AD and AS Quiz

What is Aggregate Demand (AD)?

• The total supply of goods and services in an economy
• The total demand for goods and services at different price levels in an economy
• The government's spending on public goods
• The total exports minus imports in an economy

Which of the following best describes the Real Wealth Effect?

• When interest rates affect spending patterns
• When exchange rates influence international trade
• When price levels affect purchasing power and consumer spending
• When government spending increases national wealth

The Net Export Effect refers to:

• The total value of exports in an economy
• The relationship between domestic prices and international trade competitiveness
• The difference between imports and exports
• The effect of tariffs on international trade

What is the Interest Rate Effect?

• The impact of price levels on interest rates and spending
• The relationship between savings and interest rates
• The effect of monetary policy on exchange rates
• The correlation between inflation and interest rates

SRAS (Short-Run Aggregate Supply) is best defined as:

• The economy's production capacity at full employment
• The total supply of goods and services at various price levels in the short term
• The minimum supply level in an economy
• The government's contribution to total supply

LRAS (Long-Run Aggregate Supply) represents:

• The total supply over a decade
• The supply of luxury goods in an economy
• The economy's potential output at full employment
• The maximum production capacity regardless of price level

An Inflationary Gap occurs when:

• Inflation rates exceed interest rates
• Real GDP is less than potential GDP
• Real GDP exceeds potential GDP
• Prices rise above equilibrium

A Recessionary Gap is characterized by:

• Real GDP being below potential GDP
• Rising inflation rates
• Increasing employment
• Positive economic growth

In macroeconomics, 'C' represents:

• Capital formation
• Consumer spending
• Currency exchange
• Corporate profits

The variable 'G' in aggregate demand stands for:

• Gross national product
• Global trade
• Government spending
• Goods exported