Question : 14.4   The AD Curve and Equilibrium Expenditure 1) When the price : 1227943

 

14.4   The AD Curve and Equilibrium Expenditure

 

1) When the price level ________, equilibrium expenditure ________ and the quantity of real GDP demanded ________.

A) falls; increases; increases

B) rises; increases; decreases

C) falls; increases; decreases

D) rises; decreases; increases

E) rises; increases; increases

2) The level of equilibrium expenditure at each price level determines

A) the points on the AD curve.

B) aggregate planned production.

C) the price level.

D) full employment.

E) the points on the AE curve.

 

3) The quantity of real GDP demanded on the AD curve is the equilibrium real GDP when

A) aggregate planned expenditure equals real GDP.

B) the price level equals the equilibrium price level.

C) aggregate planned expenditure is greater than real GDP.

D) aggregate planned expenditure is less than real GDP.

E) equilibrium expenditure is greater than real GDP.

 

4) An increase in the price level shifts the AE curve

A) upward and shifts the AD curve leftward.

B) upward and shifts the AD curve rightward.

C) downward and does not shift the AD curve.

D) downward and shifts the AD curve leftward.

E) downward and shifts the AD curve rightward.

 

5) A change in the price level ________ the AE curve and ________ the AD curve.

A) shifts; shifts

B) shifts; results in a movement along

C) results in a movement along; shifts

D) results in a movement along; results in a movement along

E) has no effect on; results in a movement along

6) An increase in the price level leads to

A) a downward shift in the AE curve and a movement upward along the AD curve.

B) a downward shift in both the AE and AD curves.

C) a downward shift in the AD curve and a movement downward along the AE curve.

D) a leftward movement along both the AE and AD curves.

E) an upward shift in the AE curve and a movement upward along the AD curve.

 

7) If the price level increases, the AE curve shifts

A) upward and the AD curve shifts leftward.

B) downward and the AD curve shifts rightward.

C) upward and there is a movement along the AD curve.

D) downward and there is a movement along the AD curve.

E) upward and the AD curve shifts rightward.

 

8) When the AE curve shifts upward because the price level falls, the corresponding effect on the aggregate demand curve is

A) a movement upward along the aggregate demand curve.

B) a movement downward along the aggregate demand curve.

C) a shift rightward of the aggregate demand curve.

D) a shift leftward of the aggregate demand curve.

E) nothing because aggregate demand does respond to changes in the price level.

9) A shift in the aggregate planned expenditure curve as a result of an increase in the price level results in

A) a leftward shift in the aggregate demand curve.

B) a downward movement along the aggregate demand curve.

C) a rightward shift in the aggregate demand curve.

D) an upward movement along the aggregate demand curve.

E) no movement along the aggregate demand curve and no shift in the aggregate demand curve.

 

10) When the price level increases, aggregate planned expenditure decreases, which leads to

A) a rightward shift of the aggregate demand curve.

B) a leftward shift of the aggregate demand curve.

C) an upward movement along the aggregate demand curve.

D) a downward movement along the aggregate demand curve.

E) neither a movement along nor a shift of the aggregate demand curve.

 

11) When the price level falls, the aggregate planned expenditure curve shifts ________, equilibrium expenditure ________ and there is a movement ________ along the aggregate demand curve.

A) upward; increases; upward

B) downward; decreases; downward

C) upward; increases; downward

D) downward; increases; upward

E) upward; decreases; downward

12) When the price level increases, aggregate planned expenditure ________ and equilibrium real GDP ________. As a result, in the AS-AD model, the aggregate demand curve has a ________ slope.

A) increases; increases; positive

B) decreases; decreases; negative

C) decreases; decreases; positive

D) increases; decreases; negative

E) decreases; increases; negative

 

13) A movement along the AE curve arises from a change in ________ and a movement along the AD curve arises from a change in ________.

A) real GDP; the price level

B) real GDP; investment

C) the price level; the price level

D) the price level; investment

E) investment; the price level

 

14) A change in the price level

A) shifts the AE curve and creates a movement along the AD curve.

B) creates a movement along the AE curve and shifts the AD curve.

C) shifts the AE curve and the AD curve in the same direction.

D) shifts the AE curve and the AD curve in opposite directions.

E) creates a movement along both the AE curve and the AD curve.

15) The AD curve is the relationship between

A) aggregate planned expenditure and the price level.

B) aggregate planned expenditure and the quantity of real GDP demanded.

C) the quantity of real GDP demanded and the quantity of real GDP supplied.

D) the quantity of real GDP demanded and the unemployment rate.

E) aggregate planned expenditure and real GDP when the price level is fixed.