This quiz works best with JavaScript enabled. Home > Macroeconomics > Aggregate > Aggregate Demand – Quiz 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 11 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. 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. 2. 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 INCREASE. B) INCREASE DECREASE. C) INCREASE STAY THE SAME. D) DECREASE DECREASE. Show Answer Correct Answer: B) INCREASE DECREASE. 3. Aggregate demand will increase if: A) Consumption falls. B) Investment falls. C) Exports fall. D) Imports fall. Show Answer Correct Answer: D) Imports fall. 4. 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. 5. 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. 6. 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. 7. If MPC is .9 the MPS = A) .1. B) 0. C) 1. D) .9. Show Answer Correct Answer: A) .1. 8. 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. 9. 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. 10. What would be the effect of a decrease in regulations on businesses? A) Increase AD. B) Decrease AD. C) Increase SRAS. D) Decrease SRAS. Show Answer Correct Answer: C) Increase SRAS. 11. Savings can provide ..... A) A cushion for businesses during a recession. B) The capital investment needed to promote long-term growth. C) A source of household wealth. D) A break on consumption (paradox of thrift). Show Answer Correct Answer: A) A cushion for businesses during a recession. 12. 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) .5. B) 1. C) 1.5. D) 2. Show Answer Correct Answer: A) .5. 13. 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. 14. Consumption will rise and savings will fall if interest rates are ..... ? A) Low. B) Medium. C) High. D) Cool. Show Answer Correct Answer: A) Low. 15. 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. 16. 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. 17. A major advantage of automatic stabilizers in fiscal policy is that they A) Reduce private debt. B) Go into effect w/o passage of new legislation. C) They require a balanced budget. D) Keep unemployment at zero percent. Show Answer Correct Answer: B) Go into effect w/o passage of new legislation. 18. On account of an injection of aggregate demand, equilibrium level of income A) Increases. B) Decreases. C) Remains constant. D) None of these. Show Answer Correct Answer: A) Increases. 19. Revenue and expenditure policy of the government to correct the situations of excess and deficient demand is known as: A) Monetary policy. B) Fiscal policy. C) Both (a) and(b). D) None of these. Show Answer Correct Answer: B) Fiscal policy. 20. The Phillips curve indicates that when the labor market is ....., production costs will ..... and aggregate supply increases. A) Easy; fall. B) Tight; fall. C) Easy; rise. D) Tight; rise. Show Answer Correct Answer: A) Easy; fall. ← 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