Aggregate Demand Quiz
- 1.
What is the definition of "Aggregate Demand"?
- A.
The total supply of goods and services during a certain period of time.
- B.
The total spending on goods and service in a period of time at a given price level.
- C.
The level of demand for services and goods during a given time period.
- D.
The average supply of goods and services in an economy.
Correct Answer
B. The total spending on goods and service in a period of time at a given price level. -
- 2.
In microeconomics, the Demand Curve shows the relationship between Price and Demand, what relationship does the Aggregate Demand Curve display?
- A.
Average price and average output.
- B.
Total price and total output.
- C.
Average price and real output.
- D.
Real price and total output.
- E.
Real price and total demand.
Correct Answer
C. Average price and real output. -
- 3.
What is national output equal to?
- A.
National income
- B.
Gross national product
- C.
Gross domestic income
- D.
Gross domestic product
- E.
Gross national product minus depreciation
Correct Answer
A. National income -
- 4.
The Aggregate Demand curve shows a(n) ___________ relationship between the average price level and total real output demanded.
- A.
Direct
- B.
Same
- C.
Equal
- D.
Inverse
Correct Answer
D. Inverse -
- 5.
The word "aggregate" means...
- A.
Partial
- B.
Specified
- C.
Total
- D.
Greatest
Correct Answer
C. Total -
- 6.
What are the components of aggregate demand?
- A.
Consumption (C) + government spending (G) + production (P) + (exports (X) - imports (M))
- B.
Consumers (C) + gross income (G) + investment (I) + (exports (X) - imports (M))
- C.
Cost (C) + government spending (G) + production (P) + (imports (M) - exports (X))
- D.
Consumption (C) + investment (I) + government spending (G) + (imports (M) - exports (X))
- E.
Consumption (C) + investment (I) + government spending (G) + (exports (X) - imports (M))
Correct Answer
E. Consumption (C) + investment (I) + government spending (G) + (exports (X) - imports (M)) -
- 7.
What are the two types of consumer demand for goods?
- A.
Durable and non-durable goods.
- B.
Final goods and intermediate goods.
- C.
Consumer and manufacturer goods.
- D.
Private and public goods.
Correct Answer
A. Durable and non-durable goods. -
- 8.
What is an example of a durable good?
- A.
Rice
- B.
Newspapers
- C.
Phones
- D.
Toothpaste
Correct Answer
C. Phones -
- 9.
What is a type of investment in firms?
- A.
Short-term Investments
- B.
Induced Investments
- C.
Stocks
- D.
Bonds
- E.
Cash
Correct Answer
B. Induced Investments -
- 10.
What is an Induced Investment?
- A.
Firms spend on capital in order to maintain the productivity of their existing capital.
- B.
When a firm invests in stocks in order to avoid bankruptcy.
- C.
Occurs when firms spend on capital to increase their output, which is in response to higher demand in the economy.
- D.
Firms spends and invests in order to earn more in the long run.
Correct Answer
C. Occurs when firms spend on capital to increase their output, which is in response to higher demand in the economy. -
- 11.
Which of the following does the Government NOT spend on?
- A.
Food
- B.
Education
- C.
Social security
- D.
Transportation
- E.
Health
Correct Answer
A. Food -
- 12.
What does a negative net export figure mean?
- A.
The export expenditure exceeds the import expenditure.
- B.
The import expenditure exceeds the export expenditure.
- C.
The total export and import expenditure are equal.
- D.
It is impossible to have a negative figure for net exports.
Correct Answer
B. The import expenditure exceeds the export expenditure. -
- 13.
If the net export figure is positive, what effect will it have on the AD curve?
- A.
No effect.
- B.
Will shift the curve to the left.
- C.
Will shift the curve to the right.
- D.
Will shift the curve up.
- E.
Will shift the curve down.
Correct Answer
C. Will shift the curve to the right. -
- 14.
What will result in the movement along an AD curve?
- A.
A change in the net exports.
- B.
A change in government spending.
- C.
A change in price.
- D.
A change in demand.
- E.
A change in investment.
Correct Answer
C. A change in price. -
- 15.
What is the most significant determinant of consumption?
- A.
Price
- B.
Income
- C.
Season
- D.
Wealth
- E.
Interest
Correct Answer
B. Income -
- 16.
What are the two main factors that can change the wealth of an economy?
- A.
A change in house prices and in the value of stocks and shares.
- B.
A change in income and savings.
- C.
A change in investment and income.
- D.
A change in the value of stocks and income.
Correct Answer
A. A change in house prices and in the value of stocks and shares. -
- 17.
There is a(n) ______________ relationship between interest rates and the level of investment.
- A.
Inverse
- B.
Direct
- C.
Same
- D.
Equal
Correct Answer
A. Inverse -
- 18.
What is it called when consumer confidence leads to an increased consumption?
- A.
Consumer sentiment index
- B.
Consumer confidence factor
- C.
There is no such theory
Correct Answer
A. Consumer sentiment index -
- 19.
What is the Fiscal Policy?
- A.
Official policies governing the supply of money and interest rates in an economy.
- B.
The government policy relating to its spending and taxation rates.
- C.
The Central Bank maintaining low and stable inflation rates.
Correct Answer
B. The government policy relating to its spending and taxation rates. -
- 20.
What are indirect taxes?
- A.
Taxes on goods and services
- B.
Taxes on income
- C.
Taxes on property
- D.
State tax
Correct Answer
A. Taxes on goods and services -
- 21.
Governments use the contractionary fiscal policy to _________ aggregate demand.
- A.
Remove
- B.
Improve
- C.
Increase
- D.
Reduce
Correct Answer
D. Reduce -
- 22.
What is the Monetary Policy?
- A.
Official policies governing the supply of money and interest rates in an economy.
- B.
The government policy relating to its spending and taxation rates.
- C.
The Central Bank maintaining low and stable inflation rates.
Correct Answer
A. Official policies governing the supply of money and interest rates in an economy. -
- 23.
The Central Bank is a private profit making bank.
- A.
True.
- B.
False.
Correct Answer
B. False. -
- 24.
What is the base rate?
- A.
The smallest rate
- B.
The highest rate
- C.
The prime rate
- D.
The finest rate
Correct Answer
C. The prime rate -
- 25.
If a government would like to encourage greater consumption then it can _________ income taxes to _________ disposable income.
- A.
Lower, decrease
- B.
Lower, raise
- C.
Raise, lower
- D.
Raise, raise
Correct Answer
B. Lower, raise -
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Current Version
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Jan 17, 2013Quiz Edited by
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Sep 15, 2010Quiz Created by
Vmwagner
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