This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Aggregate > Aggregate Demand – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 5 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Consumption relates to the purchase of ..... A) Durable goods. B) Non-durable goods. C) Tangible products. D) Intangible services. Show Answer Correct Answer: A) Durable goods. 2. If C = 450 and Y = 1, 000, the average propensity to consume will be: A) 0.45. B) 450. C) 750. D) 0.75. Show Answer Correct Answer: A) 0.45. 3. The only government policy that has a DIRECT effect on the aggregate demand curve is: A) Changing the quantity of money. B) Changing the tax rate. C) Changing the level of government purchases of final goods and services. D) Changing the level of government transfers. Show Answer Correct Answer: C) Changing the level of government purchases of final goods and services. 4. Which graph shows tradeoffs amid conditions of scarce resources? A) Money Market. B) Loanable Funds. C) Phillips Curve. D) Production Possibilities. Show Answer Correct Answer: D) Production Possibilities. 5. An economy is in macroeconomic equilibrium. If Y = 200, C =100, I =30, G=40 and M =30, what is the value of exports? A) 40. B) 50. C) 90. D) 60. Show Answer Correct Answer: D) 60. 6. Consumers spending $ 120 from a wage increase of $ 200 implies: A) An MPS of 0.8 and a multiplier of 5. B) An MPS of 0.4 and a multiplier of 2.5. C) An MPS of 0.6 and a multiplier of 2. D) An MPS of 0.4 and a multiplier of 3.5. Show Answer Correct Answer: B) An MPS of 0.4 and a multiplier of 2.5. 7. The long-run effect of an increase in the money supply is to A) Increase the price level. B) Decrease the price level. C) Increase the interest rate. D) Decrease the interest rate. Show Answer Correct Answer: A) Increase the price level. 8. A higher domestic price level will result in A) Higher imports. B) Higher exports. C) Probably both higher imports and higher exports. D) Higher net exports. Show Answer Correct Answer: A) Higher imports. 9. With an MPS of 0.2, an increase in government spending of $ 240 m will result in the equilibrium level of income rising by A) $ 2400m. B) $ 960m. C) $ 1200m. D) $ 480m. Show Answer Correct Answer: C) $ 1200m. 10. The short-run aggregate supply curve shifts in response to a change in: A) Consumption. B) Government purchases. C) Overall costs of production. D) All of the above. Show Answer Correct Answer: C) Overall costs of production. 11. How much people save rather than consume when there is a change in income A) Average Propensity to Save. B) Marginal Propensity to Consume. C) Marginal Propensity to Save. D) Average Propensity to Consume. Show Answer Correct Answer: C) Marginal Propensity to Save. 12. What is most likely to happen if (X-M) shows a surplus of imports? A) Appreciation of currency, shift of AD to the left. B) Appreciation of currency, shift to the right. C) Depreciation of currency, shift of AD to the right. D) Depreciation of currency, shift of AD to left. Show Answer Correct Answer: D) Depreciation of currency, shift of AD to left. 13. MPS = 0.1 MPT = 0.2 MPM = 0.2 what is the value of the multiplier? A) 2. B) 0.3. C) 0.5. D) 3.333. Show Answer Correct Answer: A) 2. 14. The aggregate supply curve shows the relationship between the aggregate price level and: A) Aggregate employment. B) The aggregate money supply. C) The aggregate unemployment rate. D) Aggregate output supplied. Show Answer Correct Answer: D) Aggregate output supplied. 15. During recessions, which types of spending falls? A) Consumption and investment. B) Investment but not consumption. C) Consumption but not investment. D) Consumption and government. Show Answer Correct Answer: A) Consumption and investment. 16. New technology leads to a ..... in demand for funds for investment. A) Decrease. B) Halt. C) Surplus. D) Increase. Show Answer Correct Answer: D) Increase. 17. Net exports will increase if: A) There is a decrease in foreign Real GDP. B) The exchange rate for the dollar depreciates. C) Both of the above. D) Neither of the above. Show Answer Correct Answer: B) The exchange rate for the dollar depreciates. 18. Tax multiplier = A) MPC/MPS. B) 1 more than spending multiplier. C) MPS/MPC. D) 1 Less than spending multiplier. Show Answer Correct Answer: A) MPC/MPS. 19. In an average capitalist economy, what percentage of AD does consumption account for? A) 50%. B) 60%. C) 70%. D) 80%. Show Answer Correct Answer: B) 60%. 20. Which of the following would increase aggregate demand? A) Increasing import spending. B) Increased saving. C) Increased taxation revenue. D) Increased investment. Show Answer Correct Answer: D) Increased investment. 21. The SRAS curve shows the relationship between A) Price and Quantity. B) Price Level and Real Output. C) Price and Real Output. D) None of the above. Show Answer Correct Answer: B) Price Level and Real Output. 22. The short run aggregate supply curve will shift to the left if A) The price level increases. B) The statutory retirement age is raised. C) Firms expect the price level to increase. D) Oil prices decrease. Show Answer Correct Answer: C) Firms expect the price level to increase. 23. Which is the least likely determinant of government expenditure in the UK? A) Public sector debt. B) The economic situation. C) Perceived degree of market of market failure. D) The exchange rate. Show Answer Correct Answer: D) The exchange rate. 24. Which of the following government policies will cause the AD curve and the AS curves to shift to the right? A) Lowering the salaries tax rate. B) Putting more resources into on-the-job training programmes. C) Raising the sales tax rate. D) Abolishing unemployment benefits. Show Answer Correct Answer: B) Putting more resources into on-the-job training programmes. 25. Which of the following would cause the aggregate supply curve to shift? A) Cost of production change. B) Change in interest rates. C) Government spending. D) Change in consumer spending. Show Answer Correct Answer: A) Cost of production change. 26. The intersection of the aggregate demand and aggregate supply curve occurs at the economy' s equilibrium level of A) Nominal investment and the interest rate. B) Government taxes and employment. C) Real disposable income and unemployment. D) Real domestic output and the price level. Show Answer Correct Answer: D) Real domestic output and the price level. 27. When the government spends more, the initial effect is that A) Aggregate demand shifts right. B) Aggregate demand shifts left. C) Aggregate supply shifts right. D) Aggregate supply shifts left. Show Answer Correct Answer: A) Aggregate demand shifts right. 28. Disposable Income = A) Gross income + Net Taxes. B) Gross income + total taxes. C) Gross income / Net Taxes. D) Gross income-Net Taxes. Show Answer Correct Answer: D) Gross income-Net Taxes. 29. The multiplier is: A) 1/1+MPC. B) 1/MPC. C) 1/1-MPS. D) 1/MPS. Show Answer Correct Answer: D) 1/MPS. 30. Find S when C=200, MPS = 0.4 & Y = 1000 A) 400. B) 420. C) 200. D) 210. Show Answer Correct Answer: C) 200. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesAggregate Demand Quiz 1Aggregate Demand Quiz 2Aggregate Demand Quiz 3Aggregate Demand Quiz 4Aggregate Demand Quiz 6Aggregate Demand Quiz 7Aggregate Demand Quiz 8Aggregate Demand Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books