This quiz works best with JavaScript enabled. Home > Macroeconomics > Aggregate > Aggregate Demand – Quiz 12 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 12 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the below events would not shift the AD curve? A) A change in the general price level. B) An increase in income tax rates. C) A fall in the value of the currency. D) Higher interest rates. Show Answer Correct Answer: A) A change in the general price level. 2. Which of the following will lead to a fall in consumption? A) High private sector debt. B) Low interest rate. C) Low inflation. D) Increased income. Show Answer Correct Answer: A) High private sector debt. 3. A decline in investment will shift the AD curve to the: A) Left by a multiple of the change in investment. B) Left by the same amount as the change in investment. C) Right by the same amount as the change in investment. D) Right by a multiple of the change in investment. Show Answer Correct Answer: A) Left by a multiple of the change in investment. 4. When the government spends more, the 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. 5. If income increases from 2500 to 3900 and autonomous investment increases by 350, the MPC should be A) 0.9. B) 0.8. C) .75. D) 0.6. Show Answer Correct Answer: C) .75. 6. Stagflation occurs when the economy experiences A) Rising prices and rising output. B) Rising prices and falling output. C) Falling prices and falling output. D) Falling prices and rising output. Show Answer Correct Answer: B) Rising prices and falling output. 7. The wealth effect states that higher prices ..... the purchasing power or the real value of the nation's households' wealth and savings. A) Increase. B) Stagnate. C) Reduce. D) Double. Show Answer Correct Answer: C) Reduce. 8. If MPS (Marginal Propensity to Save) is significant, what is most likely to happen to the AD curve with an increase in income? A) No change. B) Shift left. C) Shift right. D) None of above. Show Answer Correct Answer: B) Shift left. 9. What is a positive multiplier? A) Initial injection causes greater final increase in real GDP. B) Decrease in an injection to increase wealth. C) Increase in leakage leading to an increase in real GDP. D) An injection causes a decrease in real GDP. Show Answer Correct Answer: A) Initial injection causes greater final increase in real GDP. 10. When taxes decrease, consumption A) Increases, so aggregate demand shifts right. B) Increases, so aggregate supply shifts right. C) Decreases, so aggregate demand shifts left. D) Decreases, as aggregate supply shifts left. Show Answer Correct Answer: A) Increases, so aggregate demand shifts right. 11. In the AS/AD model, which causes a rightward shift of LRAS? A) Increased population and productivity. B) Increased consumption. C) Increased government transfers. D) Decreased taxes. Show Answer Correct Answer: A) Increased population and productivity. 12. The construction of new residential housing is an example of A) Investment expenditure. B) Consumer expenditure. C) Government spending. D) Net Exports. Show Answer Correct Answer: A) Investment expenditure. 13. Which one of the following is most likely to lead to a fall in aggregate investment? A) A reduction in the level of unemployment. B) An increase in spare capacity in the economy. C) A reduction in the average level of interest rates. D) An increase in aggregate demand. Show Answer Correct Answer: B) An increase in spare capacity in the economy. 14. Which of the following is not a shift factor for SRAS? A) Resource Cost. B) Productivity. C) Investment. D) Input Prices. Show Answer Correct Answer: C) Investment. 15. Prices and wages tend to be: A) Flexible both upward and downward. B) Inflexible both upward and downward. C) Flexible downward, but inflexible upward. D) Flexible upward, but inflexible downward. Show Answer Correct Answer: D) Flexible upward, but inflexible downward. 16. Assume MPC is 2/3. If investment spending increases by $ 2 billion, GDP will increase by A) $ 3 billion. B) $ 2/3 billion. C) $ 6 billion. D) $ 2 billion. Show Answer Correct Answer: C) $ 6 billion. 17. When the general level of prices is high, the level of AD tends to be A) Low. B) High. C) ~Unchanged. D) Stable. Show Answer Correct Answer: A) Low. 18. In the short run, an increase in the costs of production makes A) Output and prices rise. B) Output rise and prices fall. C) Output fall and prices rise. D) Output and prices fall. Show Answer Correct Answer: C) Output fall and prices rise. 19. If you receive $ 100 and save $ 25 A) MPC = .25. B) MPS = .25. C) MPC = .75. D) MPS = .75. Show Answer Correct Answer: A) MPC = .25. 20. The vertical part of the Keynesian AS curve is called: A) The Keynesian Range. B) The Classical Range. C) The Aggregate Demand Range. D) The Intermediate Range. Show Answer Correct Answer: B) The Classical Range. ← 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