Question 1

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

Accepted Answer

A) 0.2 
B) 0.4 
C) 0.6 
D) 0.8 
A) 0.2 
B) 0.4 
C) 0.6 
D) 0.8

Question 2

What would be the impact on aggregate demand (AD)if exports and imports both fell,but exports fell less than imports?

Accepted Answer

A) AD could either increase or decrease. 
B) AD would decrease. 
C) AD would be unaffected. 
D) AD would increase. 
A) AD could either increase or decrease. 
B) AD would decrease. 
C) AD would be unaffected. 
D) AD would increase.

Question 3

During the 1970s,Canadian prices generally rose faster than prices in other parts of the world.What change would the open economy effect have predicted took place in response to these price level changes?

Accepted Answer

A) Canadians reduced the fraction of purchases they made from domestic producers of goods and services, since foreign prices became relatively lower. 
B) Canadians reduced the amount of goods and services they wanted to purchase for consumption, because they felt less wealthy. 
C) Canadians reduced the proportion of foreign goods bought, since their foreign prices became relatively lower. 
D) Canadians reduced the amount of investment they undertook, because interest rates increased. 
A) Canadians reduced the fraction of purchases they made from domestic producers of goods and services, since foreign prices became relatively lower. 
B) Canadians reduced the amount of goods and services they wanted to purchase for consumption, because they felt less wealthy. 
C) Canadians reduced the proportion of foreign goods bought, since their foreign prices became relatively lower. 
D) Canadians reduced the amount of investment they undertook, because interest rates increased.

Question 4

If some non-price-level determinant causes total spending to decrease,what will the effect on aggregate demand be?

Accepted Answer

A) a shift to the right 
B) a movement downward along the curve 
C) a movement upward along the curve 
D) a shift to the left 
A) a shift to the right 
B) a movement downward along the curve 
C) a movement upward along the curve 
D) a shift to the left

Question 5

Which of the following statements about the aggregate demand curve is the most accurate?

Accepted Answer

A) It illustrates a positive relationship between the price level and real gross domestic product demanded. 
B) It illustrates the relationship between price and quantity demanded for an aggregated market. 
C) It is illustrated as a negative slope. 
D) It shows how nominal gross domestic product demanded changes with the changes in the price level. 
A) It illustrates a positive relationship between the price level and real gross domestic product demanded. 
B) It illustrates the relationship between price and quantity demanded for an aggregated market. 
C) It is illustrated as a negative slope. 
D) It shows how nominal gross domestic product demanded changes with the changes in the price level.

Question 6

The marginal propensity to consume is a measure of the additional consumption that results from a one-dollar increase in disposable income.

Accepted Answer

A) True 
 B)False

Question 7

If private consumption in Canada was 69 percent of GDP,investment was 18 percent,government purchases were 18 percent,exports were 9 percent,and imports were 14 percent,what percentage of GDP would net exports be equal to?

Accepted Answer

A) -5 
B) 5 
C) 23 
D) -23 
A) -5 
B) 5 
C) 23 
D) -23

Question 8

What impact would a combination of the discovery of new,profitable,technological investment opportunities and inventories that have fallen far below desired levels have?

Accepted Answer

A) It would decrease the investment demand curve. 
B) It could either increase or decrease the investment demand curve. 
C) It would leave the investment demand curve unchanged. 
D) It would increase the investment demand curve. 
A) It would decrease the investment demand curve. 
B) It could either increase or decrease the investment demand curve. 
C) It would leave the investment demand curve unchanged. 
D) It would increase the investment demand curve.

Question 9

Which of the following will NOT result as part of the interest rate effect when the price level rises?

Accepted Answer

A) Money demand will increase. 
B) The dollar amount of investment will increase. 
C) Interest rates will increase. 
D) A lower quantity of real GDP will be demanded. 
A) Money demand will increase. 
B) The dollar amount of investment will increase. 
C) Interest rates will increase. 
D) A lower quantity of real GDP will be demanded.

Question 10

What will an economic boom in China likely lead to?

Accepted Answer

A) An increase in Canadian imports and Canadian aggregate demand. 
B) A decrease in Canadian imports and Canadian aggregate demand. 
C) A decrease in Canadian exports and Canadian aggregate demand. 
D) An increase in Canadian exports and Canadian aggregate demand. 
A) An increase in Canadian imports and Canadian aggregate demand. 
B) A decrease in Canadian imports and Canadian aggregate demand. 
C) A decrease in Canadian exports and Canadian aggregate demand. 
D) An increase in Canadian exports and Canadian aggregate demand.

Question 11

Other things being equal,what effect would an appreciable increase in interest rates have?

Accepted Answer

A) an increase in exports 
B) a decrease in consumption 
C) an increase in investment spending 
D) a decrease in savings 
A) an increase in exports 
B) a decrease in consumption 
C) an increase in investment spending 
D) a decrease in savings

Question 12

What are the major factors that determine investment,and what impact do each have on aggregate demand?

Accepted Answer

Important factors that determine investm

Question 13

What occurs at higher real interest rates?

Accepted Answer

A) People save more. 
B) People spend more on services. 
C) People save less. 
D) People consume more durable goods. 
A) People save more. 
B) People spend more on services. 
C) People save less. 
D) People consume more durable goods.

Question 14

Under what circumstances will increases in investment tend to occur?

Accepted Answer

A) when the interest rates start to increase 
B) when consumers become more optimistic in their expectations toward the future 
C) when the level and rate of change of profits increases 
D) when inventories unexpectedly increase 
A) when the interest rates start to increase 
B) when consumers become more optimistic in their expectations toward the future 
C) when the level and rate of change of profits increases 
D) when inventories unexpectedly increase

Question 15

As the price level increases,what is the impact on interest rates and investments?

