1. The short-run aggregate supply curve shows:   a. The relationship between the price level and aggregate expenditure b. What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during a period in which output prices can change but input prices are fixed c. How firms respond to changes in interest rates d. What happens to output in an economy when the government spends more money

1. Aggregate supply definitions The short-run aggregate supply curve shows: What happens to output in an economy as the actual price level changes, holding all other determinants of real GDP constant What happens to output in an economy when the government spends more money How firms respond to changes in interest rates The relationship between the price level and aggregate expenditure The term potential output refers to: The quantity of output produced when the price level is the same as firms and workers expected when they agreed on resource prices and wages The quantity of output that would be produced if every member of the labor force worked 40 hours per week The quantity of output produced at the intersection of the AD and AS curves The maximum possible output for an economy In macroeconomics, the term short run refers to: A period of time long enough for all resource prices and wages to be renegotiated A period of 10 years A period of time in which some resource prices and wages…

The downward slope of the aggregate-demand curve shows that: The downward slope of the aggregate-demand curve shows that:       A.  a fall in the price level reduces the overall quantity of goods and services demanded     B.  a rise in the price level increases the overall quantity of goods and services demanded     C.  a fall in the price level has no effect on the overall quantity of goods and services demanded     D.  a fall in the price level increases the overall quantity of goods and services demanded

1. Which of the following policies should increase aggregate demand, short-run aggregate supply, and long-run aggregate supply? A. Reduction in the corporate profits tax B. Higher transfer payments for retirees C. Central bank sells government bonds D. Reduced taxes on low-income households E. Reduced government spending on infrastructure