Aggregate Demand and Aggregate Supply analysis
4.3What the syllabus asks of you
- definition of Aggregate Demand (AD)
- components of AD and their meanings: AD = C + I + G + (X – M)
- determinants of AD (detailed knowledge of the components of AD is not required)
- shape of the AD curve (downward sloping)
- causes of a shift in the AD curve
- definition of Aggregate Supply (AS)
- determinants of AS
- shape of the AS curve in the short run (SRAS, upward sloping line or sweeping curve) and the long run (LRAS, either a vertical line or in three sections – highly elastic, upward sloping, vertical)
- causes of a shift in the AS curve in the short run (SRAS) and in the long run (LRAS)
- distinction between a movement along and a shift in AD and AS
- establishment of equilibrium in the AD/AS model and the determination of the level of real output, the price level and employment
- effects of shifts in the AD curve and the AS curve on the level of real output, the price level and employment
Drill this topic
Every question on Aggregate Demand and Aggregate Supply analysis, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
57 questions
1May / June 2026 · Paper 11 · Q19Show mark scheme →
Athe current rate of GDP growth is less than the country's target rate
Bthe economy is experiencing low rates of inflation
Cthe economy is in recession
Dthe economy is operating at full capacity
Mark scheme
2May / June 2026 · Paper 12 · Q20Show mark scheme →
AA
BB
CC
DD
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3May / June 2026 · Paper 12 · Q25Show mark scheme →
Aeducation
Bhealthcare
Croads
Dtransfer payments
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4May / June 2026 · Paper 14 · Q24Show mark scheme →
Adecrease; decrease
Bdecrease; unchanged
Cincrease; unchanged
Dunchanged; increase
Mark scheme
5Oct / Nov 2025 · Paper 11 · Q20Show mark scheme →
Aa decrease in the exchange rate
Ba decrease in the interest rate
Can increase in the budget deficit
Dan increase in the current account deficit
Mark scheme
6Oct / Nov 2025 · Paper 11 · Q21Show mark scheme →
AA
BB
CC
DD
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7Oct / Nov 2025 · Paper 12 · Q17Show mark scheme →
Agovernment campaigns to encourage household savings
Bconsumption of domestic instead of foreign goods
Ca decrease in the budget surplus
Dinvestment in knowledge-based enterprises
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8Oct / Nov 2025 · Paper 14 · Q17Show mark scheme →
AAdditional productive capacity must be created.
BGovernment investment must remain at a constant level to stabilise supply.
CGreater reliance must be placed on imported goods to overcome any domestic shortfalls.
DWage rates must change more frequently to maintain levels of employment and output.
Mark scheme
9Oct / Nov 2025 · Paper 31 · Q20Show mark scheme →
AThe multiplier has a small value.
BThe consumer price index is below its target set by the central bank.
CThe economy is operating on the vertical section of the long-run aggregate supply curve.
DThere is a large negative output gap in the economy.
Mark scheme
10May / June 2025 · Paper 11 · Q19Show mark scheme →
AThe long-run aggregate supply curve can be downward sloping.
BThe long-run aggregate supply curve can be horizontal.
CThe long-run aggregate supply curve can be upward sloping.
DThe long-run aggregate supply curve can be vertical.
Mark scheme
11May / June 2025 · Paper 12 · Q18Show mark scheme →
AA fall in the price level will lead to a rise in demand for imports.
BAs the price level falls, improved productivity will reduce unit costs.
CIf the price level is high, any interest rate changes will encourage consumption.
DThe real value of assets increases as the price level falls.
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12May / June 2025 · Paper 12 · Q25Show mark scheme →
A
B
C
D
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13May / June 2025 · Paper 13 · Q18Show mark scheme →
A
B
C
D
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14Feb / March 2025 · Paper 12 · Q18Show mark scheme →
Aincreased direct taxation — F
Bincreased government spending on infrastructure — G
Cappreciation of the exchange rates — H
Ddecreased interest rates — J
Mark scheme
15Oct / Nov 2024 · Paper 11 · Q19Show mark scheme →
Anegative | quantity | price level
Bpositive | real output | price level
Cpositive | real output | price
Dpositive | price level | real output
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16Oct / Nov 2024 · Paper 12 · Q17Show mark scheme →
Aa fall in income equality
Ba fall in incomes abroad
Ca fall in the exchange rate
Da fall in the government budget deficit
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17Oct / Nov 2024 · Paper 12 · Q22Show mark scheme →
A
B
C
D
Mark scheme
18Oct / Nov 2024 · Paper 13 · Q19Show mark scheme →
Ahigh | high
Bhigh | low
Clow | high
Dlow | low
Mark scheme
19May / June 2024 · Paper 11 · Q18Show mark scheme →
Adecrease rate of inflation, decrease unemployment
Bdecrease rate of inflation, increase unemployment
Cunchanged rate of inflation, decrease unemployment
Dunchanged rate of inflation, increase unemployment
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20May / June 2024 · Paper 11 · Q19Show mark scheme →
AIt leads to an increase in interest rates.