Accepted Answer

A) Interest rates and investment both decrease 
B) Interest rates increase and investments decrease. 
C) Interest rates and investment both increase. 
D) Interest rates decrease and investment increases. 
A) Interest rates and investment both decrease 
B) Interest rates increase and investments decrease. 
C) Interest rates and investment both increase. 
D) Interest rates decrease and investment increases.

Question 16

Why,in part,does the interest rate effect suggest that the aggregate demand curve has a negative slope?

Accepted Answer

A) Changes in the price level affect the level of income. 
B) Changes in the price level affect the demand for money. 
C) Changes in the price level affect domestic purchases of foreign goods. 
D) Changes in the price level affect the real purchasing power of assets. 
A) Changes in the price level affect the level of income. 
B) Changes in the price level affect the demand for money. 
C) Changes in the price level affect domestic purchases of foreign goods. 
D) Changes in the price level affect the real purchasing power of assets.

Question 17

Which of the following will NOT cause consumption and,as a result,aggregate demand to increase?

Accepted Answer

A) a tax increase 
B) an increase in consumer confidence 
C) an optimistic business forecast of future income growth 
D) a tax cut 
A) a tax increase 
B) an increase in consumer confidence 
C) an optimistic business forecast of future income growth 
D) a tax cut

Question 18

Other things being equal,what will occur as the price level decreases?

Accepted Answer

A) Real gross domestic product supplied increases. 
B) The quantity of real gross domestic product demanded increases. 
C) The quantity of real gross domestic product demanded decreases. 
D) Aggregate demand increases. 
A) Real gross domestic product supplied increases. 
B) The quantity of real gross domestic product demanded increases. 
C) The quantity of real gross domestic product demanded decreases. 
D) Aggregate demand increases.

Question 19

What impact will a higher real interest rate have?

Accepted Answer

A) It will increase the dollar amount of investment but not change the investment demand curve. 
B) It will decrease the investment demand curve. 
C) It will decrease the dollar amount of investment but not change the investment demand curve. 
D) It will increase the investment demand curve. 
A) It will increase the dollar amount of investment but not change the investment demand curve. 
B) It will decrease the investment demand curve. 
C) It will decrease the dollar amount of investment but not change the investment demand curve. 
D) It will increase the investment demand curve.

Question 20

Which of the following will decrease when the price level rises?

Accepted Answer

A) money demand 
B) the real interest rate 
C) money supplied 
D) the real level of investment 
A) money demand 
B) the real interest rate 
C) money supplied 
D) the real level of investment

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

What would be the impact on aggregate demand (AD)if exports and imports both fell,but exports fell less than imports?

During the 1970s,Canadian prices generally rose faster than prices in other parts of the world.What change would the open economy effect have predicted took place in response to these price level changes?

If some non-price-level determinant causes total spending to decrease,what will the effect on aggregate demand be?

Which of the following statements about the aggregate demand curve is the most accurate?

The marginal propensity to consume is a measure of the additional consumption that results from a one-dollar increase in disposable income.

If private consumption in Canada was 69 percent of GDP,investment was 18 percent,government purchases were 18 percent,exports were 9 percent,and imports were 14 percent,what percentage of GDP would net exports be equal to?

What impact would a combination of the discovery of new,profitable,technological investment opportunities and inventories that have fallen far below desired levels have?

Which of the following will NOT result as part of the interest rate effect when the price level rises?

What will an economic boom in China likely lead to?

Other things being equal,what effect would an appreciable increase in interest rates have?

What are the major factors that determine investment,and what impact do each have on aggregate demand?

What occurs at higher real interest rates?

Under what circumstances will increases in investment tend to occur?

As the price level increases,what is the impact on interest rates and investments?

Why,in part,does the interest rate effect suggest that the aggregate demand curve has a negative slope?

Which of the following will NOT cause consumption and,as a result,aggregate demand to increase?

Other things being equal,what will occur as the price level decreases?

What impact will a higher real interest rate have?

Which of the following will decrease when the price level rises?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters

Exam 8: Aggregate Demand

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

What would be the impact on aggregate demand (AD)if exports and imports both fell,but exports fell less than imports?

During the 1970s,Canadian prices generally rose faster than prices in other parts of the world.What change would the open economy effect have predicted took place in response to these price level changes?

If some non-price-level determinant causes total spending to decrease,what will the effect on aggregate demand be?

Which of the following statements about the aggregate demand curve is the most accurate?

The marginal propensity to consume is a measure of the additional consumption that results from a one-dollar increase in disposable income.

If private consumption in Canada was 69 percent of GDP,investment was 18 percent,government purchases were 18 percent,exports were 9 percent,and imports were 14 percent,what percentage of GDP would net exports be equal to?

What impact would a combination of the discovery of new,profitable,technological investment opportunities and inventories that have fallen far below desired levels have?

Which of the following will NOT result as part of the interest rate effect when the price level rises?

What will an economic boom in China likely lead to?

Other things being equal,what effect would an appreciable increase in interest rates have?

What are the major factors that determine investment,and what impact do each have on aggregate demand?

What occurs at higher real interest rates?

Under what circumstances will increases in investment tend to occur?

As the price level increases,what is the impact on interest rates and investments?

Why,in part,does the interest rate effect suggest that the aggregate demand curve has a negative slope?

Which of the following will NOT cause consumption and,as a result,aggregate demand to increase?

Other things being equal,what will occur as the price level decreases?

What impact will a higher real interest rate have?

Which of the following will decrease when the price level rises?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters