Exam 11: Aggregate Demand and Supply  

The slope of the aggregate demand curve reflects the fact that

How are the price level and the level of real output affected if aggregate demand increases?

The circular flow model of the economy depicts the exchange of resources between the household sector and the business sector.

The real balance effect involves the way that

Decreases in aggregate supply result in

An increase in the level of prices of goods and services will

An improvement in consumer confidence causes aggregate demand to _________.

Which one of the following changes when aggregate demand changes?

Increases in aggregate supply

The intersection of aggregate supply and aggregate demand determines the equilibrium price level and the equilibrium level of _________ _________ .

The model of aggregate supply and aggregate demand is based on the assumption that consumers reduce the amount of real goods and services produced when the price level rises.

In moving from point to point up along the aggregate supply curve, we are looking at changes in which the firm increases the selling price of its good with wages remaining stable.

The intersection of aggregate supply and aggregate demand indicates

How does an increase in the foreign exchange value of the dollar affect aggregate demand?

The effect of a decrease in aggregate supply is to increase the price level and to decrease unemployment.

The circular flow model represents the

The real balance effect asserts that the quantities consumers purchase are independent of prices.

Suppose that, over time, an economy has experienced decreases in real income and decreases in the price level as well. What would account for this?

The circular flow model asserts that government generates wealth and parcels it out to consumers.

A decline in consumer confidence will increase aggregate demand.