Figtirc: Aggregate Demand Using the accompanying figure, the quantity of output

Question

Figtirc: Aggregate Demand Using the accompanying figure, the quantity of output demanded if tlic price level is 120 is: $9 trillion. $10 trillion. $11 trillion. $12 trillion. Suppose that the stock market crashes. Which of the following is most likely to occur? the aggregate demand curve shifts to the right the aggregate demand curse shifts to the left a movement up the aggregate demand curve a movement down the aggregate demand curve Suppose that a presidential candidate who promised large personal income tax cuts is elected Which of the following is most likely to occur? a decrease in short-run aggregate supply a decrease in aggregate demand an increase in short-run aggregate supply an increase in aggregate demand

Explanation / Answer

6. When the price level is 120 the quantity demanded is 10 trillion. (B)

7. When the stock market crashes, economy goes in recession. Unemployment increases and demand falls.

So, aggregate demand curve shifts to left. (B)

8. Large cuts in personal income tax will increase the real income of the consumer which will lead to increase in demand and eventually aggregate demand. (D).

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