Aggregate Demand Quiz 7 (20 MCQs)

Quiz Instructions

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1. In the unemployment rate is low, then

Correct Answer: D) Real GDP will likely be high.

2. What would be the effect of an increase in taxes on consumers?

Correct Answer: B) Decrease AD.

3. Which of the following is not a determinant of aggregate demand?

Correct Answer: B) Change in Political Parties.

4. Consumption in the economy depends on all these factors EXCEPT.

Correct Answer: A) Corporate Taxes.

5. Increasing taxes is a type of:

Correct Answer: A) Tight fiscal policy.

6. Consumption relates to the purchase of .....

Correct Answer: A) Durable goods.

7. If C = 450 and Y = 1, 000, the average propensity to consume will be:

Correct Answer: D) 0.45.

8. The only government policy that has a DIRECT effect on the aggregate demand curve is:

Correct Answer: C) Changing the level of government purchases of final goods and services.

9. Which graph shows tradeoffs amid conditions of scarce resources?

Correct Answer: A) Production Possibilities.

10. An economy is in macroeconomic equilibrium. If Y = 200, C =100, I =30, G=40 and M =30, what is the value of exports?

Correct Answer: A) 60.

11. Consumers spending $ 120 from a wage increase of $ 200 implies:

Correct Answer: B) An MPS of 0.4 and a multiplier of 2.5.

12. AD curve is a:

Correct Answer: B) Positively sloped curve.

13. The long-run effect of an increase in the money supply is to

Correct Answer: A) Increase the price level.

14. A higher domestic price level will result in

Correct Answer: A) Higher imports.

15. With an MPS of 0.2, an increase in government spending of $ 240 m will result in the equilibrium level of income rising by

Correct Answer: A) $ 1200m.

16. The short-run aggregate supply curve shifts in response to a change in:

Correct Answer: C) Overall costs of production.

17. How much people save rather than consume when there is a change in income

Correct Answer: A) Marginal Propensity to Save.

18. What is most likely to happen if (X-M) shows a surplus of imports?

Correct Answer: A) Depreciation of currency, shift of AD to left.

19. MPS = 0.1 MPT = 0.2 MPM = 0.2 what is the value of the multiplier?

Correct Answer: A) 2.

20. The aggregate supply curve shows the relationship between the aggregate price level and:

Correct Answer: A) Aggregate output supplied.