Question 1

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

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 2

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

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 3

Bill's disposable income goes from $100 000 in 2011 to $200 000 in 2012,and his consumption spending goes from $80 000 in 2011 to $140 000 in 2012.Which of the following statements about Bill's consumption is accurate?

Accepted Answer

A) Bill's MPC is equal to 0.6. 
B) Bill's MPC is equal to 0.7. 
C) Bill's APC rose between 2011 and 2012. 
D) Bill's APC is equal to 0.20 in 2011. 
A) Bill's MPC is equal to 0.6. 
B) Bill's MPC is equal to 0.7. 
C) Bill's APC rose between 2011 and 2012. 
D) Bill's APC is equal to 0.20 in 2011.

Question 4

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

Accepted Answer

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

Question 5

What does aggregate demand include?

Accepted Answer

A) the demand for intermediate goods and final goods 
B) the demand for final goods and services 
C) the demand for investment, including stocks, bonds, and gold 
D) the demand for all monetary and nonmonetary transactions 
A) the demand for intermediate goods and final goods 
B) the demand for final goods and services 
C) the demand for investment, including stocks, bonds, and gold 
D) the demand for all monetary and nonmonetary transactions

Question 6

As the price level increases,what is the impact on purchasing power and the quantity of RGDP demanded?

Accepted Answer

A) Purchasing power and the quantity of RGDP both decrease. 
B) Purchasing power increases and the quantity of RGDP decreases. 
C) Purchasing power and the quantity of RGDP both increase. 
D) Purchasing power decreases and the quantity of RGDP increases. 
A) Purchasing power and the quantity of RGDP both decrease. 
B) Purchasing power increases and the quantity of RGDP decreases. 
C) Purchasing power and the quantity of RGDP both increase. 
D) Purchasing power decreases and the quantity of RGDP increases.

Question 7

In adding the nation's total output,which of the following best describes net exports?

Accepted Answer

A) They always total to a positive figure. 
B) They would include purchases of Canadian automobiles by foreigners plus purchases of foreign automobiles by Canadian citizens. 
C) They are a positive number when the value of exports from Canada exceeds the value of imports into Canada. 
D) They represent exports of final goods and services plus imports of final goods and services. 
A) They always total to a positive figure. 
B) They would include purchases of Canadian automobiles by foreigners plus purchases of foreign automobiles by Canadian citizens. 
C) They are a positive number when the value of exports from Canada exceeds the value of imports into Canada. 
D) They represent exports of final goods and services plus imports of final goods and services.

Question 8

Jason has been holding his retirement savings in a safe in his house.Currently,the economy is experiencing a falling price level.What can he conclude?

Accepted Answer

A) The real value of his savings is increasing as long as the price level is falling. 
B) The real purchasing power of his money is remaining constant. 
C) His money is safer than would be in a bank. 
D) The real value of his savings is decreasing as long as the price level is falling. 
A) The real value of his savings is increasing as long as the price level is falling. 
B) The real purchasing power of his money is remaining constant. 
C) His money is safer than would be in a bank. 
D) The real value of his savings is decreasing as long as the price level is falling.

Question 9

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

Accepted Answer

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

Question 10

What impact would a lower real interest rate have?

Accepted Answer

A) It would decrease the dollar amount of national savings, but not shift the supply of national savings curve to the left. 
B) It would increase the dollar amount of national savings, but not shift the supply of national savings curve to the right. 
C) It would decrease the supply of national savings. 
D) It would increase the supply of national savings. 
A) It would decrease the dollar amount of national savings, but not shift the supply of national savings curve to the left. 
B) It would increase the dollar amount of national savings, but not shift the supply of national savings curve to the right. 
C) It would decrease the supply of national savings. 
D) It would increase the supply of national savings.

Question 11

Which of the following is likely to reduce investment and,as a result,reduce aggregate demand?

Accepted Answer

A) higher real interest rates 
B) a decrease in inventories 
C) decreased business taxes 
D) optimistic business forecasts 
A) higher real interest rates 
B) a decrease in inventories 
C) decreased business taxes 
D) optimistic business forecasts

Question 12

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

Accepted Answer

A) AD would fall if exports fell more than imports. 
B) AD would decrease. 
C) AD would increase. 
D) AD would rise if exports fell more than imports. 
A) AD would fall if exports fell more than imports. 
B) AD would decrease. 
C) AD would increase. 
D) AD would rise if exports fell more than imports.

