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In deriving the aggregate demand curve a ____ in the price level leads to ____ in the
real money supply because the nominal quantity of dollars can purchase ____ goods and
services.
A) decline; an increase; more
B) decline; a decrease; more
C) rise; an increase; fewer
D) rise; a decrease; more
Answer: A
Diff: 2 Type: MC Page Ref: 572
Skill: Recall
Objective List: 24.3 Differentiate between short-run and long-run equilibria in the context of the
aggregate demand and supply framework
In deriving the aggregate demand curve a ____ price level ____ the money supply
in real terms, raises interest rates, and ____ the equilibrium level of aggregate output.
A) higher; reduces; raises
B) higher; reduces; lowers
C) lower; increases; raises
D) lower; increases; lowers
Answer: B
Diff: 2 Type: MC Page Ref: 572
Skill: Recall
Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
of aggregate output and the inflation rate
The aggregate demand curve is downward sloping because a decrease in the price level
increases the ____ money supply which ____ interest rates and increases the
equilibrium level of aggregate output, everything else held constant.
A) real; lowers
B) real; raises
C) nominal; lowers
D) nominal; 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