Figure: Dynamic Aggregate Demand Reference: Ref 13-1 (Figure: Dynamic

question 91

Multiple Choice

Figure: Dynamic Aggregate Demand Reference: Ref 13-1 (Figure: Dynamic Aggregate Demand) Point B on this dynamic aggregate demand curve represents an inflation rate of

• A) 5 percent.
• B) 4 percent.
• C) 3 percent.
• D) 7 percent.

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Definitions:

Aggregate Supply

The total supply of goods and services that firms in an economy are willing to sell at a given overall price level, across all existing price levels.

Long-run Aggregate Supply

The total supply of goods and services that an economy can produce when resources are fully employed at their most efficient levels, without inflation.

Short-run Aggregate Supply

The total supply of goods and services that firms in an economy are willing to produce at a given overall price level in a specific time period.

Aggregate Quantity Demanded

The aggregate quantity of a product or service that buyers are prepared and capable of buying at a specific price point within a certain time frame.