This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Aggregate > Aggregate Demand – Quiz 9 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 9 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What would be the effect of an increase in imports? A) Decrease AD. B) Increase SRAS. C) Decrease SRAS. D) Increase AD. Show Answer Correct Answer: A) Decrease AD. 2. Which of the following events shifts the short-run aggregate supply curve to the right? A) An increase in price expectations. B) An increase in government spending on military equipmentd. C) A decrease in the money supply. D) A drop in oil prices. Show Answer Correct Answer: D) A drop in oil prices. 3. What is on the "Y" axis on an AD/AS Model? A) Price level. B) Real GDP. C) Ouput. D) Price. Show Answer Correct Answer: A) Price level. 4. Real output means the same thing as the following terms except for ..... A) Real GDP. B) Quantity. C) Real National Income. D) Total Real Output. Show Answer Correct Answer: B) Quantity. 5. Illustrate the effect of the following on LRAS diagrams.A rise in interest rates A) Increase LRAS. B) Decrease LRAS. C) No changes to LRAS. D) None of above. Show Answer Correct Answer: C) No changes to LRAS. 6. The multiplier effect shows A) How spending is magnified in the economy. B) How often the economy can survive recessions. C) How much the government can spend from their budget. D) How much consumers can spend from their paychecks. Show Answer Correct Answer: A) How spending is magnified in the economy. 7. A temporary negative supply shock ..... real interest rates and ..... output in the short run, thereby its effect on stock prices is ..... A) Raises; lowers; negative. B) Lowers; raises; positive. C) Lowers; raises; negative. D) Raises; raises; ambiguous. Show Answer Correct Answer: A) Raises; lowers; negative. 8. Which factor increases saving? A) Concerns with future income and job security. B) Increased taxation on saving. C) Consumers requiring smaller deposits to buy a house. D) Reduced availability of saving institutions. Show Answer Correct Answer: A) Concerns with future income and job security. 9. Which of the following would NOT cause a shift in AD? A) A reduction in income tax. B) A reduction in interest rates. C) An increase in government spending. D) A fall in the cost of production. Show Answer Correct Answer: D) A fall in the cost of production. 10. If C = 450 & Y = 1000, the APC will be A) 450. B) .75. C) 750. D) .45. Show Answer Correct Answer: D) .45. 11. Consumption function is a functional relationship between: A) Income and saving. B) Price and consumption. C) Consumption and income. D) Consumption and saving. Show Answer Correct Answer: C) Consumption and income. 12. If investment increases from 400 to 550 and income increases from 900 to 1650, the MPS should be equal to: A) 0.3. B) 0.1. C) 0.2. D) 0.4. Show Answer Correct Answer: C) 0.2. 13. Which of the following is TRUE? A) Investment can never lead to inflation. B) Increased investment could trigger inflation in the SR. C) Increased investment always shifts AD right. D) Increased investment has no impact on AD. Show Answer Correct Answer: B) Increased investment could trigger inflation in the SR. 14. In an average capitalist economy, how much of AD does (X-M) account for? A) 9-10%. B) 7-8%. C) 1-2%. D) 5-6%. Show Answer Correct Answer: C) 1-2%. 15. Looser monetary policies lead to A) An outwards shift of the AS. B) An inwards shift of the AD. C) An outwards shift of the AD. D) An inwards shift of the AS. Show Answer Correct Answer: C) An outwards shift of the AD. 16. Keynes theory of GDP determination is based on the assumption of A) A closed economy. B) Short period analysis. C) AS is perfectly INelastic. D) BOTH A AND B. Show Answer Correct Answer: D) BOTH A AND B. 17. Which components of GDP are also components of aggregate demand? A) Consumption and investment. B) Government spending and net exports. C) All of the above. D) None of the above. Show Answer Correct Answer: C) All of the above. 18. Which of the following would likely cause the short-run aggregate supply curve to shift to the left? A) A decrease in the price of imported oil. B) An increase in consumer spending. C) An increase in the price of imported oil. D) A decrease in consumer spending. Show Answer Correct Answer: C) An increase in the price of imported oil. 19. If countries that imported from the US went into a recession, U.S. net exports would A) Rise, making aggregate demand shift right. B) Rise, making aggregate demand shift left. C) Fall, making aggregate demand shift right. D) Fall, making aggregate demand shift left. Show Answer Correct Answer: D) Fall, making aggregate demand shift left. 20. GDP expressed in constant, or unchanging, (adjusted for inflation) prices is called A) Real GDP. B) Nominal GDP. C) GNP. D) Price level. Show Answer Correct Answer: A) Real GDP. 21. What is represented on the "X" axis on the AD/AS Model? A) Real GDP. B) Price level. C) Nominial GDP. D) Price. Show Answer Correct Answer: A) Real GDP. 22. Spending Multiplier = A) 1/ MPS. B) 1 X MPS. C) 1 X MPC. D) 1/ MPC. Show Answer Correct Answer: A) 1/ MPS. 23. What is the equation for aggregate demand? A) G+U = (X-M). B) C+I+G+ (X-M). C) (X-M) = G+I+C. D) None of above. Show Answer Correct Answer: B) C+I+G+ (X-M). 24. 'The total amount of real output that consumers, firms, gov. and foreigners want to buy ..... '.. A) Aggregate demand. B) Aggregate supply. C) Total income. D) Potential GDP. Show Answer Correct Answer: A) Aggregate demand. 25. Unemployment is high and GDP is declining. To improve conditions, the government increases spending by $ 5B. If the MPC is .75, by how much will GDP rise? A) $ 5B. B) $ 10B. C) $ 15B. D) $ 20B. Show Answer Correct Answer: D) $ 20B. 26. Aggregate supply and ..... are always equal. A) National income. B) Aggregate demand. C) Marginal propensity to save. D) Average propensity to consume. Show Answer Correct Answer: A) National income. 27. All of the following would increase consumption EXCEPT A) Decrease in interest rates. B) Increase in personal income taxes. C) Decrease in existing consumer debt. D) Increase in household incomes. Show Answer Correct Answer: B) Increase in personal income taxes. 28. How do you calculate the multiplier? A) 1/ Propensity to save + tax + import. B) 1 / 1-Marginal propensity to save. C) 1/ Marginal propensity to consume. D) 1 / Aggregate Demand-imports. Show Answer Correct Answer: A) 1/ Propensity to save + tax + import. 29. Ceteris paribus, what will happen to net exports when the real exchange rate decreases? A) Net exports will increase. B) Net exports will fall. C) Net exports are unaffected in the long run. D) Net exports will go into deficit. Show Answer Correct Answer: A) Net exports will increase. 30. Fear of a looming trade war will shift which of the following? A) Aggregate demand to the right. B) Aggregate demand to the left. C) Aggregate supply to the right. D) Aggregate supply to the left. Show Answer Correct Answer: B) Aggregate demand to the left. ← 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 7Aggregate Demand Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books