Unit 6: National Income, Price Determination

Which of the following equations represents Aggregate Demand

• GDP = X + I + C + (Y - Z)

• GDP = C + I + G + (X - M)

• GDP = C + I + X + (G - T)

• GDP = (1/MPS)*G + I + C

Which of the following events will increase the Aggregate Demand in the economy. Check all that apply.

• The government increasing Income Tax

• The Fed lowering interest rates

• A rise in the cost of raw material

• A supply shock like a new production technology

• An increase in consumer confidence

When taxes decrease, consumption

• increases, so aggregate demand shifts right

• increases, so aggregate supply shifts right

• decreases, so aggregate demand shifts left

• decreases, as aggregate supply shifts left

Which of the following shifts aggregate supply to the right?

• A decrease in the money supply

• Technology that increases the profitability of goods

• the repeal of an investment tax credit

• A decrease in the price level

When the government spends more, the initial effect is that

• aggregate demand shifts right

• aggregate demand shifts left

• aggregate supply shifts right

• aggregate supply shifts left

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

• Change in Consumer Spending
• Change in Political Parties
• Change in Government Spending
• Change in investment Spending

Two sector economy consists of _____ and _____

the study of national income is related to

• micro economics

• macro economics

Total quantity of goods and services produced in the economy.

• Aggregate Demand

• Aggregate Supply

• Leakages

• Injections

Refers to the purchase of goods and services by individuals or households.

• Investment

• Export

• Import

• Consumption