Chapter 14 Aggregate Demand and Aggregate Supply

| November 9, 2018

31)
Changes in demand will often be met with changes in output rather than changes
in prices because of formal and informal contracts.

32)
What are some reasons why coordination of economic affairs through the price
system may not work perfectly?

33)
What are the two types of prices in an economy?

34)
Suppose that demand for a product falls, but prices are sticky. What is likely
to happen to prices and output in that market, in the short run?

14.2 Understanding Aggregate Demand

1)
The relationship between the level of prices and the total demand for all goods
and services is known as
A)
aggregate supply.
B)
market supply.
C)
aggregate demand.
D)
market demand.

2)
Aggregate demand refers to the relationship between
A)
prices and the quantity of a good supplied.
B)
the price level and the quantity of real GDP supplied.
C)
prices and the quantity of a good demanded.
D)
the price level and the quantity of real GDP demanded.

3)
What is the total demand for goods and services in an entire economy called?
A)
supply and demand
B)
aggregate demand
C)
consumer demand
D)
GDP demand

4)
The aggregate demand curve is
A)
downward sloping.
B)
upward sloping.
C)
a vertical line at potential output.
D)
a horizontal line at the current price level.

5)
As the price level ________, the purchasing power of money ________.
A)
increases; increases
B)
increases; decreases
C)
decreases; decreases
D)
decreases; stays the same

6)
The increase in spending that occurs because the real value of money increases
when the price level falls is known as the
A)
interest rate effect.
B)
international trade effect.
C)
price effect.
D)
wealth effect.

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