When We Consider an Upward-Sloping Aggregate Supply Curve and a Downward-Sloping

question 1

Multiple Choice

When we consider an upward-sloping aggregate supply curve and a downward-sloping aggregate demand curve, a decrease in aggregate expenditures is reflected as a

• A) leftward shift in the aggregate supply curve, which increases the equilibrium price level and decreases equilibrium income.
• B) rightward shift in the aggregate supply curve, which increases both the equilibrium price level and equilibrium income.
• C) rightward shift in the aggregate demand curve, which increases both the equilibrium price level and equilibrium income.
• D) leftward shift in the aggregate demand curve, which decreases both the equilibrium price level and equilibrium income.
• E) leftward shift in the aggregate demand curve, which increases the equilibrium price level and decreases equilibrium income.

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Definitions:

Double Coincidence of Wants

A situation in barter economies where two parties each hold an item the other wants, making it possible for them to exchange these items directly.

100-percent-reserve Banking

A banking system in which banks are required to keep 100% of their deposits available as reserves, thus eliminating the possibility of bank runs.

Money Supply

The collective sum of money assets in an economy at a certain timeframe.

Standard of Living

The degree of prosperity, convenience, material possessions, and essential needs accessible to a specific social or economic group or particular location.