Business School 101 Quiz

Which of the following is NOT a component of aggregate expenditure?

• Inflation

• Government Purchases

• Investment

• Consumption

What is the most significant part of aggregate expenditure?

• Net Exports

• Consumption

• Investment

• Government Purchases

Which factor is the most crucial determinant of consumption?

• Interest Rate

• Expected Future Income

• Current Disposable Income

• Household Wealth

How does a rise in stock prices affect household consumption?

• Increases consumption

• No effect on consumption

• Decreases consumption

• Leads to higher savings

Which variable directly affects the cost of financing investments?

• Taxes

• Interest Rate

• Cash Flow

• Government Purchases

What happens to investment during periods of recession?

• It increases significantly

• It remains stable

• It declines significantly

• It is unaffected

Which of the following is NOT a factor influencing net exports?

• Growth rate of GDP

• Relative price level

• Exchange rate

• Interest rate

What is the result when aggregate expenditure equals GDP?

• Inflation rises

• GDP declines

• The economy is in equilibrium

• Economic growth accelerates

What occurs when aggregate expenditure exceeds GDP?

• Inventories build up

• Employment declines

• Firms reduce production

• Firms ramp up production

Why is understanding short-run economic activity important for policymakers?

• To encourage inflation

• To increase taxes

• To maintain economic stability

• To reduce government spending