This quiz works best with JavaScript enabled. Home > Macroeconomics > Aggregate > Aggregate Demand – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 4 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is represented on the "X" axis on the AS graph? A) Price level. B) Price. C) Nominal GDP. D) Real GDP. Show Answer Correct Answer: D) Real GDP. 2. The bigger MPC ..... A) The bigger MPS. B) The smaller MPT. C) The bigger the initial shift in AD. D) The bigger the multiplier. Show Answer Correct Answer: D) The bigger the multiplier. 3. Which of the following will increase consumption? A) Increased consumer confidence. B) High taxation. C) High unemployment. D) A negative wealth effect. Show Answer Correct Answer: A) Increased consumer confidence. 4. Which of the following is a disadvantage of the multiplier effect? A) There is a time lag. B) It increases government intervention. C) It increases protectionism. D) It causes a decrease in aggregate supply. Show Answer Correct Answer: A) There is a time lag. 5. K =? A) 1 / (1-MPS). B) (1-MPC). C) MPC + MPS. D) 1 / (1-MPC). Show Answer Correct Answer: D) 1 / (1-MPC). 6. If MPC = 0, the multiplier will be: A) 1. B) 0. C) 2. D) $ \infty$. Show Answer Correct Answer: A) 1. 7. Which of the following is NOT the reason for the AD curve to be downward sloping? A) The political priorities effect. B) The interest rate effect. C) The wealth effect. D) The international trade effect. Show Answer Correct Answer: A) The political priorities effect. 8. If consumption spending totals $ 40 million, investment is $ 30 million, tax revenue totals $ 15 million, government spending is $ 10 million, exports are $ 3 million and imports are $ 5 million, GDP is ..... A) $ 103 million. B) $ 80 million. C) $ 93 million. D) $ 78 million. Show Answer Correct Answer: D) $ 78 million. 9. What is the vertical line called on the AD/AS Model? A) Short-run aggregate supply. B) Aggregate demand. C) Long run aggregate supply. D) R GDP. Show Answer Correct Answer: C) Long run aggregate supply. 10. If MPC = .8 A) Spending multiplier = 5. B) Tax multiplier = 5. C) MPS = .8. D) Spending multiplier = 10. Show Answer Correct Answer: A) Spending multiplier = 5. 11. A positive impact on consumption could be due to A) Better funding conditions. B) Higher interest rates. C) Higher tariffs abroad. D) None of above. Show Answer Correct Answer: A) Better funding conditions. 12. Which of the following equations represents Aggregate Demand A) GDP = X + I + C + (Y-Z). B) GDP = C + I + G + (X-M). C) GDP = C + I + X + (G-T). D) GDP = (1/MPS)*G + I + C. Show Answer Correct Answer: B) GDP = C + I + G + (X-M). 13. The nation of Mordor sees an increase in exports to other nations. This should result in: A) An increase in unemployment in Mordor. B) An decrease in aggregate demand in Mordor. C) An increase in aggregate demand in Mordor. D) A decrease in the price level in Mordor. Show Answer Correct Answer: C) An increase in aggregate demand in Mordor. 14. Changes in foreigners' spending will arise from which of the following factors? A) Changes in exchange rates. B) Changes in wealth. C) Changes in interest rates. D) Changes in political priorities. Show Answer Correct Answer: A) Changes in exchange rates. 15. Which is NOT a benefit of increased consumption? A) Increased private sector debt. B) Reduced unemployment benefit payments and increased tax base. C) Firms profits increase. D) Increases demand for UK firms' products. Show Answer Correct Answer: A) Increased private sector debt. 16. If workers demand and receive higher real wages (a successful wage push), the cost of production ..... and the short-run aggregate supply curve shifts ..... A) Rises; leftward. B) Rises; rightward. C) Falls; leftward. D) Falls; rightward. Show Answer Correct Answer: A) Rises; leftward. 17. Average propensity to consume is equal to: A) $ \frac{Y}{C}$. B) $ \frac{\Delta Y}{\Delta C}$. C) $ \frac{C}{Y}$. D) $ \frac{\Delta C}{\Delta Y}$. Show Answer Correct Answer: C) $ \frac{C}{Y}$. 18. Aggregate demand shifts left when the government A) Decreases taxes. B) Cuts military expenditures. C) Both of the above are correct. D) None of the above is correct. Show Answer Correct Answer: B) Cuts military expenditures. 19. Positive net exports lead to ..... A) A trade surplus and shifts AD right. B) A trade surplus and shifts AD left. C) A trade deficit and shifts AD left. D) A trade deficit and shifts AD right. Show Answer Correct Answer: A) A trade surplus and shifts AD right. 20. An Economy's AD demand measures A) The total Value of all G and S demanded in the economy. B) The total Q of G and S Produced in the economy. C) The total Q of G and S demanded in the economy. D) The total value of all Producer and Consumer surplus in econ. Show Answer Correct Answer: A) The total Value of all G and S demanded in the economy. ← PreviousNext →Related QuizzesMacroeconomics QuizzesAggregate Demand Quiz 1Aggregate Demand Quiz 2Aggregate Demand Quiz 3Aggregate Demand Quiz 5Aggregate Demand Quiz 6Aggregate Demand Quiz 7Aggregate Demand Quiz 8Aggregate Demand Quiz 9Aggregate Demand Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books