Multipliers Practice

Which curve represents the shift? The government decides to increase its spending on health care services.

• AD1

• AD2

• AD3

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

What will the government do if it wishes to increase total spending in the economy?

• Increase government spending

• Increase debt interest payments to foreign lenders

• Reduce government spending

• Increase taxes

Which way does the aggregate demand curve shift when interest rates increase?

• To the left [downwards]

• To the right [upwards]

Do changes in the price level shift the aggregate demand curve?

• Yes

• No

Which way does the aggregate demand curve shift when the level of real disposable income goes down?

• To the right [upwards]

• To the left [downwards]

Aggregate demand is the same as national expenditure

• True

• False

Investment is a form of -

• Spending

• Saving

Aggregate demand shifts to the left when the government

• Decreases taxes

• Cuts military expenditures

• Both of the above are correct

• None of the above is correct

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