This quiz works best with JavaScript enabled. Home > Macroeconomics > Aggregate > Aggregate Demand – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Aggregate Demand Quiz 6 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A reduction in Interest rates will not tend to A) Discourage consumer expenditure. B) Shift the AD curve to the right. C) Expand investment expenditure. D) Cause a rise in the exchange rate. Show Answer Correct Answer: A) Discourage consumer expenditure. 2. Everything else held constant, an autonomous monetary policy easing ..... aggregate ..... A) Decreases; demand. B) Increases; demand. C) Decreases; supply. D) Increases; supply. Show Answer Correct Answer: B) Increases; demand. 3. An increase in aggregate demand will generate ..... in real GDP and ..... in the price level in the short-run A) An increase; an increase. B) An increase; no change. C) A decrease; no change. D) No change; an increase. Show Answer Correct Answer: A) An increase; an increase. 4. What is a recessionary gap? A) When ouput falls below potential. B) When output exceeds potentional. C) When output increases. D) When unemployment decreases. Show Answer Correct Answer: A) When ouput falls below potential. 5. The difference between tax revenue and government spending when government spending exceeds tax revenue. A) Budget surplus. B) Budget deficit. C) Budget balance. D) National savings. Show Answer Correct Answer: B) Budget deficit. 6. Changes in consumption, gross investment, government spending, or net exports will shift the ..... A) AD curve. B) AS curve. C) LRAS line. D) PPC. Show Answer Correct Answer: A) AD curve. 7. The multiplier effect means that A) Consumption is usually several times as large as savings. B) A change in consumption can cause a larger change in investment. C) An increase in investment can change GDP by a larger amount. D) A decline in MPC can cause GDP to rise by a larger amount. Show Answer Correct Answer: C) An increase in investment can change GDP by a larger amount. 8. MPS = A) Change in savings/ change in income. B) Change in consumption/ change in income. C) Change in savings-change in income. D) None of above. Show Answer Correct Answer: A) Change in savings/ change in income. 9. An increase in which of the following shifts aggregate demand to the right? A) Consumption. B) Investment. C) Government expenditure. D) All of the above are correct. Show Answer Correct Answer: D) All of the above are correct. 10. In the UK, consumption roughly comprises ..... of AD A) 60%. B) 80%. C) 20%. D) 100%. Show Answer Correct Answer: A) 60%. 11. What will happen to UK if its trading partners in EU were to experience an Inc in econ activity A) Its AD curve would shift to the RT. B) Its AD curve would shift to the LT. C) Its AS curve would shift to the LT. D) Its AS curve would shift to the RT. Show Answer Correct Answer: A) Its AD curve would shift to the RT. 12. The Keynesian Aggregate Supply (AS) curve includes the ranges listed below except for: A) Classical Range. B) Keynesian Range. C) Intermediate Range. D) Non-essential Range. Show Answer Correct Answer: D) Non-essential Range. 13. The government injects £200 million, The multiplier is 1.5, what is the final rise in GDP? A) £300 million. B) £3000 million. C) £250 million. D) £215 million. Show Answer Correct Answer: A) £300 million. 14. If exports from the United States increased, what would most likely happen to real gross domestic product and price level? A) Decrease/decrease. B) Increase/increase. C) Decrease/increase. D) Increase/no chanve. Show Answer Correct Answer: B) Increase/increase. 15. What is most likely to rise following a contraction in AD? A) Government spending. B) Investment expenditure. C) Consumption expenditure. D) Net Exports. Show Answer Correct Answer: A) Government spending. 16. Tighter fiscal policies lead to A) An inwards shift of the AD. B) An outwards shift of the AD. C) An outwards shift of the AS. D) An outwards shift of the AS. Show Answer Correct Answer: A) An inwards shift of the AD. 17. If the dollar depreciates(decreases in value) because of speculation or government policy, or other countries are in a recession A) AD shifts right in the US. B) AD shifts left in the US. C) AD is unchanged in the US. D) AS shifts left in the US. Show Answer Correct Answer: B) AD shifts left in the US. 18. When aggregate supply exceeds aggregate demand, which point on the business cycle results? A) Recession. B) Peak. C) Recovery. D) None of above. Show Answer Correct Answer: A) Recession. 19. Which of the following components of monetary policy can be adopted to correct excess demand: A) Increase in repo rate. B) Increase in CRR. C) Increase in margin requirement. D) All of these. Show Answer Correct Answer: D) All of these. 20. 'Relationship between the aggregate output that buyers want to buy, and the price level ..... '.. A) The aggregate demand curve. B) The aggregate demand. C) The aggregate supply. D) The aggregate supply curve. Show Answer Correct Answer: A) The aggregate demand curve. ← PreviousNext →Related QuizzesMacroeconomics QuizzesAggregate Demand Quiz 1Aggregate Demand Quiz 2Aggregate Demand Quiz 3Aggregate Demand Quiz 4Aggregate Demand Quiz 5Aggregate Demand Quiz 7Aggregate Demand Quiz 8Aggregate Demand Quiz 9Aggregate Demand Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books