Exhibit 14-8 Aggregate Demand and Supply

question 29

Multiple Choice

Exhibit 14-8 Aggregate demand and supply

In Exhibit 14-8, if aggregate demand shifts from AD₁ to AD₃,

• A) real GDP will increase from $3.0 to $4.0, and the price level will increase from 100 to 140.
• B) real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 140.
• C) real GDP will increase from $3.0 to $4.0, and the price level does not change.
• D) real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 120.

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Definitions:

Fully Functioning

A term often used in psychology to describe an individual who is living at their highest potential, often related to self-actualization.

Consistency

The quality of achieving a uniform, stable, and unvarying approach in actions or behavior over time.

Precisely Balanced System

A system fine-tuned to maintain equilibrium among its components, ensuring stable functioning.

Adequate

Sufficient to satisfy a requirement or meet a need; satisfactory in quality or quantity.