Question 13

Under which of the following circumstances will investment increase?

Accepted Answer

A) if business taxes increase or if business confidence increases 
B) if business taxes increase or if business confidence decreases 
C) if business taxes decrease or if business confidence decreases 
D) if business taxes decrease or if business confidence increases 
A) if business taxes increase or if business confidence increases 
B) if business taxes increase or if business confidence decreases 
C) if business taxes decrease or if business confidence decreases 
D) if business taxes decrease or if business confidence increases

Question 14

If the price level in Canada increases,domestic goods will become relatively more expensive than foreign goods.Consumers will import more and reduce the quantity of domestic goods and services they buy.

Accepted Answer

A) True 
 B)False

Question 15

Fred's consumption purchases fall from $140 000 in 2011 to $100 000 in 2012,as his disposable income falls from $200 000 in 2011 to $150 000 in 2012.Which of the following statements about Fred's consumption is accurate?

Accepted Answer

A) Fred's APC in 2012 equals 0.7. 
B) Fred's MPC equals 0.8. 
C) Fred's APC was higher in 2012 than in 2011. 
D) Fred's MPC equals 0.7. 
A) Fred's APC in 2012 equals 0.7. 
B) Fred's MPC equals 0.8. 
C) Fred's APC was higher in 2012 than in 2011. 
D) Fred's MPC equals 0.7.

Question 16

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

Accepted Answer

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

Question 17

The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 18

The aggregate demand curve portrays the relationship between price level and real GDP.What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.

Accepted Answer

A microeconomic demand curve shows the r

Question 19

What effect would an increase in business tax rates,combined with a decrease in consumer confidence,have on aggregate demand (AD)?

Accepted Answer

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

Question 20

What would be the impact on aggregate demand (AD)if exports fell and imports rose?

Accepted Answer

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

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

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

Bill's disposable income goes from $100 000 in 2011 to $200 000 in 2012,and his consumption spending goes from $80 000 in 2011 to $140 000 in 2012.Which of the following statements about Bill's consumption is accurate?

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

What does aggregate demand include?

As the price level increases,what is the impact on purchasing power and the quantity of RGDP demanded?

In adding the nation's total output,which of the following best describes net exports?

Jason has been holding his retirement savings in a safe in his house.Currently,the economy is experiencing a falling price level.What can he conclude?

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

What impact would a lower real interest rate have?

Which of the following is likely to reduce investment and,as a result,reduce aggregate demand?

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

Under which of the following circumstances will investment increase?

If the price level in Canada increases,domestic goods will become relatively more expensive than foreign goods.Consumers will import more and reduce the quantity of domestic goods and services they buy.

Fred's consumption purchases fall from $140 000 in 2011 to $100 000 in 2012,as his disposable income falls from $200 000 in 2011 to $150 000 in 2012.Which of the following statements about Fred's consumption is accurate?

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

The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve.

The aggregate demand curve portrays the relationship between price level and real GDP.What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.

What effect would an increase in business tax rates,combined with a decrease in consumer confidence,have on aggregate demand (AD)?

What would be the impact on aggregate demand (AD)if exports fell and imports rose?

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

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

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

Bill's disposable income goes from $100 000 in 2011 to $200 000 in 2012,and his consumption spending goes from $80 000 in 2011 to $140 000 in 2012.Which of the following statements about Bill's consumption is accurate?

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

What does aggregate demand include?

As the price level increases,what is the impact on purchasing power and the quantity of RGDP demanded?

In adding the nation's total output,which of the following best describes net exports?

Jason has been holding his retirement savings in a safe in his house.Currently,the economy is experiencing a falling price level.What can he conclude?

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

What impact would a lower real interest rate have?

Which of the following is likely to reduce investment and,as a result,reduce aggregate demand?

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

Under which of the following circumstances will investment increase?

If the price level in Canada increases,domestic goods will become relatively more expensive than foreign goods.Consumers will import more and reduce the quantity of domestic goods and services they buy.

Fred's consumption purchases fall from $140 000 in 2011 to $100 000 in 2012,as his disposable income falls from $200 000 in 2011 to $150 000 in 2012.Which of the following statements about Fred's consumption is accurate?

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

The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve.

The aggregate demand curve portrays the relationship between price level and real GDP.What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.

What effect would an increase in business tax rates,combined with a decrease in consumer confidence,have on aggregate demand (AD)?

What would be the impact on aggregate demand (AD)if exports fell and imports rose?

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