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Most economists use the aggregate demand and aggregate supply model primarily to analyze

a. short-run fluctuations in the economy.

b. the effects of macroeconomic policy on the prices of individual goods.

c. the long-run effects of international trade policies.

d. productivity and economic growth. 

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Sixta Kovacek
Sixta KovacekLv2
6 May 2020

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Related questions

The basic aggregate demand and aggregate supply curve model helps explain:
A) short-run fluctuations in real GDP and the price level.
B) long-term growth.
C) price fluctuations in an individual market.
D) output fluctuations in an individual market.

1. If the price level doubles and the real output doesn't change, then nominal output also doubles.
2. Inflation makes it less difficult to interpret the information conveyed by prices.

3. Laissez-faire economists oppose government intervention in the market process.

4. Active demand management policies are based on the work of JohnMaynard Keynes.

5. In the AS/AD model, as the price level rises, the real value of assets increases, causing consumption to increase. This is one reason why the aggregate demand curve slopes down.

6. The short-run aggregate supply curve is upward sloping in part because increases in aggregate demand cause some firms to increase their price markups.

7. If productivity and wages both raises by 3 percent, then the short-run aggregate supply curve does not shift.

8. The long-run aggregate supply curve is vertical because all prices adjust in the long run.

9. If the economy is not in long-run equilibrium and other things are equal, then prices will eventually adjust to bring the economy to long-run equilibrium.

10. Most economists agree that it is possible for fiscal policy to fine-tune the economy.

Explain why the following statements are false.

a. “The aggregate-demand curve slopes downward because it is the horizontal sum of the demand curves for individual goods.”

b. “The long-run aggregate-supply curve is vertical because economic forces do not affect long-run aggregate supply.”

c. “If firms adjusted their prices every day, then the short-run aggregate-supply curve would be horizontal.”

d. “Whenever the economy enters a recession, its long-run aggregate supply curve shifts to the left.”

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