy operates below the potential GDP. (C) The economy is experiencing rising price levels and has a low unemployment rate because it is operating above the potential GDP. (1C) What accurately describes the Aggregate Demand-Aggregate Supply (AD-AS) model? (a)Real GDP is shown on the vertical axis and the price level is shown on the horizontal axis. (b)Price level is shown on the vertical axis and real GDP is shown on the horizontal axis. (c) Aggregate demand is shown on the vertical axis and aggregate supply is shown on the horizontal axis. (1D) The relationship between the price level and the total quantity of output or real GDP firms will produce to sell is known as (a)market supply. (b) aggregate supply. (c)aggregate demand.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(1A) Typically, if consumer and business confidence is falling then ________ and if consumer and business confidence is rising then ________.

(a) AD shifts to the right; AD shifts to the left
(b) AD shifts to the left; AD shifts to the right
(c) AD does not shift; AD shifts to the right

(1B) Consider the following table and identify equilibrium GDP. If the potential GDP is at 12.0, what can you conclude about price levels and the unemployment rate?

Current Price Level	Real GDP-quantity demanded per trillion	Real GDP-quantity supplied per trillion
120	6.0	10.0
115	8.0	8.0
110	11.0	6.0
100	13.0	5.0

(A) The economy has stable price levels and low unemployment because it is operating above the potential GDP.

(B) The economy has high unemployment but experiences stable price levels because the economy operates below the potential GDP.

(C) The economy is experiencing rising price levels and has a low unemployment rate because it is operating above the potential GDP.

(1C) What accurately describes the Aggregate Demand-Aggregate Supply (AD-AS) model?

(a)Real GDP is shown on the vertical axis and the price level is shown on the horizontal axis.
(b)Price level is shown on the vertical axis and real GDP is shown on the horizontal axis.
(c) Aggregate demand is shown on the vertical axis and aggregate supply is shown on the horizontal axis.

(1D) The relationship between the price level and the total quantity of output or real GDP firms will produce to sell is known as

(a)market supply.
(b) aggregate supply.
(c)aggregate demand.

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