Understanding Supply, Demand, and Policy

Which of the following is a tool of fiscal policy?

• Open market operations

• Government spending

• Interest rate adjustments

• Exchange rate interventions

What does the aggregate demand curve represent?

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

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

• The relationship between inflation and unemployment

• The supply of money in the economy

Which of the following shifts the aggregate supply curve to the right?

• An increase in taxes

• A decrease in technology

• An increase in labor productivity

• A decrease in government spending

How does an increase in government spending affect the aggregate demand curve?

• It shifts the aggregate demand curve to the left

• It shifts the aggregate demand curve to the right

• It causes a movement along the aggregate demand curve

• It has no effect on the aggregate demand curve

Which of the following is NOT a fiscal policy tool?

• Taxation

• Government spending

• Money supply control

• Transfer payments

What is the shape of the long-run aggregate supply curve?

• Downward sloping

• Upward sloping

• Vertical

• Horizontal

Which of the following would cause a leftward shift in the aggregate demand curve?

• An increase in consumer confidence

• A decrease in interest rates

• An increase in taxes

• An increase in government spending

What is the primary goal of expansionary fiscal policy?

• To reduce inflation

• To increase unemployment

• To stimulate economic growth

• To decrease the money supply

Which of the following best describes the short-run aggregate supply curve?

• It is perfectly elastic

• It is perfectly inelastic

• It is upward sloping

• It is downward sloping

How does a decrease in taxes affect the aggregate demand curve?

• It shifts the aggregate demand curve to the left

• It shifts the aggregate demand curve to the right

• It causes a movement along the aggregate demand curve

• It has no effect on the aggregate demand curve