Question 1

Suppose the price level decreases.How will aggregate demand be affected?

Accepted Answer

A)  The aggregate demand curve will shift to the right. 
B)  The aggregate demand curve will shift to the left. 
C)  The level of aggregate quantity demanded will increase. 
D)  The level of aggregate quantity demanded will decrease. 
A)  The aggregate demand curve will shift to the right. 
B)  The aggregate demand curve will shift to the left. 
C)  The level of aggregate quantity demanded will increase. 
D)  The level of aggregate quantity demanded will decrease.

Question 2

The aggregate expenditure line, along with the 45-degree line, determines equilibrium.What assumption is this model based on?

Accepted Answer

A)  that production is constant 
B)  that production is constant and at the full employment level of GDP 
C)  that producers are ready to supply whatever amount of output is demanded at the existing price level 
D)  that producers will supply more at higher prices than they will at lower prices 
A)  that production is constant 
B)  that production is constant and at the full employment level of GDP 
C)  that producers are ready to supply whatever amount of output is demanded at the existing price level 
D)  that producers will supply more at higher prices than they will at lower prices

Question 3

How will a decrease in the price level affect the aggregate demand curve?

Accepted Answer

A)  It will shift the aggregate demand curve to the right. 
B)  It will shift the aggregate demand curve to the left. 
C)  It will result in a movement upward along the aggregate demand curve. 
D)  It will result in a movement downward along the aggregate demand curve. 
A)  It will shift the aggregate demand curve to the right. 
B)  It will shift the aggregate demand curve to the left. 
C)  It will result in a movement upward along the aggregate demand curve. 
D)  It will result in a movement downward along the aggregate demand curve.

Question 4

What is the term for that fraction of a change in disposable income that is consumed?

Accepted Answer

A)  the marginal propensity to save 
B)  induced consumption 
C)  the multiplier 
D)  the marginal propensity to consume 
A)  the marginal propensity to save 
B)  induced consumption 
C)  the multiplier 
D)  the marginal propensity to consume

Question 5

Suppose the price level decreases.How will the aggregate expenditure line and the aggregate demand curve be affected?

Accepted Answer

A)  The aggregate expenditure line will shift downward, and the economy will move down along the aggregate demand curve. 
B)  The aggregate expenditure line will shift upward, and the economy will move up along the aggregate demand curve. 
C)  The aggregate demand curve will shift to the left, and the economy will move along the aggregate expenditure line. 
D)  The aggregate expenditure line will shift upward, and the economy will move down along the aggregate demand curve. 
A)  The aggregate expenditure line will shift downward, and the economy will move down along the aggregate demand curve. 
B)  The aggregate expenditure line will shift upward, and the economy will move up along the aggregate demand curve. 
C)  The aggregate demand curve will shift to the left, and the economy will move along the aggregate expenditure line. 
D)  The aggregate expenditure line will shift upward, and the economy will move down along the aggregate demand curve.

Question 6

Other things constant, how would a larger marginal propensity to save affect the multiplier?

Accepted Answer

A)  The multiplier would remain the same. 
B)  The multiplier would become smaller. 
C)  The multiplier would become larger. 
D)  The multiplier would be negative. 
A)  The multiplier would remain the same. 
B)  The multiplier would become smaller. 
C)  The multiplier would become larger. 
D)  The multiplier would be negative.

Question 7

What is reflected by the aggregate demand curve's downward slope to the right?

Accepted Answer

A)  a relationship between the price level and real GDP 
B)  a relationship between the price level and interest rates 
C)  a relationship between the price level and the saving rate 
D)  a relationship between the price level and the investment level 
A)  a relationship between the price level and real GDP 
B)  a relationship between the price level and interest rates 
C)  a relationship between the price level and the saving rate 
D)  a relationship between the price level and the investment level

Suppose the price level decreases.How will aggregate demand be affected?

The aggregate expenditure line, along with the 45-degree line, determines equilibrium.What assumption is this model based on?

How will a decrease in the price level affect the aggregate demand curve?

What is the term for that fraction of a change in disposable income that is consumed?

Suppose the price level decreases.How will the aggregate expenditure line and the aggregate demand curve be affected?

Other things constant, how would a larger marginal propensity to save affect the multiplier?

What is reflected by the aggregate demand curve's downward slope to the right?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters

Exam 10: Aggregate Expenditure and Aggregate Demand

Suppose the price level decreases.How will aggregate demand be affected?

The aggregate expenditure line, along with the 45-degree line, determines equilibrium.What assumption is this model based on?

How will a decrease in the price level affect the aggregate demand curve?

What is the term for that fraction of a change in disposable income that is consumed?

Suppose the price level decreases.How will the aggregate expenditure line and the aggregate demand curve be affected?

Other things constant, how would a larger marginal propensity to save affect the multiplier?

What is reflected by the aggregate demand curve's downward slope to the right?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters