This quiz works best with JavaScript enabled. Home > Macroeconomics > Aggregate > Aggregate Demand – Quiz 13 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 13 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Equilibrium level of income/output and employment is viewed from which of the following approaches? A) AS = AD approach. B) S = I approach. C) Both (a) and (b). D) None of these. Show Answer Correct Answer: C) Both (a) and (b). 2. International competitiveness for the UK increases when ..... A) Relative prices of exports fall in world markets. B) Relative prices of exports increase in world markets. C) Supply side policies are ineffective. D) The value of the £ increases. Show Answer Correct Answer: A) Relative prices of exports fall in world markets. 3. The MPC and MPS are equal to each other because: A) It's the law of economics. B) You can only consume as much as you save. C) You can only save as much as you consume. D) You can only save money or spend it. Show Answer Correct Answer: D) You can only save money or spend it. 4. How much is MPS in an economy when MPC is .8? A) .2. B) 3. C) 1.6. D) .8. Show Answer Correct Answer: A) .2. 5. Level of federal borrowing makes it more difficult for private businesses to borrow. A) Excess reserves. B) Fiscal policy. C) Required reserves. D) Crowding out effect. Show Answer Correct Answer: D) Crowding out effect. 6. The multiplier is useful in determining: A) The full employment rate. B) Level of business inventories. C) Rate of inflation. D) Change in GDP resulting from a change in spending. Show Answer Correct Answer: D) Change in GDP resulting from a change in spending. 7. The Aggregate demand curve shows the A) RNO that is purchased at each PL, per time period. B) Positive correlation between NO and the general PL. C) NNO that is purchased at each PL, per time period. D) Negative correlation between production costs and RNO. Show Answer Correct Answer: A) RNO that is purchased at each PL, per time period. 8. What would be the effect of an increase in imports? A) Increase AD. B) Decrease AD. C) Increase SRAS. D) Decrease SRAS. Show Answer Correct Answer: B) Decrease AD. 9. Which of the following events shifts the short-run aggregate supply curve to the right? A) A decrease in the money supply. B) A drop in oil prices. C) An increase in government spending on military equipmentd. D) An increase in price expectations. Show Answer Correct Answer: B) A drop in oil prices. 10. What is on the "Y" axis on an AD/AS Model? A) Real GDP. B) Ouput. C) Price level. D) Price. Show Answer Correct Answer: C) Price level. 11. Real output means the same thing as the following terms except for ..... A) Real GDP. B) Real National Income. C) Total Real Output. D) Quantity. Show Answer Correct Answer: D) Quantity. 12. 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. 13. The multiplier effect shows A) How spending is magnified in the economy. B) How much consumers can spend from their paychecks. C) How much the government can spend from their budget. D) How often the economy can survive recessions. Show Answer Correct Answer: A) How spending is magnified in the economy. 14. 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) Raises; raises; ambiguous. C) Lowers; raises; negative. D) Lowers; raises; positive. Show Answer Correct Answer: A) Raises; lowers; negative. 15. 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. 16. 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. 17. If C = 450 & Y = 1000, the APC will be A) 750. B) .75. C) 450. D) .45. Show Answer Correct Answer: D) .45. 18. 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. 19. If investment increases from 400 to 550 and income increases from 900 to 1650, the MPS should be equal to: A) 0.1. B) 0.2. C) 0.3. D) 0.4. Show Answer Correct Answer: B) 0.2. 20. Which of the following is TRUE? A) Increased investment could trigger inflation in the SR. B) Investment can never lead to inflation. C) Increased investment always shifts AD right. D) Increased investment has no impact on AD. Show Answer Correct Answer: A) Increased investment could trigger inflation in the SR. ← 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