Aggregate Demand and Aggregate Supply
52 questions· page 1 of 6
With the help of a diagram, explain how increases in aggregate demand affect the level of real output and the price level in an economy and consider when such increases may become a problem.
Assess whether increases in aggregate demand are the best way of reducing unemployment in a high-income country.
Explain how the factor of production enterprise contributes to aggregate supply in a modern economy and how it differs from the other factors of production in terms of the reward for its services.
Explain how aggregate demand is likely to be affected by an increase in the money supply and consider whether the impact of such an increase will be on employment or on the general price level.
Explain, with the help of a diagram, what is meant by equilibrium national income, and show how this equilibrium changes when there is an increase in aggregate demand.
Discuss the factors that determine how much an increase in aggregate demand will affect prices, employment and the balance of payments of an economy.
Discuss whether an appreciation of a country’s foreign exchange rate is likely to cause both a rise in inflation and a decrease in employment in its economy.
Discuss the likely consequences for an economy of an increase in the money supply.
Discuss whether increased government spending on a country’s infrastructure will always lead to a rise in the rate of inflation. Use aggregate demand and aggregate supply analysis to support your answer.
With the help of an AD/AS diagram, explain what is meant by an expansionary fiscal policy and consider the extent to which an expansionary fiscal policy will always increase the level of aggregate demand.