This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Aggregate > Aggregate Demand – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 4 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A change in any of the determinants of AD will A) Cause Prices to Increse. B) Shift the AD curve. C) Cause a movement along the AD curve. D) Increase the Price Elasticity of AD currve. Show Answer Correct Answer: B) Shift the AD curve. 2. A change in any of the following factors could cause the aggregate demand curve to shift except: A) Expectations. B) Monetary policy. C) Price level. D) Fiscal policy. Show Answer Correct Answer: C) Price level. 3. If MPC (Marginal Propensity to Consume) is high, how would an increase in income impact on the AD curve? A) No change. B) Shift left. C) Shift right. D) None of above. Show Answer Correct Answer: C) Shift right. 4. Aggregate demand consists of which components of aggregate expenditure? A) (C), (I), (G) and (X-M). B) (I), (G) and (X-M). C) (C), (I), (G) and (X). D) (C), (I), (G) and (M). Show Answer Correct Answer: A) (C), (I), (G) and (X-M). 5. All of the following can SHIFT aggregate supply, except A) Investments in infrastructure. B) Supply side shocks from trading partners. C) Changes in the price level. D) An innovation in technology. Show Answer Correct Answer: C) Changes in the price level. 6. Illustrate the effect of the following on LRAS diagrams.A loss arable land from deforestation A) Increase LRAS. B) Decrease LRAS. C) No changes to LRAS. D) None of above. Show Answer Correct Answer: B) Decrease LRAS. 7. A reduction in Interest rates will not tend to A) Discourage consumer expenditure. B) Shift the AD curve to the right. C) Expand investment expenditure. D) Cause a rise in the exchange rate. Show Answer Correct Answer: A) Discourage consumer expenditure. 8. Everything else held constant, an autonomous monetary policy easing ..... aggregate ..... A) Decreases; demand. B) Increases; demand. C) Decreases; supply. D) Increases; supply. Show Answer Correct Answer: B) Increases; demand. 9. An increase in aggregate demand will generate ..... in real GDP and ..... in the price level in the short-run A) No change; an increase. B) An increase; an increase. C) An increase; no change. D) A decrease; no change. Show Answer Correct Answer: B) An increase; an increase. 10. What is a recessionary gap? A) When ouput falls below potential. B) When output exceeds potentional. C) When output increases. D) When unemployment decreases. Show Answer Correct Answer: A) When ouput falls below potential. 11. The difference between tax revenue and government spending when government spending exceeds tax revenue. A) Budget balance. B) Budget surplus. C) Budget deficit. D) National savings. Show Answer Correct Answer: C) Budget deficit. 12. Changes in consumption, gross investment, government spending, or net exports will shift the ..... A) LRAS line. B) AD curve. C) AS curve. D) PPC. Show Answer Correct Answer: B) AD curve. 13. The multiplier effect means that A) Consumption is usually several times as large as savings. B) A change in consumption can cause a larger change in investment. C) An increase in investment can change GDP by a larger amount. D) A decline in MPC can cause GDP to rise by a larger amount. Show Answer Correct Answer: C) An increase in investment can change GDP by a larger amount. 14. An increase in which of the following shifts aggregate demand to the right? A) Consumption. B) Investment. C) Government expenditure. D) All of the above are correct. Show Answer Correct Answer: D) All of the above are correct. 15. In the UK, consumption roughly comprises ..... of AD A) 60%. B) 20%. C) 100%. D) 80%. Show Answer Correct Answer: A) 60%. 16. What will happen to UK if its trading partners in EU were to experience an Inc in econ activity A) Its AS curve would shift to the RT. B) Its AD curve would shift to the RT. C) Its AS curve would shift to the LT. D) Its AD curve would shift to the LT. Show Answer Correct Answer: B) Its AD curve would shift to the RT. 17. The Keynesian Aggregate Supply (AS) curve includes the ranges listed below except for: A) Classical Range. B) Intermediate Range. C) Non-essential Range. D) Keynesian Range. Show Answer Correct Answer: C) Non-essential Range. 18. The government injects £200 million, The multiplier is 1.5, what is the final rise in GDP? A) £215 million. B) £300 million. C) £3000 million. D) £250 million. Show Answer Correct Answer: B) £300 million. 19. If exports from the United States increased, what would most likely happen to real gross domestic product and price level? A) Decrease/increase. B) Increase/increase. C) Increase/no chanve. D) Decrease/decrease. Show Answer Correct Answer: B) Increase/increase. 20. What is most likely to rise following a contraction in AD? A) Investment expenditure. B) Consumption expenditure. C) Net Exports. D) Government spending. Show Answer Correct Answer: D) Government spending. 21. Tighter fiscal policies lead to A) An outwards shift of the AD. B) An outwards shift of the AS. C) An inwards shift of the AD. D) An outwards shift of the AS. Show Answer Correct Answer: C) An inwards shift of the AD. 22. If the dollar depreciates(decreases in value) because of speculation or government policy, or other countries are in a recession A) AS shifts left in the US. B) AD is unchanged in the US. C) AD shifts left in the US. D) AD shifts right in the US. Show Answer Correct Answer: C) AD shifts left in the US. 23. When aggregate supply exceeds aggregate demand, which point on the business cycle results? A) Recession. B) Peak. C) Recovery. D) None of above. Show Answer Correct Answer: A) Recession. 24. Which of the following components of monetary policy can be adopted to correct excess demand: A) Increase in repo rate. B) Increase in CRR. C) Increase in margin requirement. D) All of these. Show Answer Correct Answer: D) All of these. 25. 'Relationship between the aggregate output that buyers want to buy, and the price level ..... '.. A) The aggregate demand curve. B) The aggregate demand. C) The aggregate supply. D) The aggregate supply curve. Show Answer Correct Answer: A) The aggregate demand curve. 26. In the unemployment rate is low, then A) Real GDP will likely be low. B) Aggregate supply will be down. C) Aggregate demand will be low. D) Real GDP will likely be high. Show Answer Correct Answer: D) Real GDP will likely be high. 27. What would be the effect of an increase in taxes on consumers? A) Increase AD. B) Decrease AD. C) Decrease SRAS. D) Increase SRAS. Show Answer Correct Answer: B) Decrease AD. 28. Which of the following is not a determinant of aggregate demand? A) Change in Consumer Spending. B) Change in Government Spending. C) Change in Political Parties. D) Change in investment Spending. Show Answer Correct Answer: C) Change in Political Parties. 29. Consumption in the economy depends on all these factors EXCEPT. A) Corporate Taxes. B) Consumer Confidence. C) Interest Rates. D) Income Tax. Show Answer Correct Answer: A) Corporate Taxes. 30. Increasing taxes is a type of: A) Tight fiscal policy. B) Loose monetary policy. C) Tight monetary policy. D) Loose fiscal policy. Show Answer Correct Answer: A) Tight fiscal policy. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesAggregate Demand Quiz 1Aggregate Demand Quiz 2Aggregate Demand Quiz 3Aggregate Demand Quiz 5Aggregate Demand Quiz 6Aggregate Demand Quiz 7Aggregate Demand Quiz 8Aggregate Demand Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books