Question : The aggregate supply curve shows the relationship between:
Option 1: Price level and aggregate demand
Option 2: Price level and real GDP
Option 3: Interest rate and investment expenditure
Option 4: Inflation and unemployment
Correct Answer: Price level and real GDP
Solution : The correct answer is (b) Price level and real GDP
The aggregate supply curve shows the relationship between the price level in an economy and the level of real GDP (gross domestic product). It illustrates the quantity of goods and services that firms are willing and able to supply at different price levels. The aggregate supply curve typically has an upward slope, indicating that as the price level increases, firms are generally willing to produce and supply more output.
Question : The Phillips curve shows the relationship between:
Option 1: Inflation and unemployment
Option 2: Aggregate demand and aggregate supply
Option 3: Investment and saving
Option 4: Government expenditure and taxation
Option 2: GDP and inflation
Option 3: GDP and unemployment
Option 4: Interest rates and inflation
Question : The short-run Phillips curve suggests that there is a trade-off between:
Question : Demand-pull inflation occurs when:
Option 1: Aggregate demand exceeds aggregate supply
Option 2: Aggregate supply exceeds aggregate demand
Option 3: There is a decrease in aggregate demand
Option 4: There is a decrease in the aggregate supply
Option 3: Wages and input costs increase
Option 4: The government increases taxes
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