Exhibit 10-8 Aggregate Demand and Supply

question 33

Multiple Choice

Exhibit 10-8 Aggregate demand and supply

In Exhibit 10-8, if aggregate demand shifts from AD₁ to AD₂,

• A) real GDP will increase from $3.0 to $7.0, and the price level will remain the same.
• B) real GDP will increase from $3.0 to $4.0, and the price level will remain the same.
• C) real GDP and the price level will both remain the same.
• D) real GDP will increase from $3.0 to $4.0, and the price level will increase from 100 to 140.

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Definitions:

State Implementation Plan

A document prepared by states in which the emissions to the air from individual sources are limited legally so that the area will meet the national ambient air quality standards.

Clean Air Act

A comprehensive federal law in the United States that regulates air emissions from stationary and mobile sources to control air pollution.

National Ambient Air Quality Standards

Federally established air pollution standards designed to protect the public health and welfare.

Permit System

A regulatory system that requires individuals or entities to obtain permission, usually from a government authority, before undertaking certain activities.