True or false: the aggregate demand curve demonstrates an inverse relationship between the price level and real GDP.True false question.TrueFalse

The aggregate demand curve slopes downward because the relationship between the price level and real GDP is:Multiple choice question.positivedirectinverse

True or False QuestionTrue or false: If the price level is below macroeconomic equilibrium, there will be a surplus of real GDP.True false question.TrueFalse

Along the horizontal range of the aggregate supply curve, an increase in the aggregate demand curve will increase:Group of answer choicesboth the price level and real GDP.only real GDP.only the price level.real GDP and reduce the price level.

The upward sloping segment of the aggregate supply curve is where:Question 35Select one:a.substantial growth of real GDP can be produced without any increase in the price level (inflation).b.increased price levels result in a corresponding increased real output in the economy.c.price levels (inflation) can rise without increases in real output in the economy.d.is when all available labor resources are being used in the most efficient way possible.e.no growth of real GDP can be produced even with increases in the price levels.

If the aggregate demand curve (AD) presented in lectures is constructed by allowing the price level to vary in the IS/LM model with rate-setting monetary policy (i.e. an interest rate rule), then, ceteris paribusGroup of answer choicesthe price level and real income will not be inversely related because the rate of interest is kept constant under rate-setting monetary policylower price levels will be associated with higher levels of investment expenditurea rise in the target price level will lead to a leftward shift of the aggregate demand curvehigher price levels are associated with lower rates of interest and thus lower levels of income