Aggregate Demand Quiz

1. The word "aggregate" means...

Partial

Specified

Total

Greatest

2. If a government would like to encourage greater consumption then it can _ income taxes to _ disposable income.

Lower, decrease

Lower, raise

Raise, lower

Raise, raise

3. What does a negative net export figure mean?

The export expenditure exceeds the import expenditure.

The import expenditure exceeds the export expenditure.

The total export and import expenditure are equal.

It is impossible to have a negative figure for net exports.

4. Which of the following does the Government NOT spend on?

Food

Education

Social security

Transportation

Health

5. If the net export figure is positive, what effect will it have on the AD curve?

No effect.

Will shift the curve to the left.

Will shift the curve to the right.

Will shift the curve up.

Will shift the curve down.

6. The Central Bank is a private profit making bank.

True.

False.

7. What is an example of a durable good?

Rice

Newspapers

Phones

Toothpaste

8. What will result in the movement along an AD curve?

A change in the net exports.

A change in government spending.

A change in price.

A change in demand.

A change in investment.

9. What is the Fiscal Policy?

Official policies governing the supply of money and interest rates in an economy.

The government policy relating to its spending and taxation rates.

The Central Bank maintaining low and stable inflation rates.

10. The Aggregate Demand curve shows a(n) ___________ relationship between the average price level and total real output demanded.

Direct

Same

Equal

Inverse

11. What is the Monetary Policy?

Official policies governing the supply of money and interest rates in an economy.

The government policy relating to its spending and taxation rates.

The Central Bank maintaining low and stable inflation rates.

12. What are indirect taxes?

Taxes on goods and services

Taxes on income

Taxes on property

State tax

13. What are the components of aggregate demand?

Consumption (C) + government spending (G) + production (P) + (exports (X) - imports (M))

Consumers (C) + gross income (G) + investment (I) + (exports (X) - imports (M))

Cost (C) + government spending (G) + production (P) + (imports (M) - exports (X))

Consumption (C) + investment (I) + government spending (G) + (imports (M) - exports (X))

Consumption (C) + investment (I) + government spending (G) + (exports (X) - imports (M))

14. There is a(n) ______________ relationship between interest rates and the level of investment.

Inverse

Direct

Same

Equal

15. What are the two types of consumer demand for goods?

Durable and non-durable goods.

Final goods and intermediate goods.

Consumer and manufacturer goods.

Private and public goods.

16. What is the most significant determinant of consumption?

Price

Income

Season

Wealth

Interest

17. What is the definition of "Aggregate Demand"?

The total supply of goods and services during a certain period of time.

The total spending on goods and service in a period of time at a given price level.

The level of demand for services and goods during a given time period.

The average supply of goods and services in an economy.

18. What is the base rate?

The smallest rate

The highest rate

The prime rate

The finest rate

19. What is an Induced Investment?

Firms spend on capital in order to maintain the productivity of their existing capital.

When a firm invests in stocks in order to avoid bankruptcy.

Occurs when firms spend on capital to increase their output, which is in response to higher demand in the economy.

Firms spends and invests in order to earn more in the long run.

20. Governments use the contractionary fiscal policy to _________ aggregate demand.

Remove

Improve

Increase

Reduce

21. In microeconomics, the Demand Curve shows the relationship between Price and Demand, what relationship does the Aggregate Demand Curve display?

Average price and average output.

Total price and total output.

Average price and real output.

Real price and total output.

Real price and total demand.

22. What is national output equal to?

National income

Gross national product

Gross domestic income

Gross domestic product

Gross national product minus depreciation

23. What is a type of investment in firms?

Short-term Investments

Induced Investments

Stocks

Bonds

Cash

24. What are the two main factors that can change the wealth of an economy?

A change in house prices and in the value of stocks and shares.

A change in income and savings.

A change in investment and income.

A change in the value of stocks and income.

25. What is it called when consumer confidence leads to an increased consumption?

Consumer sentiment index

Consumer confidence factor

There is no such theory