In the Aggregate Demand and Supply Model,the

question 33

Multiple Choice

In the aggregate demand and supply model,the:

• A) aggregate supply curve is horizontal at full-employment real GDP.
• B) vertical axis measures real GDP.
• C) vertical axis measures the average price level.
• D) All of the above.
• E) None of the above.

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Definitions:

Laspeyres Price Index

A measure of the change in the aggregate price level of a basket of goods and services over time, using the quantities purchased in the base year.

Paasche Price Index

The Paasche Price Index measures the change in the price level of a basket of goods and services between two periods, using the quantities of the current period.

Strong Axiom

A principle or rule with robust implications or requirements, though more context is needed for a specific field application.

Revealed Preference

An economic concept referring to the idea that consumers' choices, reflected in their purchasing decisions, reveal their preferences for certain goods or services over others.