If the Quantity of Real GDP Demanded Is Less Than

question 100

Multiple Choice

If the quantity of real GDP demanded is less than the quantity of real GDP supplied,then

• A)the economy must be producing at potential GDP.
• B)the price level falls and firms decrease production.
• C)the price level falls and firms increase production.
• D)aggregate demand changes to restore the equilibrium.
• E)the price level rises to restore the macroeconomic equilibrium.

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Definitions:

Leisure

free time when individuals are not working, available for relaxation or activities of personal choice.

Normal Good

A good for which demand increases as the income of consumers increases and vice versa.

Demand for Leisure

The desire for free time in which one can enjoy personal activities outside of work.

Labor Supply Curve

A graphical illustration of the relationship between the wage rate and the quantity of labor workers are willing to supply at various wage rates.