Exhibit 14-7 Aggregate Supply and Demand Curves

Multiple Choice

Exhibit 14-7 Aggregate supply and demand curves

-In Exhibit 14-7,the aggregate demand and supply curves reflect an economy in which:

A) full employment is at $1,000 billion GDP.
B) excess aggregate supply is created when there is a shift from AD₁ to AD₂.
C) excess aggregate demand forces prices up to P = 120.
D) excess aggregate demand causes prices to stabilize at P = 110.
E) a new equilibrium is found at point b.