This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Aggregate > Aggregate Demand – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 7 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which is untrue? Investment ..... A) Relates only to private investment. B) Improves the quality and quantity of the Factors of producti. C) Public sector comprises 25% of investment spending. D) Private sector comprises 75% of investment spending. Show Answer Correct Answer: A) Relates only to private investment. 2. Assume an economy is at full-employment equilibrium when a negative supply shock occurs. All the following will occur in the short-run except A) A decrease in aggregate demand. B) Stagflation. C) A decrease in real output. D) An increase in unemployment. Show Answer Correct Answer: A) A decrease in aggregate demand. 3. Which of the following does not lead to fall in AD? A) Fall in private consumption expenditure. B) Fall in exports. C) Fall in imports. D) Fall in government expenditure. Show Answer Correct Answer: C) Fall in imports. 4. If nominal wages fall, then short-run aggregate: A) Supply shifts to the right. B) Supply shifts to the left. C) Demand shifts to the right. D) Demand shifts to the left. Show Answer Correct Answer: A) Supply shifts to the right. 5. ..... refers to actual savings in an economy during a year. A) Ex-ante saving. B) Ex-post saving. C) APS. D) MPS. Show Answer Correct Answer: B) Ex-post saving. 6. The government lowers personal income taxes (taxes on income of households). A) Government spending. B) Consumption. C) Net exports. D) Investment. Show Answer Correct Answer: B) Consumption. 7. If exports from the Malaysia increased, what would most likely happen to real gross domestic product and price level?Real GDP / Price Level A) Increase/increase. B) Decrease/decrease. C) Increase/no change. D) Decrease/increase. Show Answer Correct Answer: A) Increase/increase. 8. A positive impact on investments could be due to A) Higher business confidence. B) Higher interest rates. C) Higher taxes. D) None of above. Show Answer Correct Answer: A) Higher business confidence. 9. The Keynesian AS curve range associated with low levels of output (economic activity). A) The Classical Range. B) The Intermediate Range. C) The Keynesian Range. D) None of the ranges are associated with low levels of output. Show Answer Correct Answer: C) The Keynesian Range. 10. Which of the following equations is correct? A) MPS = MPC. B) Multiplier = $ \frac{1}{MPC}$. C) MPC + MPS = 1. D) $ \frac{MPC}{MPS}=1$. Show Answer Correct Answer: C) MPC + MPS = 1. 11. If domestic price level falls relative to other countries, what is the effect on the AD curve? A) The AD curve shifts rightward. B) The AD curve shifts leftward. C) There is a downward movement along the AD curve. D) There is an upward movement along the AD curve. Show Answer Correct Answer: C) There is a downward movement along the AD curve. 12. Which is a drawback of investment? A) All three. B) Automation reduces employment. C) Negative externalities. D) Re-training costs of workers may be incurred. Show Answer Correct Answer: A) All three. 13. Under consumption spending, which of the following is NOT the determinant of aggregate demand? A) Changes in the level of household indebtedness. B) Changes in wealth. C) Changes (improvements) in technology. D) Changes in consumer confidence. Show Answer Correct Answer: C) Changes (improvements) in technology. 14. An increase in short-run aggregate supply could be caused by: A) An increase in wage rates. B) An increase in productivity. C) An adverse supply shock. D) All of the above. Show Answer Correct Answer: B) An increase in productivity. 15. An increase in the wealth of consumers will likely cause price level and unemployment to change in which of the following ways? NOTE:1ST PART OF ANSWER IS PRICE LEVEL, 2ND PART IS UNEMPLOYMENT A) INCREASE DECREASE. B) INCREASE INCREASE. C) INCREASE STAY THE SAME. D) DECREASE DECREASE. Show Answer Correct Answer: A) INCREASE DECREASE. 16. Aggregate demand will increase if: A) Consumption falls. B) Investment falls. C) Exports fall. D) Imports fall. Show Answer Correct Answer: D) Imports fall. 17. In the market for real output, the initial effect of an increase in the money supply is to A) Shift aggregate demand to the right. B) Shift aggregate demand to the left. C) Shift aggregate supply to the right. D) Shift aggregate supply to the left. Show Answer Correct Answer: A) Shift aggregate demand to the right. 18. A decrease in energy prices will: A) Decrease the quantity of aggregate output supplied in the short-run. B) Decrease aggregate demand. C) Increase the quantity of aggregate output demanded. D) Increase short-run aggregate supply. Show Answer Correct Answer: D) Increase short-run aggregate supply. 19. Increased investment affects.. A) AD in the SR and AS in theLR. B) AD only. C) AD and AS in the LR. D) AD and AS in the SR. Show Answer Correct Answer: A) AD in the SR and AS in theLR. 20. If MPC is .9 the MPS = A) .1. B) 1. C) 0. D) .9. Show Answer Correct Answer: A) .1. 21. A permanent negative supply shock leads to ..... output ..... A) Higher; in both the short and long runs. B) Higher; in the short run but not in the long run. C) Lower; in both the short and long runs. D) Lower; in the short run but not in the long run. Show Answer Correct Answer: C) Lower; in both the short and long runs. 22. An economy is more likely to avoid economic fluctuations if A) Prices adjust slowly. B) Prices adjust quickly. C) Prices don't send signals to producers and consumers. D) Prices prevent economic coordination. Show Answer Correct Answer: B) Prices adjust quickly. 23. What would be the effect of a decrease in regulations on businesses? A) Decrease AD. B) Increase SRAS. C) Decrease SRAS. D) Increase AD. Show Answer Correct Answer: B) Increase SRAS. 24. Savings can provide ..... A) The capital investment needed to promote long-term growth. B) A source of household wealth. C) A cushion for businesses during a recession. D) A break on consumption (paradox of thrift). Show Answer Correct Answer: C) A cushion for businesses during a recession. 25. If Karl increases his saving from $ 1, 500 to $ 1, 700 and his disposable income increases from $ 45, 000 to $ 49, 000, what is his MPC? A) 1.5. B) .5. C) 2. D) 1. Show Answer Correct Answer: B) .5. 26. Wage-price spiral is a consequence of: A) Inflationary gap. B) Deflationary gap. C) Stagflation. D) Both (a) and (c). Show Answer Correct Answer: A) Inflationary gap. 27. Consumption will rise and savings will fall if interest rates are ..... ? A) High. B) Cool. C) Low. D) Medium. Show Answer Correct Answer: C) Low. 28. Analyzing aggregate demand and aggregate supply provides economists with insights into which of the following areas? A) Deforestation of the Amazon. B) The Stock Market. C) Inflation, recessions and employment. D) Donald Trump's Tax returns. Show Answer Correct Answer: C) Inflation, recessions and employment. 29. What causes the shifts in the AD curve? A) The determinants of aggregate demand. B) Changes in the price level. C) Changes in marginal benefits of consumption. D) None of the above. Show Answer Correct Answer: A) The determinants of aggregate demand. 30. A major advantage of automatic stabilizers in fiscal policy is that they A) They require a balanced budget. B) Go into effect w/o passage of new legislation. C) Keep unemployment at zero percent. D) Reduce private debt. Show Answer Correct Answer: B) Go into effect w/o passage of new legislation. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesAggregate Demand Quiz 1Aggregate Demand Quiz 2Aggregate Demand Quiz 3Aggregate Demand Quiz 4Aggregate Demand Quiz 5Aggregate Demand Quiz 6Aggregate Demand Quiz 8Aggregate Demand Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books