This quiz works best with JavaScript enabled. Home > Macroeconomics > Aggregate > Aggregate Demand – Quiz 10 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 10 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The economy's long-run aggregate supply curve A) Slopes upward and to the right. B) Is vertical. C) Is horizontal. D) Slopes downward and to the right. Show Answer Correct Answer: B) Is vertical. 2. What is the marginal propensity to consume? A) Increase in consumption per extra unit of income. B) Decrease in wealth per extra unit of income. C) Increase in spending per extra unit of income gained. D) Increase in utility per extra unit of consumption. Show Answer Correct Answer: A) Increase in consumption per extra unit of income. 3. In macroeconomics, what does the horizontal axis measure? A) Total output, or real GDP of an economy. B) Price of total output. C) The long-term output. D) Quantity of a single good. Show Answer Correct Answer: A) Total output, or real GDP of an economy. 4. According to Keynesian analysis, if government expenditures and taxes are increased by the same amount, which of the following will occur? A) AS will decrease. B) AS will increase. C) AD will increase. D) Unemployment will increase. Show Answer Correct Answer: C) AD will increase. 5. ..... flexible wages and prices imply that the short-run aggregate supply curve is ..... A) More; flatter. B) Less; steeper. C) Less; vertical. D) More; steeper. Show Answer Correct Answer: D) More; steeper. 6. Consumption is not a function of A) Business confidence levels. B) Real interest rates. C) The average propensity to consume. D) Household income. Show Answer Correct Answer: A) Business confidence levels. 7. What will generally happen to the aggregate demand curve when consumer confidence is too low? A) Curve shifts left. B) No change in curve. C) Curve slopes up. D) Curve shifts right. Show Answer Correct Answer: A) Curve shifts left. 8. 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. 9. 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. 10. 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. 11. 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. 12. ..... refers to actual savings in an economy during a year. A) Ex-ante saving. B) APS. C) MPS. D) Ex-post saving. Show Answer Correct Answer: D) Ex-post saving. 13. The government lowers personal income taxes (taxes on income of households). A) Consumption. B) Investment. C) Government spending. D) Net exports. Show Answer Correct Answer: A) Consumption. 14. If exports from the Malaysia increased, what would most likely happen to real gross domestic product and price level?Real GDP / Price Level A) Decrease/decrease. B) Increase/increase. C) Decrease/increase. D) Increase/no change. Show Answer Correct Answer: B) Increase/increase. 15. 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. 16. 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. 17. Which of the following equations is correct? A) $ \frac{MPC}{MPS}=1$. B) Multiplier = $ \frac{1}{MPC}$. C) MPS = MPC. D) MPC + MPS = 1. Show Answer Correct Answer: D) MPC + MPS = 1. 18. If domestic price level falls relative to other countries, what is the effect on the AD curve? A) There is a downward movement along the AD curve. B) The AD curve shifts leftward. C) The AD curve shifts rightward. D) There is an upward movement along the AD curve. Show Answer Correct Answer: A) There is a downward movement along the AD curve. 19. 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. 20. Under consumption spending, which of the following is NOT the determinant of aggregate demand? A) Changes (improvements) in technology. B) Changes in consumer confidence. C) Changes in the level of household indebtedness. D) Changes in wealth. Show Answer Correct Answer: A) Changes (improvements) in technology. ← PreviousNext →Related QuizzesMacroeconomics QuizzesAggregate Demand Quiz 1Aggregate Demand Quiz 2Aggregate Demand Quiz 3Aggregate Demand Quiz 4Aggregate Demand Quiz 5Aggregate Demand Quiz 6Aggregate Demand Quiz 7Aggregate Demand Quiz 8Aggregate Demand Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books