BIt reduces the real value of money balances.
CIt makes the country’s goods cheaper relative to foreign goods.
DIt leads to the expectation of further price falls.
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21May / June 2024 · Paper 13 · Q15Show mark scheme →
ADiagram A: AS shifts right from AS1 to AS2, AD1 unchanged, price level falls from P1 to P2
BDiagram B: AD shifts left from AD1 to AD2, AS1 unchanged, price level falls from P1 to P2
CDiagram C: AS shifts left from AS1 to AS2, AD1 unchanged, price level rises from P1 to P2
DDiagram D: AD shifts right from AD1 to AD2, AS1 unchanged, price level rises from P1 to P2
Mark scheme
22May / June 2024 · Paper 13 · Q16Show mark scheme →
ANominal GDP has increased.
BNominal GDP is unchanged.
CReal GDP has increased.
DReal GDP has fallen.
Mark scheme
23Feb / March 2024 · Paper 12 · Q19Show mark scheme →
Aconsumption expenditure.
Bgovernment expenditure.
Cimport expenditure.
Dinvestment expenditure.
Mark scheme
24Feb / March 2024 · Paper 12 · Q22Show mark scheme →
Adecrease income tax; decrease sales tax
Bdecrease income tax; increase sales tax
Cincrease income tax; decrease sales tax
Dincrease income tax; increase sales tax
Mark scheme
25Oct / Nov 2023 · Paper 11 · Q16Show mark scheme →
AAD1
BAD2
CAD3
DAD4
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26Oct / Nov 2023 · Paper 11 · Q21Show mark scheme →
AIt will increase aggregate supply.
BMore schools will be built.
CThe government will have to raise taxes.
DWorkers will be more highly skilled.
Mark scheme
27Oct / Nov 2023 · Paper 13 · Q20Show mark scheme →
Aa decline in the country's international competitiveness.
Ban increase in interest rates.
Can increase in the real value of money balances.
Dthe expectation of further price falls.
Mark scheme
28May / June 2023 · Paper 11 · Q18Show mark scheme →
AAs prices fall, the demand for exports becomes more elastic.
BAs prices fall, fewer goods are imported.
CAs prices fall, the rate of interest will rise.
DAs prices fall, real wealth rises and so spending increases.
Mark scheme
29May / June 2023 · Paper 11 · Q19Show mark scheme →
Ahigher subsidies and higher indirect taxes
Bhigher subsidies and lower indirect taxes
Clower subsidies and higher indirect taxes
Dlower subsidies and lower indirect taxes
Mark scheme
30May / June 2023 · Paper 11 · Q21Show mark scheme →
A
B
C
D
Mark scheme
31May / June 2023 · Paper 12 · Q18Show mark scheme →
Athe nominal income level
Bthe price level
Cthe unemployment level
Dthe wage level
Mark scheme
32May / June 2023 · Paper 12 · Q19Show mark scheme →
ADomestic interest rates will tend to fall.
BImports become more price competitive.
CReal incomes fall.
DThe purchasing power of savings falls.
Mark scheme
33May / June 2023 · Paper 13 · Q25Show mark scheme →
Aa decrease in the competitiveness of domestically produced products
Ba decrease in the general price level
Ca decrease in the money supply
Da depreciation of the country's exchange rate
Mark scheme
34May / June 2023 · Paper 13 · Q26Show mark scheme →
Aa decrease in exports
Ba decrease in labour productivity
Can increase in the government's spending
Dan increase in the money supply
Mark scheme
35May / June 2023 · Paper 13 · Q28Show mark scheme →
Achange in AD from W to Y | increase in population
Bdecrease in raw material costs | improvements in the education of workers
Cdecrease in wage rates | decrease in immigration
Dincrease in availability of labour | increase in labour productivity
Mark scheme
36Feb / March 2023 · Paper 12 · Q21Show mark scheme →
A
B
C
D
Mark scheme
37Oct / Nov 2022 · Paper 11 · Q22Show mark scheme →
ADiagram A
BDiagram B
CDiagram C
DDiagram D
Mark scheme
38Oct / Nov 2022 · Paper 12 · Q20Show mark scheme →
Abudget deficit
Bconsumer savings
Cgeneral price level
Dinterest rate
Mark scheme
39Oct / Nov 2022 · Paper 13 · Q21Show mark scheme →
Aaggregate demand decreases; short-run aggregate supply decreases
Baggregate demand decreases; short-run aggregate supply unchanged
Caggregate demand increases; short-run aggregate supply decreases
Daggregate demand unchanged; short-run aggregate supply decreases
Mark scheme
40Oct / Nov 2022 · Paper 13 · Q24Show mark scheme →
Adownward shift of the aggregate demand curve
Bdownward shift of the aggregate supply curve
Can upward shift of the aggregate demand curve
Dan upward shift of the aggregate supply curve
Mark scheme
41Oct / Nov 2022 · Paper 33 · Q25Show mark scheme →
AKeynesian: decreasing AD will always lead to an increase in economic growth; Monetarist: economic growth is achieved using fiscal policy
BKeynesian: increasing AD brings the economy out of recession; Monetarist: the economy always tends to full employment in the long run
CKeynesian: increasing AD will always lead to increased employment; Monetarist: economic growth is achieved by cutting taxation
DKeynesian: increasing AS brings the economy out of recession; Monetarist: full employment will always be achieved in the long run
Mark scheme
42May / June 2022 · Paper 12 · Q19Show mark scheme →
AExports increased.
