Choose the correct statement: Select one: a.There is a negative relationship between the price level and aggregate demand. b.lf the price level rises, the quantity of real GDP demanded (aggregate expenditure) falls. c. If the price level falls, the quantity of real GDP demanded (aggregate expenditure) rises. d.all of these are correct statements

Choose the correct statement: Select one: a.There is a negative relationship between the price level and aggregate demand. b.lf the price level rises, the quantity of real GDP demanded (aggregate expenditure) falls. c. If the price level falls, the quantity of real GDP demanded (aggregate expenditure) rises. d.all of these are correct statements

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The French economist Jean-Baptiste Say trans- formed the equality of total output and total spending into a law that can be expressed asa. unemployment is not possible in the short run.b. demand and supply are never equal.c. supply creates its own demand.d. demand creates its own supply.
What is true about equilibrium price level? a. There will be some surplus in the economy b. There will be some shortages in the economy c. There will be either surplus or shortages in the economy d. There will be neither surplus nor shortages in the economy
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The aggregate quantity demand of real GDP A. increases if the price level rises. B. decreases if the price level rises. C. does not change with prices. D. All of the choices above are correct.
If there is excess demand for goods and services in the economy at the current price level, then the: If there is excess demand for goods and services in the economy at the current price level, then the: A. price level will remain the same B. GDP will fall C. price level will increase D. price level will decrease
What is the effect of an increase in the price level when the money wage rate remains unchanged? A. Aggregate supply increases. B. Potential GDP increases. C. The quantity of real GDP supplied increases. D. Resource prices increase by the same percentage as the increase in the price level.
If the price level rises, what happens to aggregate supply? Aggregate supply _______. A. doesn't change, but the quantity of real GDP supplied increases B. decreases C. increases D. doesn't change, but the quantity of real GDP supplied decreases
According to Say's law, aggregate demand is always equal to aggregate supply. O True O False
Aggregate Demand will increase if: A. Imports fall. B. Investment falls. C. Consumption falls. D. Exports fall.
The following graph shows aggregate demand and short-run aggregate supply. 1.) Use the line drawing tool to show the effect of expectations of an increase in the future price level Properly label this line. 2.) Use the point drawing tool to show the new equilibrium price level and real GDP Label this point 'B' Carefully follow the instructions above, and only draw the required objects. Price level Po A Real GDP (Y) SRAS ADO
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3. Explain how each of the following will affect aggregate demand. In each case, draw a diagram to show the effect on the aggregate demand curve. (c) The government passes legislation that increases the rate of corporate taxes. (d) Inflation leads the central bank to increase the base interest rate.