Practise using AD/AS diagrams, components and shifts to analyse output, price levels, growth and inflation pressures.
What is a correct description of an aggregate demand (AD) curve?
It is a curve obtained by adding the market demand curves of all consumer goods traded in an economy.
It is a curve determined by the horizontal summation of all individual consumer demand curves for a product.
It is a curve that shows the total amount of goods and services firms are willing to buy at a given price in an economy.
It is a curve that shows the total demand of all goods and services produced at all price levels in an economy.
D
A government succeeds in changing a current account deficit into a current account surplus.
Why might this current account surplus increase the country's inflation rate?
It raises Aggregate Demand.
It raises production costs.
It reduces the exchange rate.
It reduces the money supply.
A
Why would a fall in a country's average price level cause its aggregate demand curve to slope downwards?
It leads to an increase in interest rates.
It reduces the real value of money balances.
It makes the country's goods cheaper relative to foreign goods.
It leads to the expectation of further price falls.
C