Question 1

Which of the following factors does NOT affect investment?

Accepted Answer

A) the level of profits 
B) current consumer spending 
C) expectations of long-term profit growth 
D) optimism 
A) the level of profits 
B) current consumer spending 
C) expectations of long-term profit growth 
D) optimism

Question 2

If consumption were a direct function of disposable income,how would a decrease in personal taxes or an increase in transfer payments affect consumption?

Accepted Answer

Consumption would increase if personal t

Question 3

What would result from a decrease in the investment demand curve?

Accepted Answer

A) an increase in the dollar amount of savings 
B) a decrease in real interest rates 
C) an increase in the dollar amount of investment 
D) an increase in real interest rates 
A) an increase in the dollar amount of savings 
B) a decrease in real interest rates 
C) an increase in the dollar amount of investment 
D) an increase in real interest rates

Question 4

As the price level decreases,what is the impact on real wealth and purchasing power?

Accepted Answer

A) Real wealth and purchasing power both increase. 
B) Real wealth decreases and purchasing power increases. 
C) Real wealth increases and purchasing power decreases. 
D) Real wealth and purchasing power both decrease. 
A) Real wealth and purchasing power both increase. 
B) Real wealth decreases and purchasing power increases. 
C) Real wealth increases and purchasing power decreases. 
D) Real wealth and purchasing power both decrease.

Question 5

What occurs at higher real interest rates?

Accepted Answer

A) People consume less. 
B) People consume more. 
C) People save less. 
D) People pay more taxes. 
A) People consume less. 
B) People consume more. 
C) People save less. 
D) People pay more taxes.

Question 6

What would decrease the supply of national savings curve?

Accepted Answer

A) a decrease in disposable income 
B) a decrease in real interest rates 
C) a decrease in expected future earnings 
D) an increase in disposable income 
A) a decrease in disposable income 
B) a decrease in real interest rates 
C) a decrease in expected future earnings 
D) an increase in disposable income

Question 7

What will result as part of the interest rate effect when the price level falls?

Accepted Answer

A) A higher quantity of nominal GDP will be demanded. 
B) Money supply will decrease. 
C) The dollar amount of investment will decrease. 
D) Interest rates will decrease. 
A) A higher quantity of nominal GDP will be demanded. 
B) Money supply will decrease. 
C) The dollar amount of investment will decrease. 
D) Interest rates will decrease.

Question 8

As the price level increases,what is the impact on money demand (money supply unchanged)and the quantity RGDP demanded?

Accepted Answer

A) Money demand decreases and the quantity of RGDP demanded increases. 
B) Money demand and the quantity of RGDP demanded both increase. 
C) Money demand and the quantity of RGDP demanded both decrease. 
D) Money demand increases and the quantity of RGDP demanded decreases. 
A) Money demand decreases and the quantity of RGDP demanded increases. 
B) Money demand and the quantity of RGDP demanded both increase. 
C) Money demand and the quantity of RGDP demanded both decrease. 
D) Money demand increases and the quantity of RGDP demanded decreases.

Question 9

If,at a given interest rate,the quantity of savings supplied is less than the quantity of investment demanded,what can we conclude?

Accepted Answer

A) There is a shortage of savings and real interest rates will fall. 
B) There is a surplus of savings and real interest rates will rise. 
C) There is a surplus of savings and real interest rates will fall. 
D) There is a shortage of savings and real interest rates will rise. 
A) There is a shortage of savings and real interest rates will fall. 
B) There is a surplus of savings and real interest rates will rise. 
C) There is a surplus of savings and real interest rates will fall. 
D) There is a shortage of savings and real interest rates will rise.

Question 10

The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 11

If our exports of final goods and services increase more than our imports,other things being equal,how will aggregate demand be affected?

Accepted Answer

A) It will be negative. 
B) It will increase. 
C) It will decrease by the change in net exports. 
D) It will stay the same. 
A) It will be negative. 
B) It will increase. 
C) It will decrease by the change in net exports. 
D) It will stay the same.

Question 12

Which of the following changes in taxes would lead to the greatest increase in consumption?

Accepted Answer

A) a $15 000 decrease in taxes, if MPC equals 0.6 
B) a $20 000 decrease in taxes, if MPC equals 0.5 
C) a $12 000 decrease in taxes, if MPC equals 0.75 
D) a $30 000 decrease in taxes, if MPC equals 0.25 
A) a $15 000 decrease in taxes, if MPC equals 0.6 
B) a $20 000 decrease in taxes, if MPC equals 0.5 
C) a $12 000 decrease in taxes, if MPC equals 0.75 
D) a $30 000 decrease in taxes, if MPC equals 0.25

Question 13

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

Accepted Answer

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

Question 14

What effect would an increase in investment,combined with an increase in imports,have on aggregate demand (AD)?

