q2 When the real aggregate supply curve is upward sloping, increased expenditures lead to increased real GDP. The main reason for this is

• producers can always increase output to take advantage of profit opportunities.
• the availability of unemployed resources, such as labor and physical capital.
• a higher price level stimulates real GDP.

q3 Suppose an economy is defined by the following: C = 108 + 0.6 (Yd). The 108 in this algebraic equation represents the ________.

• consumption function
• marginal propensity to consume
• autonomous consumption

q4 When looking at the graph of an income-expenditure model where would the macro equilibrium be found?

• At the market level where supply equals demand.
• At the level of GDP where aggregate expenditure equals national income.
• At the level of GDP where GDP equals Potential GDP.