AD-AS model (Source: Barron's AP Micro-/Macroeconomics, 6th ed, New York, ISBN: 978-1-5062-7204-7, ebook, pp. 240 - 242)
Quiz
Which of the following would shift the aggregate demand curve to the left?
An increase in consumer confidence
Business firms reduce spending on plant and equipment
Foreigners develop a preference for our products
Government increases its level of spending
An increase in the money supply
What will happen to the equilibrium price level and the equilibrium quantity of output if the aggregate supply curve shifts to the left? Assume a long-run aggregate supply curve.
The equilibrium price level increases while the equilibrium quantity of output decreases.
The equilibrium price level decreases while the equilibrium quantity of output increases.
The equilibrium price level and quantity of output increase.
The equilibrium price level remains unchanged while the equilibrium quantity of output increases.
The equilibrium price level increases while the equilibrium quantity of output remains unchanged.
Which of the following would NOT shift the aggregate supply curve?
An increase in the price level
A decrease in the amount of resources in the economy
An increase in the amount of resources in the economy
An improvement in technology
A decrease in productivity
Which of the following would NOT shift the aggregate demand curve?
A change in consumer confidence
A change in technology
A change in the money supply
A change in spending by state governments
A change in foreign tastes for our products
An increase in the price level ...
shifts aggregate demand left.
increases real financial wealth and therefore decreases consumer demand.
reduces real financial wealth and therefore increases consumer demand.
increases real financial wealth and therefore increases consumer demand.
reduces real financial wealth and therefore decreases consumer demand.
What will happen to the equilibrium price level and the equilibrium quantity of output if the aggregate demand curve shifts to the right? Assume a long-run aggregate supply curve.
The equilibrium price level increases while the equilibrium quantity of output decreases.
The equilibrium price level decreases while the equilibrium quantity of output increases.
The equilibrium price level and quantity of output increase.
The equilibrium price level remains unchanged while the equilibrium quantity of output increases.
The equilibrium price level increases while the equilibrium quantity of output remains unchanged.
What will happen to the equilibrium price level and the equilibrium quantity of output if the aggregate supply curve shifts to the left? Assume an upward-sloping aggregate supply curve.
The equilibrium price level increases while the equilibrium quantity of output decreases.
The equilibrium price level decreases while the equilibrium quantity of output increases.
The equilibrium price level and quantity of output increase.
The equilibrium price level and quantity of output decrease.
The equilibrium price level increases while the equilibrium quantity of output remains unchanged.
What will happen to the equilibrium price level and the equilibrium quantity of output if consumer confidence increases? Assume an upward-sloping aggregate supply curve.
The equilibrium price level increases while the equilibrium quantity of output decreases.
The equilibrium price level decreases while the equilibrium quantity of output increases.
The equilibrium price level and quantity of output increase.
The equilibrium price level and quantity of output decrease.
The equilibrium price level increases while the equilibrium quantity of output remains unchanged.
What will happen to the equilibrium price level and the equilibrium quantity of output if the aggregate demand curve shifts to the right? Assume an upward-sloping supply curve.
The equilibrium price level increases while the equilibrium quantity of output decreases.
The equilibrium price level decreases while the equilibrium quantity of output increases.
The equilibrium price level and quantity of output increase.
The equilibrium price level and quantity of output decrease.
The equilibrium price level increases while the equilibrium quantity of output remains unchanged.
What will happen to the equilibrium price level and the equilibrium quantity of output if a major earthquake destroys much of the plant and equipment on the West Coast? Assume an uward sloping aggregate supply curve.
The equilibrium price level increases while the equilibrium quantity of output decreases.
The equilibrium price level decreases while the equilibrium quantity of output increases.
The equilibrium price level and quantity of output increase.
The equilibrium price level and quantity of output decrease.
The equilibrium price level increases while the equilibrium quantity of output remains unchanged.