Refer to the information provided in Figure 11.7 below to answer the questions that follow. PA LRAS AS Price level 400 700 800 Y Aggregate output (in millions) Figure 11.7 Refer to Figure 11.7 $700 million is the level of aggregate output that can be sustained in the long run Select one a only with unemployment b. without inflation c. only with deflation d. only with inflation Question 1 Government spending is a variable that is exogenous to the AS/AD model. Select one: True False By analyzing aggregate demand through its component parts, we can conclude that everything else held constant, a decline in the inflation rate causes Select one: a. an increase in real interest rates, an increase in investment spending and a decline in aggregate output demand. b. a decline in real interest rates, a decrease in investment spending, and an increase in aggregate output demand C. decline in real interest raten, an increase in investment pendid on ingregate outout demand d. an increase in real interest rates, a decline in investment spending and a decline in aggregate output demand CLEAR MY CHOICE Question 4 When the aggregate supply curve is horizontal, Select one: a. many firms are likely to have excess capacity. b. resources are being utilized at full capacity. c. the economy is close to full capacity. d. the prices level increases with additional production. Question 5 is the change in market value of capital over a given period. Select one: a. Accounting depreciation b. Implicit rental rate c Accounting implicit rental cost d. Economic depreciation Question 7 The long-run aggregate supply curve is Select one: a vertical at the full-employment level of real GDP b. horizontal at the full-employment price level. c. upward sloping because of the effects of price level changes on real GDP. d. the same as the short-run aggregate supply curve Question 9 The views of the new classical economists are consistent with a vertical aggregate supply curve in both the short run and the long run Select one True False