BImports increased.
CSavings increased.
DTaxes increased.
Mark scheme
43May / June 2022 · Paper 12 · Q27Show mark scheme →
AA rise in inflation is expected.
BConsumers face a fall in their disposable income.
CDomestic firms' costs have increased.
DThe government reduces tax on oil and petroleum products.
Mark scheme
44May / June 2022 · Paper 13 · Q19Show mark scheme →
Amoney national output | real disposable income
Bprice level | real GDP
Creal GDP | price level
Dreal disposable income | money national output
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45May / June 2022 · Paper 13 · Q21Show mark scheme →
AIt is a curve obtained by adding the market demand curves of all consumer goods traded in an economy.
BIt is a curve determined by the horizontal summation of all individual consumer demand curves for a product.
CIt is a curve that shows the total amount of goods and services firms are willing to buy at a given price in an economy.
DIt is a curve that shows the total demand of all goods and services produced at all price levels in an economy.
Mark scheme
46May / June 2022 · Paper 13 · Q29Show mark scheme →
Aan increase in the exchange rate that makes locally produced goods less price-competitive, both at home and abroad
Ban increase in government spending on infrastructure that increases the production potential of the economy
Can increase in interest rates that increases the cost of borrowing
Dan increase in real wages of labour
Mark scheme
47May / June 2022 · Paper 14 · Q24Show mark scheme →
AAS decreases; price level falls
BAS increases; price level falls
CAS decreases; price level rises
DAS increases; price level rises
Mark scheme
48May / June 2022 · Paper 31 · Q28Show mark scheme →
Abusiness confidence
Bcompany profits
Cinterest rates
Dnational income
Mark scheme
49May / June 2022 · Paper 33 · Q28Show mark scheme →
Abusiness confidence
Bcompany profits
Cinterest rates
Dnational income
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50Feb / March 2022 · Paper 12 · Q22Show mark scheme →
Aequilibrium level of national income: falls; equilibrium level of prices: uncertain
Bequilibrium level of national income: no change; equilibrium level of prices: no change
Cequilibrium level of national income: rises; equilibrium level of prices: rises
Dequilibrium level of national income: uncertain; equilibrium level of prices: rises
Mark scheme
51Feb / March 2022 · Paper 12 · Q23Show mark scheme →
Aa decrease in income tax
Ba decrease in the price of goods
Can increase in money wage rates
Dan increase in the money supply
Mark scheme
52Feb / March 2022 · Paper 32 · Q26Show mark scheme →
AA change in the money supply is the main determinant of the rate of inflation.
BWhen unemployment falls below its natural rate, there is upward pressure on prices.
CTotal spending in the economy affects real output and employment in the short run.
DWages and prices are flexible so output and employment will always return to its equilibrium rate.
Mark scheme
53Oct / Nov 2021 · Paper 13 · Q23Show mark scheme →
Aa decrease in the exchange rate
Ba decrease in the price level
Ca fall in immigration
Da fall in the average level of wages
Mark scheme
54Oct / Nov 2021 · Paper 13 · Q30Show mark scheme →
Aconsumption + investment + government spending + (exports – imports)
Bconsumption + investment + taxation – (exports – imports)
Cconsumption + saving + taxation – (exports – imports)
Dconsumption + saving + taxation + (exports – imports)
Mark scheme
55Oct / Nov 2021 · Paper 31 · Q26Show mark scheme →
Awages flexible; investment interest rates elastic
Bwages flexible; investment interest rates inelastic
Cwages not flexible; investment interest rates elastic
Dwages not flexible; investment interest rates inelastic
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56Oct / Nov 2021 · Paper 33 · Q28Show mark scheme →
AY1 to Y3.
BY1 to Y4.
CY2 to Y3.
DY2 to Y4.
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57May / June 2021 · Paper 12 · Q19Show mark scheme →
Aa rise in the demand for exports
Ba rise in the price of raw materials
Ca rise in the productivity of labour
Da rise in the rate of sales tax
Mark scheme