Figure 2 Price Level AS AD Real GDP 21. In figure 2 the aggregate supply curve i

ID: 1109435 • Letter: F

Question

Figure 2 Price Level AS AD Real GDP 21. In figure 2 the aggregate supply curve is the AS in: a. the short run b. the long run c. a barter economy d. a monetary economy e. none of the above 22. In figure 2 if aggregate demand increases, then: a. the price level rises b. the price level falls c. AS rises d. AS falls e. none of the above 23. In figure 2, if AS increases, then the price level: a. rises and real GDP rises b. rises and real GDP falls c. falls and real GDP rises d. falls and real GDP falls e. none of the above

Explanation / Answer

21> Long run

Reason

In the long run, the inflation or changes in the price level does not affect the real output level, it is changes by exogenous factors of the economy.

22> the price level falls

Reason

As can be seen in the picture, the slope of the AS curve is downward. thus less price level implies more aggregate demand.

23> none of the above

Reason

In the figure AS is constant, so it can not change.

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Figure 2 Price Supply 125 $110 ….. $89 Social value Demand 58 73 94 Quantity 16.

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Figure 2 Price Level AS AD Real GDP 21. In figure 2 the aggregate supply curve i

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Explanation / Answer

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