Accepted Answer

A) AD would increase. 
B) AD would stay the same. 
C) AD could either increase or decrease, depending on which change was of a greater magnitude. 
D) AD would decrease. 
A) AD would increase. 
B) AD would stay the same. 
C) AD could either increase or decrease, depending on which change was of a greater magnitude. 
D) AD would decrease.

Question 15

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

Accepted Answer

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

Question 16

Identify four changes in the economy that would cause the aggregate demand curve to decrease (shift to the left).

Accepted Answer

The aggregate demand curve might be shif

Question 17

If the price level in Canada decreases,domestic goods will become relatively cheaper than foreign goods,the demand for Canadian-made goods will increase,and the Canadian aggregate demand curve will shift to the right.

Accepted Answer

A) True 
 B)False

Question 18

What would be the impact on aggregate demand (AD)if the Canadian dollar depreciated?

Accepted Answer

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

Question 19

What will an economic bust or severe downturn in the Japanese economy likely result in?

Accepted Answer

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

Question 20

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?

Accepted Answer

A) AD would increase, because only federal government purchases affect AD. 
B) AD would increase if the change in federal purchases were smaller than the change in provincial and local purchases. 
C) AD would decrease, because only provincial and local government purchases affect AD. 
D) AD would decrease if the change in federal purchases were smaller than the change in provincial and local purchases. 
A) AD would increase, because only federal government purchases affect AD. 
B) AD would increase if the change in federal purchases were smaller than the change in provincial and local purchases. 
C) AD would decrease, because only provincial and local government purchases affect AD. 
D) AD would decrease if the change in federal purchases were smaller than the change in provincial and local purchases.

Which of the following factors does NOT affect investment?

If consumption were a direct function of disposable income,how would a decrease in personal taxes or an increase in transfer payments affect consumption?

What would result from a decrease in the investment demand curve?

As the price level decreases,what is the impact on real wealth and purchasing power?

What occurs at higher real interest rates?

What would decrease the supply of national savings curve?

What will result as part of the interest rate effect when the price level falls?

As the price level increases,what is the impact on money demand (money supply unchanged)and the quantity RGDP demanded?

If,at a given interest rate,the quantity of savings supplied is less than the quantity of investment demanded,what can we conclude?

The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.

If our exports of final goods and services increase more than our imports,other things being equal,how will aggregate demand be affected?

Which of the following changes in taxes would lead to the greatest increase in consumption?

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

What effect would an increase in investment,combined with an increase in imports,have on aggregate demand (AD)?

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

Identify four changes in the economy that would cause the aggregate demand curve to decrease (shift to the left).

If the price level in Canada decreases,domestic goods will become relatively cheaper than foreign goods,the demand for Canadian-made goods will increase,and the Canadian aggregate demand curve will shift to the right.

What would be the impact on aggregate demand (AD)if the Canadian dollar depreciated?

What will an economic bust or severe downturn in the Japanese economy likely result in?

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?

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

Which of the following factors does NOT affect investment?

If consumption were a direct function of disposable income,how would a decrease in personal taxes or an increase in transfer payments affect consumption?

What would result from a decrease in the investment demand curve?

As the price level decreases,what is the impact on real wealth and purchasing power?

What occurs at higher real interest rates?

What would decrease the supply of national savings curve?

What will result as part of the interest rate effect when the price level falls?

As the price level increases,what is the impact on money demand (money supply unchanged)and the quantity RGDP demanded?

If,at a given interest rate,the quantity of savings supplied is less than the quantity of investment demanded,what can we conclude?

The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.

If our exports of final goods and services increase more than our imports,other things being equal,how will aggregate demand be affected?

Which of the following changes in taxes would lead to the greatest increase in consumption?

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

What effect would an increase in investment,combined with an increase in imports,have on aggregate demand (AD)?

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

Identify four changes in the economy that would cause the aggregate demand curve to decrease (shift to the left).

If the price level in Canada decreases,domestic goods will become relatively cheaper than foreign goods,the demand for Canadian-made goods will increase,and the Canadian aggregate demand curve will shift to the right.

What would be the impact on aggregate demand (AD)if the Canadian dollar depreciated?

What will an economic bust or severe downturn in the Japanese economy likely result in?

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?

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