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A-Level Economics · Aggregate demand and aggregate supply · last updated

Aggregate demand and aggregate supply practice questions (A-Level Economics)

This theme covers the components and determinants of aggregate demand, short-run and long-run aggregate supply in the classical and Keynesian models, macroeconomic equilibrium, and the effects of shifts in AD and AS. Below are all 2 free A-Level Economics questions on it from our free exams, each with a worked answer behind a toggle, then 6 key terms with the formulas typeset, and a door to make an A-Level Economics-style paper on this topic from your own notes. The free exams are typeset PDFs with an answer key; the exam downloads without a signup.

Make a practice exam from your notes →Upload your notesA-Level Economics style preselected; tick "Aggregate demand and aggregate supply" on the next screen. Free to try, no card.

Sample questions

All 2 free A-Level Economics questions on this topic, from the free A-Level Economics Practice Paper and the free A-Level Economics Multiple Choice Questions with Answers. Each answer is behind its own toggle; the whole paper, its PDF and the full answer key are on the exam page.

  1. Question 11 mark · Aggregate demand
    In the aggregate demand identity AD=C+I+G+(X−M)AD = C + I + G + (X - M), which of the following is recorded as investment (II)?
    • A.
      a household buying newly issued shares in a housebuilding company
    • B.
      a supermarket chain building a new distribution warehouse
    • C.
      a household buying a new car for private use
    • D.
      the government building a new hospital
    From the free A-Level Economics Practice Paper →
  2. Question 21 mark · Aggregate demand and supply
    Which of the following would cause a leftward shift of the short-run aggregate supply curve, with no direct effect on aggregate demand?
    • A.
      A cut in income tax
    • B.
      A rise in the world price of oil
    • C.
      A rise in interest rates
    • D.
      An increase in the size of the labour force
    From the free A-Level Economics Multiple Choice Questions with Answers →

Key terms

The definitions and formulas A-Level Economics expects for aggregate demand and aggregate supply, typeset as they appear on the paper.

Aggregate demand (AD)
Total planned spending on an economy's goods and services at each price level. Consumption is the largest component in the UK (around 60 percent); investment is the most volatile.
AD=C+I+G+(X−M)AD = C + I + G + (X - M)
Determinants of consumption and investment
Consumption depends on disposable income, interest rates, consumer confidence, wealth effects (house and share prices) and the availability of credit. Investment depends on interest rates, business confidence, expected demand, access to credit and the accelerator effect.
Short-run aggregate supply (SRAS)
Output firms plan to supply at each price level with factor costs fixed. It shifts with changes in wages, raw material and energy prices, exchange rates (import costs) and indirect taxes.
Long-run aggregate supply (LRAS)
Potential output set by the quantity and quality of factors of production. Classical LRAS is vertical at full employment; Keynesian LRAS is horizontal at low output, then curves up to vertical, so AD can affect output when there is spare capacity.
Macroeconomic equilibrium
Where AD meets AS, determining the price level and real output. A rightward shift of AD raises output and prices in the short run; in the classical long run it raises only the price level.
Output gap
The difference between actual and potential output. A negative gap means spare capacity and cyclical unemployment; a positive gap means output above trend and inflationary pressure.

Frequently asked questions

Are there free aggregate demand and aggregate supply practice questions for A-Level Economics?

Yes. 2 questions on aggregate demand and aggregate supply appear in the free A-Level Economics Practice Paper and the free A-Level Economics Multiple Choice Questions with Answers, and the sample questions on this page come from them with worked answers. Each exam can be read online or downloaded as a typeset PDF without signing up, and its full answer key is emailed on request.

How do I make an A-Level Economics practice paper on aggregate demand and aggregate supply from my notes?

Open the create page with the A-Level Economics style preselected, tick "Aggregate demand and aggregate supply" under the units to cover (or upload your notes and slides on it), choose the question mix and time limit, and generate. You get a typeset PDF in the A-Level format with a separate answer key, in about a minute. It is free to try, no card needed.

What does A-Level Economics expect you to know about aggregate demand and aggregate supply?

This theme covers the components and determinants of aggregate demand, short-run and long-run aggregate supply in the classical and Keynesian models, macroeconomic equilibrium, and the effects of shifts in AD and AS. The terms to have cold: Aggregate demand (AD), Determinants of consumption and investment, Short-run aggregate supply (SRAS), Long-run aggregate supply (LRAS), Macroeconomic equilibrium. Each is defined below with its formula typeset where one applies.

What is the A-Level Economics exam format?

The A-Level Economics guide explains the papers, their timing and mark allocation, with a sample question and mark scheme and the common mistakes, and links to the generator with the A-Level Economics style preselected.

Other A-Level Economics topics

All A-Level Economics topics · A-Level Economics exam guide · All free practice exams

Make an A-Level Economics paper on aggregate demand and aggregate supply from your notes

Open "Pick your exam" with the A-Level Economics style preselected and tick "Aggregate demand and aggregate supply", or upload your notes on it. You get a typeset paper in the A-Level format with a separate answer key.

Make a practice exam from your notes →Upload your notes