Aggregate Demand and Supply Models Quiz

What does the aggregate demand curve represent?

• The total demand for goods and services by the government.

• The total quantity of goods and services demanded at different price levels.

• The total supply of goods and services by producers.

• The quantity of goods and services produced at a single price level.

Inflationary gaps occur when:

• The actual aggregate output is below potential output.

• The actual aggregate output is above potential output.

• Government spending is increased.

• There is a decrease in consumer spending.

What role does consumer confidence play in the aggregate demand model?

• It has no impact on aggregate demand.

• It affects consumption and investment negatively.

• It directly influences government spending.

• It affects consumption and investment positively.

What is the primary effect of an increase in aggregate supply in the short run?

• Increase in price level.

• Decrease in price level.

• Decrease in employment.

• Increase in government spending.

A decrease in net exports will most likely cause the aggregate demand curve to:

• Shift to the right.

• Move along the curve.

• Shift to the left.

• Remain unchanged.

Deflationary gaps are characterized by:

• Excess demand over output at full employment.

• Excess supply over demand at full employment.

• Equal supply and demand at full employment.

• None of the above.

Which component is NOT a part of aggregate demand?

• Consumption

• Investment

• Exports

• Savings

What is represented by a movement along the aggregate supply curve?

• A change in the quantity of goods and services supplied due to a change in demand.

• A change in the production capacity of an economy.

• A change in the quantity of goods and services supplied due to a change in price level.

• A shifting government policy affecting supply.

Aggregate demand measures the total spending on:

• Domestic goods and services only.

• Foreign and domestic goods and services by a country's residents.

• Goods and services by the government only.

• Investment goods only.

An improvement in labor productivity will most likely affect the aggregate supply curve by:

• Shifting it to the left.

• Causing a movement along the curve.

• Shifting it to the right.

• No change to the curve.