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2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

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Question 87

A country's manufacturing sector experiences a 25% increase in the market price of industrial metals and electricity. On an AD/AS diagram, the immediate effects are shown by a shift left in:

A

both the aggregate demand curve and the short-run aggregate supply curve.

B

the aggregate demand curve as consumers reduce discretionary spending.

C

the long-run aggregate supply curve as firms permanently divest from manufacturing.

D

the short-run aggregate supply curve as firms face higher costs of production.

Markscheme

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions

  1. A Level
  2. /Economics
  3. /2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.

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