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Exhibit 14-7 Aggregate Supply and Demand Curves

Question 111

Multiple Choice

Exhibit 14-7 Aggregate supply and demand curves
Exhibit 14-7 Aggregate supply and demand curves At point A in Exhibit 14-7, the aggregate demand AD<sub>2</sub> and the aggregate supply curve 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 AD<sub>1</sub> to AD<sub>2</sub>. C) excess aggregate demand forces prices up to P = 120. D) excess aggregate demand causes prices to stabilize at P = 110.
At point A in Exhibit 14-7, the aggregate demand AD2 and the aggregate supply curve 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.

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