Managing flow of Income

What is aggregate demand?

• The total demand for goods and services within an economy.

• The total supply of goods and services within an economy.

• The demand for a specific good or service.

• The supply of a specific good or service.

Which of the following components are included in the aggregate demand equation AD = C + I + G + (X - M)?

• Consumption, Investment, Government expenditure, Exports, Imports

• Consumption, Savings, Government expenditure, Exports, Imports

• Consumption, Investment, Government expenditure, Savings, Imports

• Consumption, Investment, Government expenditure, Exports, Savings

What happens to production when the economy expands?

When the economy contracts, what happens to unemployment?

Fill in the blank: When the economy expands, wages ______ because businesses are doing well.

• wages increase

• wages decrease

• wages remain the same

• wages are unaffected

Increased interest rates during economic expansion typically lead to:

• Higher inflation

• Lower consumer spending

• Increased borrowing

• Rapid economic growth

When the economy contracts, consumer spending:

• increases significantly.

• remains stable.

• decreases.

• increases slightly.

What is the business cycle?

• A recurring pattern of economic expansion and contraction

• A continuous increase in the stock market

• A period of inflation followed by deflation

• A government policy to control the economy

Which phase of the business cycle is characterised by economic growth and increased confidence?

• A) Boom

• B) Recession

• C) Upswing/Recovery

• D) Downswing/Contraction

What happens during the Recession/Trough phase of the business cycle?

• Economic activity reaches its lowest point

• Inflation rates increase significantly

• Businesses expand rapidly

• Consumer confidence is at its peak