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- 1. Multiple Choice
What is aggregate demand (AD)?
The willingness and ability to purchase a product at a given price.
The total spending on services in a period of time at a given price level.
The total spending on goods and services in a period of time at a given price level.
The total demand for a product in an industry.
- 2. Multiple Choice
Which of the following are the correct axis labels for an aggregate demand diagram?
y-axis: Average price level ($), x-axis: Quantity
y-axis: Real output, x-axis: Average price level ($).
y-axis: Quantity, x-axis: Average price level ($).
y-axis: Average price level ($), x-axis: Real output
- 3. Multiple Choice
Which of the following is not a component of aggregate demand?
Investments
Savings
Consumption
Government spending
- 4. Multiple Choice
When does induced investment occur?
Firms save money in order to spend on capital in the future.
Firms spend on capital in order to maintain the productivity of their existing capital.
Firms offer new shares to existing shareholders.
Firms spend on capital to increase their output in response to higher demand in the economy.
- 5. Multiple Choice
Which of these is the formula for aggregate demand?
C+I
C+I+G
C+I+G+X
C+I+G+(X-M)
- 6. Multiple Choice
Which of these will cause the AD curve to shift to the right?
An increase in house prices.
An increase in income tax.
An increase in consumer uncertainty about the economic future.
An increase in interest rates.
- 7. Multiple Choice
Which one of the following will not lead to an increase in investment?
A reduction in business confidence.
A reduction in business taxes.
A reduction in interest rates.
A reduction in corporate indebtedness.
- 8. Multiple Choice
What are net exports?
The difference between the quantity of exports and the quantity of imports.
The quantity of total exports in an economy.
The value of total exports in an economy.
The difference between export revenue and import expenditure.
- 9. Multiple Choice
Which of the following would be likely to lead to a fall in the level of exports?
An increase in foreign incomes.
An increase in inflation rates among trading partners.
An increase in free trade.
An increase in the exchange rate.
- 10. Multiple Choice
Which of the following would be likely to lead to a fall in the level of imports?
An increase in tariffs.
An increase in a country’s national income.
An increase in the interest rate.
An increase in the exchange rate.
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