Font size
WorksheetsH2 Intro to Macro: AD-AS Analysis
Total questions: 15
Worksheet time: 14mins
What is the primary purpose of the AD-AS model?
To analyze consumer behavior
To determine equilibrium national income
To measure individual market prices
To calculate government expenditure
Which of the following is NOT a component of Aggregate Demand (AD)?
Net Savings (NS)
Government Spending (G)
Investment (I)
Consumption (C)
Which of the following factors can cause a rightward shift in the Aggregate Demand curve?
Increase in government spending
Decrease in consumer confidence
Decrease in exports
Increase in interest rates
What happens to the equilibrium general price level when Aggregate Demand increases, ceteris paribus?
It remains unchanged
It increases
It fluctuates unpredictably
It decreases
What does the term 'multiplier effect' refer to?
The increase in national income resulting from an initial increase in AD
The decrease in inflation due to increased savings
The relationship between interest rates and investment
The impact of taxes on consumer spending
Which of the following best describes Aggregate Supply (AS)?
The total expenditure on final goods and services
The total quantity of goods and services demanded
The total output of goods and services producers are willing to supply
The total income earned by households
Which of the following is a factor that affects Aggregate Supply in the long run?
Changes in consumer preferences
Changes in technology
Changes in government policies
Changes in interest rates
In the context of the AD-AS model, what does a rightward shift of the Aggregate Supply curve indicate?
A decrease in national output
An increase in the general price level
An increase in productive capacity
A decrease in consumer spending
What is the effect of a decrease in investment expenditure on the economy?
Decrease in national income
Increase in national income
Increase in government spending
No effect on national income
What is the formula for calculating the multiplier?
MPS + MPT + MPM
MPC / (1 - MPC)
1 / (MPC + MPT + MPM)
1 / (MPS + MPT + MPM)
What is the impact of an increase in consumer confidence on Aggregate Demand?
It decreases Aggregate Demand
It has no effect on Aggregate Demand
It increases Aggregate Demand
It shifts Aggregate Supply to the left
Which of the following is a short-run factor that can affect Aggregate Supply?
Changes in population demographics
Technological advancements
Government policy to increase competition in markets.
Changes in labour costs
How does an increase in corporate taxes generally affect Aggregate Demand?
It increases Aggregate Demand
It decreases Aggregate Demand
It has no effect on Aggregate Demand as it affects firms.
It decreases Short-run aggregate supply.
Explain how aggregate demand might be affected when there is a rise in government transfer payments such as welfare payments and unemployment benefits.
Explain how an appreciation of a country’s currency is likely to affect net exports and national income, ceteris paribus.
