Exhibit 14-7 Aggregate Supply and Demand Curves

question 136

Multiple Choice

Exhibit 14-7 Aggregate supply and demand curves

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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