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The aggregate demand curve has the usual downward slope, since a ____ price level
____ the real money supply, raises interest rates, and lowers the equilibrium level of
aggregate output, everything else held constant.
A) lower; reduces
B) lower; increases
C) higher; reduces
D) higher; increases
Answer: C
Diff: 2 Type: MC Page Ref: 573
Skill: Recall
Objective List: 24.3 Differentiate between short-run and long-run equilibria in the context of the
aggregate demand and supply framework
The aggregate demand curve has the usual downward slope, since a higher price level
reduces the real money supply, ____ interest rates, and ____ the equilibrium level of
aggregate output, everything else held constant.
A) raises; lowers
B) raises; raises
C) lowers; lowers
D) lowers; raises
Answer: A
Diff: 2 Type: MC Page Ref: 573
Skill: Recall
Objective List: 24.3 Differentiate between short-run and long-run equilibria in the context of the
aggregate demand and supply framework
Everything else held constant, an increase in government spending will cause ____.
A) aggregate demand to increase
B) aggregate demand to decrease
C) the quantity of aggregate demand to increase
D) the quantity of aggregate demand to decrease
Answer: A
Diff: 2 Type: MC Page Ref: 574
Skill: Recall
Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
of aggregate output and the inflation rate
Everything else held constant, expansionary monetary policies will cause ____.
A) the quantity of aggregate demand to increase
B) the quantity of aggregate demand to decrease
C) aggregate demand to decrease
D) aggregate demand to increase
Answer: D
Diff: 2 Type: MC Page Ref: 574
Skill: Recall
Objective List: 24.3 Differentiate between short-run and long-run equilibria in the context of the
aggregate demand and supply framework