Determinants of Aggregate Demand Quiz

Which of the following are components of the determinants of aggregate demand?

• Consumer Spending

• Multiplier effect

• Government Spending

• Change in one of the determinants

What effect does an increase in government spending on transportation projects have on aggregate demand?

• It does not change aggregate demand.

• It decreases aggregate demand.

• It increases aggregate demand.

• It shifts aggregate demand to the left.

Which of the following effects is associated with a change in real GDP desired at each price level?

• Real balances effect

• Consumer wealth effect

• Household borrowing effect

• National income abroad effect

What is the relationship between real GDP desired at each price level and the price level itself according to the Aggregate Demand model?

• Direct relationship

• Inverse relationship

• No relationship

• Proportional relationship

What happens to aggregate demand when there is less military spending by the government?

• Aggregate demand increases.

• Aggregate demand decreases.

• Aggregate demand remains unchanged.

• Aggregate demand becomes unpredictable.

Which factor can cause a shift in the aggregate demand curve?

• Change in one of the determinants

• Constant consumer wealth

• Stable exchange rates

• Unchanged government spending

What does aggregate supply represent?

• The total demand for goods and services at each price level.

• The total real output produced at each price level.

• The total amount of money in the economy.

• The total number of goods available in the market.

Which of the following is NOT a determinant of aggregate supply?

• Labor

• Capital

• Consumer preferences

• Land

What is the relationship between productivity and per-unit production costs?

• Increases in productivity increase per-unit production costs.

• Decreases in productivity have no effect on per-unit production costs.

• Increases in productivity reduce per-unit production costs.

• Productivity is not related to per-unit production costs.

What can cause a decrease in aggregate demand (AD) leading to recession and cyclical unemployment?

• Prices are upwardly flexible.

• Prices are downwardly inflexible due to menu costs.

• Prices are downwardly inflexible due to efficiency wages.

• Both B and C are correct.