Macro Unit 3- Practice Questions #1

This video provides practice questions for macroeconomics, focusing on the aggregate demand curve and its downward slope due to the inverse relationship between price level and real GDP. It explains why certain answers are incorrect and emphasizes the importance of understanding the relationship between interest rates and investment. The video aims to reinforce key concepts through practice questions and detailed explanations.

What is the main purpose of the video tutorial for Macroeconomics Unit 3?

• To introduce new concepts in macroeconomics

• To provide a summary of the unit

• To practice multiple choice questions

• To discuss the history of macroeconomics

Why is the aggregate demand curve downward sloping?

• Lower price levels decrease the quantity demanded

• Lower price levels increase interest rates

• Higher price levels decrease the purchasing power of money

• Higher price levels increase the purchasing power of money

Which of the following is NOT a reason for the downward slope of the aggregate demand curve?

• Higher price levels increase demand for durable goods

• Lower price levels increase the quantity demanded of consumer goods

• Inverse relationship between price level and real GDP

• Lower price levels decrease interest rates

What happens to aggregate demand when interest rates increase?

• Aggregate demand remains unchanged

• Aggregate demand increases

• Aggregate demand decreases

• Aggregate demand fluctuates randomly

Which factor would lead to an increase in aggregate demand?

• Increase in consumer wealth

• Increase in interest rates

• Decrease in government spending

• Decrease in net exports