Aggregate Demand and Supply quiz

An expected increase in the prices of consumer goods in the near future will

increase (or shift right) in aggregate demand now.

Graphically, cost-push inflation is shown as a

leftward shift of the AS curve.

The real-balances effect on aggregate demand suggests that a

lower price level will increase the real value of many financial assets and therefore cause an increase in spending.

The labels for the axes of the aggregate demand graph should be

real domestic output on the horizontal axis and the price level on the vertical axis.

Which of the following factors does not explain a movement along the AD curve? the expenditure multiplier effect the real-balances effect the interest-rate effect the foreign purchases effect

the expenditure multiplier effect

The foreign purchases, interest rate, and real-balances effects explain why the

aggregate demand curve is downward-sloping