Exam 8: Aggregate Demand

What would happen to aggregate demand (AD)if the federal government increased military purchases and provincial and local governments decreased their road building budgets at the same time?

Imports are not included in GDP because they do not reflect output produced within the domestic economy.

What would be an economist's opinion of the statement: "It is possible for aggregate demand to be reduced by high and rising consumer debt"?

What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?

As the price level increases,what is the effect on the quantity of real GDP demanded in the economy?

What effect would faster growth rates by a major trading partner,combined with an increase in stock market wealth,have on aggregate demand (AD)?

A reduction in the price level will cause the aggregate demand curve to shift to the left.

If Rhonda's taxes rose by $20 000,other things being equal,which of the following statements about her consumption is accurate?

With which of the following marginal propensities to consume would a given change in disposable income have the smallest effect on aggregate demand?

What is included in investment (I)?

What is likely to increase investment and,as a result,aggregate demand?

The four major components of aggregate demand are consumption,investment,government purchases of goods and services,and net exports.

For individuals who are holding money or fixed dollar value assets,what is the effect of inflation?

In which of following examples does increased investment NOT occur?

If income falls abroad and consequently net exports fall,the aggregate demand curve will shift to the right.

Which of the following expenditures would be counted as consumption in GDP accounts?

Explain the difference between the average propensity to consume and the marginal propensity to consume.Provide a numerical example for each.

What would increase the supply of national savings curve?

Higher interest rates will tend to reduce investment expenditures,other things being equal.

Figure 8-1 -Refer to Figure 8-1.Which of the following could NOT shift the investment demand curve from ID₀ to ID₁?