1.The concept that people produce things because they demand other goods is referred to as:

a.Keynes' Law.

b.Say's law.

c.Friedman's law.

d.the Mises Message.

e.Rothbard's law.

2.Which of the following can be shown on the AS/AD model?

a.Inflation and growth.

b.Deflation and growth.

c.Inflation and depression.

d.Deflation and depression.

e.All of the above.

3.The AS/AD model is unable to show a situation in which we have _____ and _____ at the same time.

a.inflation;growth

b.deflation;growth

c.inflation;depression

d.deflation;depression

e.inflation; deflation.

4.As shown in the AS/AD model, an increase in the quantity of money results in a:

a.leftward movement along the aggregate demand schedule.

b.rightward movement along the aggregate demand schedule.

c.leftward shift of the aggregate demand schedule.

d.rightward shift of the aggregate demand schedule.

e.shifts in the aggregate demand that cannot be predicted.

5.A central bank can prevent deflation by conducting monetary policy that:

a.shifts the aggregate supply schedule rightward.

b.shifts the aggregate supply schedule leftward.

c.shifts the aggregate demand schedule rightward.

d.shifts the aggregate demand schedule leftward.

e.Both B and C are true.

For the next three questions, use the graph, above, which shows the aggregate demand (AD), the short run aggregate supply (AS-sr) and the long run aggregate supply (AS-lr) for an economy: