1) Everything else held constant, aggregate demand AD increases whern A) government spending is reduced. C) business investment declines. ) the money supply is reduced. D) taxes are cut. 2) The aggregate supply curve shows the relationship between A) the inflation rate and the level of aggregate output. B) the level of inputs and aggregate output. C) the wage rate and the level of employment. D) the inflation rate and the level of inputs. 3) Suppose the economy is producing at less than full employment. An open market purchase of in real GDP and nds by the Fed will cause A) an increase; an increase C) no change; an increase in inflation in the short run. B) a decrease; a decrease D) no change; a decrease